Commentary
Fewer Ads For TV Networks? Where's The Bottom Line?
- by Wayne Friedman , Staff Writer, March 1, 2016
Viceland, a venture with A+E Networks, has already drawn in big advertisers in preparation for its launch. Unilever PLC, Bank of America, watch and apparel maker Shinola, Samsung, T-Mobile and Toyota are among those that have signed on, according to the Wall Street Journal.
The network says it will carry only about 9 minutes an hour of advertising time -- about half of the 17 minutes to 18 minutes per hour many cable networks air. And, within a year, the plan is that half of that advertising will be native advertising.
At the same time, more-established cable networks like Viacom’s MTV, and Turner Broadcasting’s TNT and truTV pledged to cut advertising time on their networks. Turner has said it could make up to a 50% cut.
This has been long overdue: For years cable TV networks have had on average, more advertising clutter per hour than broadcast networks.
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And now you have companies like CBS toying with the idea of creating an ad-free option for its budding OTT service, CBS All Access. Besides its current $5.99 a month option -- which includes advertising -- there could be a $9.99 a month ad-free option.
Last fall, Hulu -- perhaps to compete more effectively with the likes of Netflix -- started up an ad-free option for $12 a month, to supplement its limited-advertising subscription of $8 a month service.
What gives? Can we guess some futurist minds are looking at the bigger picture, foreseeing a time when revenues aren’t coming from traditional cost per thousand viewer prices, and their expected yearly increases?
Future revenues may come from a combination of higher priced “native” advertising -- a modern form of traditional TV ad “branded” entertainment -- and from increased customer revenues from new apps and/or new over-the-top platforms.
Even then, in the near term, OMD’s Chris Geraci wonders how the new Viceland network model can survive in today’s short-term-driven profitability model for new TV network ventures.
Sure. For Viceland, and others, if consumers get the hint their networks offer less messaging, perhaps they will stay around for longer periods. Advertisers would like that.
But how will consumers get that message? Will networks deliver this via on-air TV promotions that say “We run less advertising, come watch us.” Perhaps, “We run less advertising. Pay your bills, and we’ll still give you great content.”
If they can somehow figure out that all-encompassing new TV brand identity, it would be a key model for many to copy.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
If Viceland attracts 10-15 million viewers per minute and earns a weekly reach of 150 million, I suspect that A&E's policy about commercial clutter on this new channel might be altered somewhat. At 25,000 viewers per minute and a weekly reach of 500,000, this kind of ploy, while interesting, hardly signals a major change for all of network TV/cable in the offing. Rather, it's a way to launch something small but different and attract sponsor support---probably at premium CPM pricing. If advertisers were willing to pay 50-55% higher CPMs for their "mass audience" network/cable buys, then the sellers might reduce their number by, say, 45% but I wouldn't hold my breath waiting for this miracle to happen.
Of course this idea is intriguing and noises have been made in the past. However, it’s not entirely true that consumers hate all advertising. In fact, consumers welcome advertising with a caveat, it has to be relevant and either emotionally compelling or downright hilarious. Anything else in between becomes monotonous and annoying. All we need do is look to this years’ Super Bowl, it was a bust for advertising but the game was good.
Consumers want good content and along with content networks (that means you cable) should be able to figure out how to serve both sides of the aisle, those who don’t mind advertising and those who do. Now is the time to really figure this out as consumers are not going to wait patiently while the money keeps rolling in. We need only look to newspapers to see what happens when advertising becomes the model for financial success only to have the rug pulled out from under you, but you should have known it all along.
If you build it they will come, but don't get too comfortable.
All consumers do not hate advertising. But you cannot convince me that MOST consumers enjoy advertising. I don't even buy the notion that relevance affects ad avoidance. Some of us just skip all the ads, regardless how intrusive, because we can. It's just not practical for viewers who love TV to watch their shows inefficiently, i.e., without skipping the ads on DVR replay. There's a reason the scripted shows are the most-recorded. They are best consumed with the interruptions on fast-forward, so that more shows can be viewed during our finite leisure time. Yes, I should be more sensitive to the plight of industry folk whose livelihood depends on the 20th century model of ad-supported media, but not nearly enough to alter my media consumption behavior. And far younger viewers feel even less nostalgia for so-called relevant ad messages.
Douglas, the research---and there's plenty of it, including some I have personally conducted--- shows that a relatively small percentage of people---about 10%---go out of their way to avoid all ads while another segment--about 25-30% does so on, but a more selective basis. Fortunately for advertisers, chronic ad avoiders tend to be relatively light TV viewers, while those who tolerate ads and that segment of TV "ad receptives"--about 20%-- that often finds commercials to be helpful ( "they show me new products" ) or funny ( Geico and many others ) , or educational ( "they show me how other people dress, react to situations or behave" ), tend to like almost everything about TV, including ads as well as programming, and, consequently, are heavy viewers. This scenario, may not agree with the much heralded anti-TV narrative, but riddle me this: how can it be that a typical TV ad campaign will garner an awareness level of 50% or much higher depending on the GRP "weight" behind it, if the respondents are given some form of visual recognition aid to refresh their memories? And how can it be that an average TV commercial gets a recall score---including some proof that it was seen---of 30-40% if almost everyone is either zapping or ignoring just about every commercial? Finally, if there really is some sort of mass rebellion against TV commercials that has suddenly sent 300 million viewers to man the barricades against ads---again, per the ongoing anti-TV narrative---why aren't the various commercial recall/impact studies---and there are thousands of them conducted each year----showing a steep nosedive in their normative findings for the past few years?
Least I am accused of shilling for TV, I have chronicled the gradual erosion of the medium's commercial exposure and ad impact over the course of 65 years, so I'm not even suggesting that things are as good now as they were in the 1960s or 1970s. But the sky, while gradually darkening, isn't falling nearly as fast as some assume. If you don't believe me get your school library to buy a copy of "TV Dimensions 2016" and you will see much of the data supporting my case as well as lots of other interesting findings.
Sorry the NYPLibrary on 5th ave could not find a Google link for "TV Dimensions 2016".
Must be a uninformed librarian.
Leonard, if by some chance you are interested in "TV Dimensions 2016", it is sold via the Media Dynamics Inc website. We present a pretty thorough description of the book. Just Google Media Dynamics Inc and we should pop up.
Update; just for the heck of it I just Googled "TV Dimensions 2016" and it appeared at the top of the list--several times. That librarian must be rather inept---- or ham fisted.
Actually she was very well respected but simply did not use quotes.
I did not know MediaPost boards can be used to sell and promote your own merchandise.....
Based on prior knowledge of your views TV Dimensions 2016 would lack the importance of Attribution....
Leonard, you might want to read the book before passing judgement on it..or is that asking too much.
Ed you are correct, please feel free to send a Complimentary copy. Thank you.
It's on its way, Leonard. Sorry for the delay. I took the liberty of including my new book, "TV Now and Then", as well as our very interesting annual on intermedia comparisons, "Intermedia Dimensions 2016". By the way, the books are coming by drone but not to worry, I've instructed our technicians to disarm our Hellfire missiles. Look to the sky, Leonard, the drone should be approaching any moment now.
Ed I sense a bit of anger w the hellfire reference. Of course if you don't want your "Book" to be read for open discussion then keep posting drone blogs !