DVRs Approaching Critical Mass, Finally: Prove More Of A Whimper Than A Big Bang

by , Jan 26, 2011, 9:17 AM
  • Comment (7)
  • Recommend
Subscribe to MediaDailyNews
As far as important industry milestones go, the one announced late Tuesday by Interpublic's Magna Global unit, that DVRs are finally poised to reach the 50% mark - a level often thought of as critical mass for a mass medium like television - may seem a bit anticlimactic, and just goes to show that big industrial shifts sometimes are more evolutionary than they are revolutionary. In fact, Magna estimates that milestone will not be crossed for another five years, but its year-end 2016 forecast is the first time the ad industry has had an official halfway mark for the dreaded devices, which have been Madison Avenue's main nemisis for nearly a decade.

DVRs, Magna's Brian Wieser said in his understated fashion, will officially cross the 50% penetration level at year-end 2016, up from his previous estimate of 49%. But the significance of that milestone now seems more of a whimper than a bang, and certainly not the sonic "boom" many on Madison Avenue had feared a decade ago when Michael Lewis' cover story on the New York Times Magazine announced that the end of TV advertising was near. Not nearly, as it turns out.

Ten years after Lewis' "Boom Box" article captured Madison Avenue's attention that DVRs - and especially their ability to fast-forward through TV commercials - were about to change everything, some things have certainly changed. Others have not. Advertisers, for example, still spend more on the medium than ever before, and its share of total ad spending continues to climb, both in the U.S. and worldwide. If anything, the recent global economic recession - and Madison Avenue's own economic rollback - have proven the vitality of television, which increased share as marketers cutback on total advertising and consolidated spending on media they believed would generate immediate returns: TV and digital media, including the next generation of TV, online video.

"The worst news is that no one watches commercials anymore," Lewis proclaimed in "Boom Box," citing early research that "eighty-eight percent -- 88 percent! -- of the advertisements in the programs seen by viewers on their black boxes went unwatched, and issuing an understatement that became a new rallying cry for Madison Avenue, and the television networks for the next decade: "If no one watches commercials, then there is no commercial television."

The Lewis piece was important, and most likely prophetic for a number of reasons beyond this prediction, which certainly has not come true. In it, he accurately predicted the shift toward more consumer control, as well as better ad targeting, but also discussed the "black box," as he called DVRs in the context of an ongoing progression of technologies (including the Internet, and more powerful computing), that were shifting electronic media from linear to non-linear experiences, including things like time-shifting, augmented memory, and the ability to access content on-demand, anytime, anywhere.

Lewis did not address the stickier business issues like copyrights or payment models, and he probably underestimated some important cultural factors -- especially how Madison Avenue makes and controls media markets, and how and whether those markets are economically sound for advertising agencies, advertisers and media suppliers who can influence their outcomes.

But the reality is that things have changed. DVRs will soon be in half of television homes, but by the time that finally occurs, other equally significant shifts will have already happened in the media industry's ecosystem that may make Lewis' "Boom Box" seem like a bust by comparison.

But for now, the bottom line is that TV advertising still works, and TV advertising spending continues to grow. It is growing because consumers are watching more TV than ever before, despite all the time they're spending doing everything else, according to Nielsen, anyway.

That's probably for a number of reasons. One is that a significant number of people didn't watch TV commercials before the advent of DVRs. They did it the old-fashioned way, of course, and simply ignored them, got up and walked out of the room, or turned the channel. It's hard to know what the actual percentage was in the pre-DVR days, but it could well have been 88% back then too.

The real culprit to TV's declining economies of scale is not DVRs, or more consumer control. It is more consumer options. People simply have more options to turn their attention to than TV programming and advertising, and that is most likely impacting. It's also a significant factor within television itself, where the number of channel options has exploded, fragmenting consumer choice and viewing. Yes, TV usage levels may be as high as ever, according to Nielsen, but the average usage of any particular TV program - what people in the business call ratings and shares - has gone down dramatically, changing the economics of buying TV, and making it a less efficient medium than it was in its most golden days.

TV still works, of course. And there is an ample body of marketing mix modeling research to prove it. It may not work as well as it used to, and it may be more expensive to do things like build reach or influence consumers, but no other medium has come up with anything that approaches its unique scalability. Online search is great, but it cannot scale like TV. Social media? Well, that's another story that's still playing out. For now, TV is still king, even in a land where one out of every two serfs are surfing past the commercials. But let's revisit this story in another ten years, and see where we are at.

