• by Brian McAndrews , December 19, 2002

How about another trend that portends a good 2003 for Internet advertising? As you may know, according to a recent survey, if TiVo has the expected impact on advertising (~70% of TiVo users report that they skip most ads), major marketers said they'd reduce their TV ad budgets to 20% of the mix. These dollars have to go somewhere. I say they will go online. Here's why.

First, the evidence that TiVo and other forms of PVRs are getting traction, will start a number of things in motion. As the survey showed, there will be an initial flight from TV that will greatly benefit the Internet.

Internet is the next best thing to TV in terms of audio / visual combination. New rich media formats and broadband penetration will make that more clear. In fact, if you imagine a TV ad in a flash wrapper -- that is, with interactivity on either side of it -- you can only end up with a more effective vehicle.

TiVo will further hurt the measurability of TV ads, because consumers will skip them. I see There will be a flight to 'measurability' as many marketers will get burned by spending hundreds of millions on TV ads and learning after the fact that nobody actually watched them.

This will force advertisers to understand the Internet as a medium and will leverage its interactivity. Additionally, they'll get used to the idea of short-form / long-form: an ad banner or rich media ad creates awareness for the masses; interested parties go to the website for in-depth product/brand information. We already have or are developing better ways of evaluating Internet ads with goals across the full marketing spectrum (I watched an ad; I interacted with an ad; I visited the site after seeing an ad; I purchased offline).

Digital cable, if it evolves from the interactivity TiVo presents, will likely share many of the Internet's characteristics (Impression-based; I'll know if someone watched an ad or not; I'll be able to target narrow geographies and demographics; I'll be able to (inexpensively) create many versions of an ad for different audiences; I'll be able to make changes to ads that people are fast-forwarding past.) As a result, digital cable business will likely surge and benefit from advertisers' training on the Internet. Dollars will continue to flow from basic TV and may flow from the Internet.

The bottom line is that, as PVRs become more prevalent, marketers will be forced to look past "'it's the way we've always done it" (because that world will have changed). This is the real threat to TV budgets: the bloom will be off the rose and marketers will scrutinize their TV budgets rather than looking to tradition.

Thanks, TiVo.