Video Game Ads Contribute To 'Slow Death' Of :30

Aside from adding another pre-eulogy to the impending death of the 30-second commercial, a study by the Reed Elsevier research firm In-Stat/MDR says that the growing attraction of video games as ad vehicles is likely to grow more than most expect.

The report, "Television Advertising 2004-2009: The Slow Death of the 30-Second Commercial," looks at how TV advertising is changing in the face of increased competition from the Internet, video games, and prepackaged content, as well as new technologies such as personal video recorders. The report includes forecasts of new advertising methods such as video game advertising and product placement, as well as TV, cable, Internet, and radio advertising.

Among the report's findings is that the total U.S. electronic advertising market will see an average growth rate of 2.8 percent from 2005 through 2009 in the face of the reduced potency of broadcast advertising. The growth will largely be driven by Internet advertising, and to a lesser extent, cable TV and video game advertising.

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The diminishing effectiveness of broadcast advertising can be attributed to two major irreversible trends, said Mike Wolf, principal analyst of In-Stat/MDR. The first is the continued fading away of the broadcast TV audience to other media, like cable television, DVDs, the Internet, and electronic gaming.

The second is an increasingly empowered consumer through new technologies like the personal video recorder (PVR) that allows users to skip ads. In addition, the consumer will continue to be empowered through new distribution channels for content, such as DVD by mail and downloadable premium content through services such as CinemaNow and MovieLink.

"PVRs have turned the broadcast TV ad business on its head," Wolf said. "Our research shows that over two-thirds of those with a PVR skip ads, with 75 percent of those individuals skipping over 50 percent of ads shown. Some of the ways broadcast TV execs and advertisers are combating the rise of ad-skipping technologies is through the increased use of product placement. The recent $7.7 million giveaway of Pontiac cars on Oprah to create a marketing 'event' is an example of what is being done today outside of the 30-second commercial."

The report was based on interviews with people in the TV industry and with users of technology. Wolf said he believes that the coming troubles have been masked somewhat by the amount of political ad spending this past year. But the day of reckoning is fast approaching, as major Fortune 500 companies are beginning to say that they will not continue to pay as much for a shrinking audience.

"Video gaming is now a $300 million a year business, but by 2009, it'll be more like $3 billion," he said. "It's an undervalued market right now. Granted, it will still be smaller than total TV is going to be, but as more people change their media habits, video gaming will make a difference. And ad insertion will be a major support in furthering online games, as many people will not want to pay the fees in order to play."

As for putting video gaming in further perspective, market researcher Veronis Suhler Stevenson noted that last year, Americans on average spent nearly 1,800 hours watching TV and 71 hours playing video games. By 2008, that's not expected to change much, as their forecast expects slightly more than 1,900 hours devoted to total TV watching and 98 hours for video games.

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