7 comments on "DVRs Approaching Critical Mass, Finally: Prove More Of A Whimper Than A Big Bang".

  1. Douglas Ferguson from College of Charleston
    commented on: January 26, 2011 at 9:31 a.m.

    Sorry, but I fast-forwarded through some of your unsupported arguments with my TiVo, the only "real" DVR with two tuners. Ba-doop ba-doop ba-doop.

  2. William Hughes from Arnold Aerospace
    commented on: January 26, 2011 at 9:51 a.m.

    Sorry, didn't see a thing! I was too busy watching my DVDs.

  3. Doug Garnett from Atomic Direct
    commented on: January 26, 2011 at 10:30 a.m.

    You should look up last year's study on all media from the Journal of Advertising Research. There we find...

    1. TV viewership hasn't declined. In fact, people are watching as much, and more, TV as ever.

    2. The DVR has no impact on advertising effectiveness (shown by many studies and our real life direct response TV results). What appears to be happening instead is that people use the DVR to automate their prior cognitive behavior. 1/3 of TV viewers always fully ignored commercials. Now they buy a DVR.

    3. TV is prime driver for other mediums. For example, the WOM influenced who buy most often are those who also saw a TV advertisement.

    What has changed is the decline of three dominant networks as viewers have so many more options. So, they're watching just as much - but watching it across many more channels.

    And, other studies show that the impact of the internet and mobile TV (so far) isn't to cannabilize TV, but to add new times and places where TV is consumed. Makes sense - TV is best viewed on...well...a TV and not a phone.

    What bugs me is that the ad biz bought into the DVR hype. Why? Certainly part of it was a bunch of people wanting to make careers by saying something different. And, with our elite status, we forget that we talk to the real world and can no longer rely on Ogilvy's sexist comment "your consumer is your wife".

    So despite article after article hyping TV problems, I'm pretty optimistic. People like TV. They like it even better with a DVR. And, the primary interest of the consumer with digital distribution is more DVR-like flexibility to watch what they want when they want it.

    ...Doug Garnett

  4. Rob Frydlewicz from RAF Consulting
    commented on: January 26, 2011 at 12:58 p.m.

    Perhaps because I'm not a heavy TV watcher I often find myself watching TV commercials rather than fast forwarding. Conversely, I ignore online ads completely.

  5. Karl Meisenbach from HDNet
    commented on: January 26, 2011 at 4:32 p.m.

    10 years ago we didn't have 50" Plasma HDTV's for $549!

    BIG, and getting BIGGER, HDTV's plus Better Sound (think home theater in a box for $300) is going to Increase the Popularity of TV.

    DVR's Further increase the Popularity (talk to anyone who has one)

    A Netflix account plus a Blu-ray player Increases the Popularity.

    Reaching Viewers with Big Visual and Impactful Audio Marketing Messages is the Opportunity of a Lifetime for those of us in the business of TV Advertising.

    Karl Meisenbach
    HDNet & HDNet Movies

  6. Joe Mandese from MediaPost
    commented on: January 26, 2011 at 5:33 p.m.

    @Karl: You'll be happy to know I finally have an HD set (a big one, and it's hooked up to Netflix, Youtube and the rest of the Internet), and boy is it changing the way my household uses the "TV."

    @Rob: Me too.

    @DougGarnett: That all makes sense.

    @William: What's a "DVD?"

    @DougFerguson: Hit "rewind."

  7. Doug Garnett from Atomic Direct
    commented on: January 26, 2011 at 8:09 p.m.

    One way to look at advertising consumption on the DVR is that now we get to ignore the ads that don't matter to us. Even better, we get to rewind, analyze, and return later to the ads that do matter.

    Remember, one of TV's weaknesses in advertising was always their fleeting appearance so you could never say "wait, did that ad really say..." (especially when contrasted with print ads that sit around). So, DVR's solve that problem.

    And when I mention the rewinding ads option to people, I see a lot of thoughtful pauses followed by "I do that" or "my kids do that".

Leave a Comment

Sign in to leave a comment. Don't have an account? Join Now

Recent MediaDailyNews Articles

>> MediaDailyNews Archives