Broadcast Still Ad-Attractive, DVR Could Be Helpful
That's been disproved. Broadcast television -- the most at risk because of its reliance on ad money -- continues to attract high-spending marketers even as ratings drop.
Networks may still wish DVRs had suffered the fate of the Edsel and just gone away. The devices still aren't Mustangs, but a couple of events this week indicate DVRs may be a sort of frenemy.
Nielsen continued to advance the case that commercial-skipping is lower than might be expected. Younger adults with a DVR skip ads modestly enough that the commercial ratings for top programs increase significantly even as the devices proliferate.
Then, there was word Starcom MediaVest Group and DirecTV have a deal that might turn the DVR partly on its head. Their joint initiative could use the devices to boost ad effectiveness, rather than emaciate it.
For years, the industry has sought a transformative model for addressable advertising, one on a national level reaching millions of homes. SMG and DTV seem to have found a starting point. (Previous addressable ad efforts have been limited in scope -- in 60,000 Comcast homes in Baltimore, or 100,000 Cablevision dwellings in Brooklyn.)
The SMG-DTV system is expected to debut next year, sending highly targeted ads into relevant homes. Key in the flow chart is the DVR.
Advertisers were handed "a lemon with a DVR, and now it's time to make lemonade," says Tracey Scheppach, innovations director at an SMG unit.
A rough outline has a third party with direct-mail expertise identifying homes with a range of characteristics. There could be sports lovers; people who take a cruise annually; heavy beer drinkers, etc. Or in other segments: millionaires or grandparents.
Next, specific ads are chosen to run in homes that would be receptive. The spots are then streamed to the particular household and stored on a DVR. When time to run, a trigger goes off: The sports lover has LeBron James endorsing Nikes and at the exact same time, the cruise lover gets an offer from Carnival.
The system can allow dozens of ads -- from multiple advertisers -- to run in different homes at once. Some 10 million DirecTV customers with a DVR will be eligible for SMG to target.
The addressable ads will run in the inventory DirecTV owns on cable networks. Not all 10 million homes will be in play at once.
DirecTV has deals with Snuggie-types and other direct response advertisers allowing their ads to be preempted. In a particular 30-second opening, SMG may feed ads into 5 million homes, while the DR ads fill the balance.
As part of its DirecTV arrangement, SMG has first crack at using the addressable advertising option. In theory, if SMG is satisfied it could keep using it exclusively for its clients for some time. Scheppach says advertisers can cut down on waste and the system is "exactly where they want us to head."
SMG's deal calls for DirecTV to skim its set-top boxes to gather data on ad performance. And SMG will only be charged if the ads are viewed by specific passion or demographic groups. If 200,000 frequent flyers watch a Delta ad, SMG only pays a rate for that delivery.
There is one other benefit the coming gambit gets from a DVR. During the time a recorded show sits on a DVR pre-viewing, SMG can pull one of its embedded ads out.
To be sure, addressable advertising hardly means a sports car enthusiast will want to watch a Mustang ad. They may still reflexively opt to skip. Still, maybe the uphill road DVRs pose advertisers with, gets a little flatter.