• by Karlene Lukovitz  @KLmarketdaily, May 13, 2016

It seems like a no brainer. Less ad clutter equals a better experience for viewers, which translates to a more robust, engaged audience for a program’s advertisers.

That translates to higher demand for the remaining ad units, which in turn translates to higher value and more per-unit revenue for the media owner.

Or that’s the presumptive logic behind the growing number of ad-reduction moves by networks, anyway.

Just this week, Turner-owned TruTV announced, in conjunction with its new programming lineup, that starting in Q4, all 45 hours of its original quarterly programming will have “drastically” reduced commercial loads. That will result in 20% more content and “the lowest average commercial and promo time in all of television,” helping to make TruTV “an exclusive must-buy for advertisers,” boasted the network.

And yesterday, the National Geographic Channel announced that it will reduce ads in new series and specials in the U.S. by 25% and run documentaries commercial-free. 

Both of those followed NBCUniversal’s late-April announcement that “Saturday Night Live” will remove two commercial breaks, or about 30% of the ads per weekly show, starting next season. 

More ongoing commercial cutbacks are in the works. Viacom networks are reducing ads in prime-time shows, and three new TNT dramas will have significantly reduced ad loads, according to industry reports.

The “less is more” ad strategy reflects networks’ awareness that lower-ad-load viewing options have produced higher experience expectations among younger audiences. At the same time, the networks are selling advertisers on opportunities to blend their messages into content to make them more palatable to viewers increasingly apt to use technology, or seek out alternate platforms, to avoid ads.

For instance, NBC is offering advertisers limited numbers of opportunities per year to create original branded programming with “SNL,” and to create ads that tie into the show. There have also been special deals wherein sponsored content results in fewer traditional ads — like Fox’s Pepsi integration over three “Empire” episodes last year, and American Express’s sponsorship of additional content from “The Voice” and other NBC shows during Leap Day this year.

Media Buyers’ Reactions
But these good-in-theory concepts are still limited in scope, and need to prove their value in real-numbers terms, particularly if networks expect to command premium pricing, said several veteran media buyers who commented on the trend during panels at MediaPost’s 2016 Outfront Forum.

“One of the reasons we have things like ad blockers and DVRs, and why Netflix has been so successful, is because you’ve created a crap user experience that people are going to flee from,” said Barry Lowenthal, president of The Media Kitchen. “How do you fix it? Reducing the commercial load would probably be the first thing to do. But the networks are going to have a lot of problem doing that, because they can’t monetize their audiences any other way — they haven’t figured out a better model to distribute the content.”

“’SNL’ is just the first; we’re going to be reading more about making the user experience better and fewer commercials and creating more demand,” predicted Alan Cohen, co-founder of Giant Spoon. “I don’t think we’re going to see a dramatic shift [in that direction], but I do think we’re going to see a trend.”

“It sounds great on paper, but I’m not going to pay for something unless I get some incremental value, like higher ratings,” stressed Marianne Gambelli, EVP, chief investment officer, Horizon Media. “We’ll have to show benefits and impacts to clients; they’re not just going to line up to pay more if we haven’t proved it out.”

Given that it’s “just a few shows” reducing ad units at present, concerns that this will further constrict supply is premature, she said. “The real effect probably isn’t even nano at this point.”

Catherine Warburton, chief investment officer at Assembly, said that while reduced ad scenarios aren’t likely to have much effect on this year’s buying marketplace, she lauds sellers for trying to improve the viewer experience, and hopes that ratings actually do go up as a result of fewer commercials.

“That’s what the cable networks want, and I want these networks to have ratings growth, too,” she said. “A lot of the non-ad-supported viewing is a very positive experience for the consumer, and I think the [mainstream media] world has to catch up with that.”

“I think everybody wants a clutter-free environment,” but “if you look at [overall] unit loads, you’ll see that they’re not really going down, even though they’re decluttering certain shows — so that becomes a bigger question,” observed Gibbs Haljun, managing director, Media Investment, GroupM. Ad units are being moved out of prime-time, but shifted to daytime, so daytime becomes more cluttered, he said.

“I think that at the end of the day it’s a ploy,” Haljun asserted. “You look at it and say, ‘When you added more commercials you didn’t lower my price, so why should taking away commercials raise my price?’”

However, “in some of these instances, I think the plan is to remove the lowest-rated commercial pods,” said Chris Geraci, president, national broadcast investment, OMD USA. “They’re going to build in enough audience, or at least the average audience is going to go up X% by removing that lowest-rated inventory, so as to make it sort of cost-neutral. And as long as it’s cost-neutral, it’s a good thing.”