How Does Traditional TV Compete With Ad-Free Services?

TV show producers have strong points of view on the ads airing between comedy, drama and reality content. And so do advertising executives. Who do you believe?

“Consumers hate advertising,” said Bob Greenblatt, chairman of NBC Entertainment, at a New York City TV business event on Tuesday. “People are running away from advertising in droves. To me, that is the crux of the problem. How do we stop that from happening?”

And then there is this:

Jonah Goodhart, cofounder/CEO of Moat, a media analytics and measurement company, at the same event: “Consumers hate bad advertising... Branding and content to me are the same thing.”

The only time the latter might be true is for one specific TV occasion: the Super Bowl. Everything else? Maybe when I’m really bored with the story arc on a TV comedy, drama or reality show.

When HBO was the only game in town in the ‘80s, ‘90s and most of the 2000s, the ad-free channel could only command around 25 million or so TV homes, out of some 120 million U.S. TV homes. The relative high cost (around $13 to $15 a month, depending on the promotion and/or pay TV provider) and ease of access (having to buy a basic cable network package) might have had something to do with it.



Many years later, we now have Netflix at around $10 to $12 a month with some 50 million U.S. subscribers. But you don’t need to subscribe to a basic cable network plan in order to get the service.

Consumers are now looking a lot closer at ad-free, easy-to-buy (and leave) digital content platforms, such as Netflix, HBO, Hulu, YouTube TV, among others.

NBC’s Greenblatt, former president of entertainment for Showtime Networks (another ad-free cable TV service), reckons people are on the move -- away from TV advertising.

A positive note to ad executives — the industry needs to get better at incorporating ad messages into TV programming content.

We have heard these warnings from TV execs before — and will continue to hear them again. Now decide — from all data points and trends — who is winning the debate.

11 comments about "How Does Traditional TV Compete With Ad-Free Services?".
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  1. Douglas Ferguson from College of Charleston, November 29, 2017 at 12:33 p.m.

    It doesn't matter what viewers over 30 are currently doing or thinking. Habits are long-ago formed. But the question is what are young viewers willing to accept? They already use ad blockers and they love time-shifting. The future lies ahead: HBO was then, Netflix and others are now. It's a different media landscape and advertising interruptions are simply old hat. Too many choices out there to get drawn into the hoary "commercials are a fair exchange for free programs" notion.

  2. Ed Papazian from Media Dynamics Inc, November 29, 2017 at 1:28 p.m.

    Greenblatt is talking through his hat, Douglas. He might check the findings of TVision regarding the relative eyes-on-screen ratios during TV commercials, as recorded by "eye cameras" for young adults relative to older viewers----and get a surprise. Younger viewers are  slightly lower, but that's about all. When he's done with that he might ask Nielsen for its ad recall norms by age group for TV commercials---based on thousands of studies and see how much lower than the norm the younger set is. A tad lower---nothing new about this----but that's all. "Running away in droves" , indeed. Though I'm sure that some of our digital friends will pick up this quote, accept it as "data" and "run" with it.

  3. Tracey Scheppach from Matter More Media, November 29, 2017 at 3:03 p.m.

    We should look no further than Hulu for a clue. Three packages: $5.99 basic (with ads - limited), $11.99 basic with no commercials (some ABC progamming restrictions) or $39.99 for basic + live. Wonder the % of subscribers for each? My bet is maybe 80% are in the $5.99 basic package. 

    I firmly believe consumers don't hate ads...they hate irrelevant disruptions. A new model will/is emmerging. Hint: it involves big data, addressabilty and less ads...and if the netowrks want advertiser to pay more the ads must be worth more. Less ads but the ones that are viewied are much more relevant and fully accountable. 

  4. Dale Knoop from TRE, November 30, 2017 at 1:11 p.m.

    I agree with Tracey. There's no value to the ads. Where's the instant gratification element? 70% of Americans 2-screen. If you interupt them, give them value immediately in their micro-moment of brand inspiration. Toda's feel good ad is the one where I get exactly what I want exactly when I want it. Hey TV world-don't make us dig/forage/search. Give us a dopamine rush of brand value. Don't tell me about the BMW on TV then force me to dig for more. Offer me the chance for a video or offer instantly on my phone.

  5. Ed Papazian from Media Dynamics Inc, November 30, 2017 at 2:13 p.m.

    Seventy percent of Americans do not "2-screen" every time a TV commercial appears on their screens. This happens, of course, but the incidence is nothing like an every time event---not even close to it.

  6. Tracey Scheppach from Matter More Media, November 30, 2017 at 2:23 p.m.

    We did a significant piece of research as part of The Pool at Publicis. Finding was when a viewer was watching TV with another screen (phone or tablet) that 2/3 of the time eyes were on the TV screen during program content and 2/3 of the time eyes were on their alternative screen when the ads came on. This does not mean there was no value to TV ad playing (hey, radio works, right?) It does point for the need for change. Less ads, more relevant and to Dale's point a well orchestrated two screen experience would help a lot.

  7. Ed Papazian from Media Dynamics Inc, November 30, 2017 at 2:31 p.m.

    Interesting, Tracey, but did you also ascertain what percent of the time a viewer had a second screen readily available? Also, the recent CRE eye camera study monitored people as they watched TV and, as I recall, all of the "respondents" were asked to have another screen available to them---which is not necessarily a typical situation. Their findings were that using a second screen as a form of commercial avoidance was not as frequent an avoidance mechanism as you note from your study. If I recall correctly only about 20-25% of the audience used a second screen when commercials were on---others simply payed no attention, left the room or engaged in other activities, but the average eyes-on percentage for commercials was about 38-40%---- or  roughly twenty points lower than for program content.

  8. Michael Mongelluzzo from Captivate replied, November 30, 2017 at 2:32 p.m.

    Amen Tracey.  There is no reason to pay attention to commercials when you have a tablet or smartphone in your hand, as there is way too much information at your finger tips to read and enjoy.....and way too many irrelevant commercials per break.

  9. Ed Papazian from Media Dynamics Inc, November 30, 2017 at 3:07 p.m.

    Here's another thing for those who think that almost nobody watches TV commercials might consider. The average minute audience for the average TV show is dominated not by people like "us" but by older adults and those with lesser educations and sub par incomes. It is dreaming to assume that such people, many of whom like commercials and find them often informative and/or entertaining, don't watch them. Moreover, these older/low brow heavy TV viewers are the least likely to have a second screen with them as they watch--- in contrast to younger, well educated audiences who are invariably in the minority. I happen to have a second screen available and I very frequently avoid commercials in various ways---but I also realize that I'm not representative of the total adult population, let alone TV's heaviest viewers---that 20% of the population that accounts for 50%+ of the average minute audience and, probably, 60% of the average commecial's audience.

  10. Paula Lynn from Who Else Unlimited, November 30, 2017 at 6:08 p.m.

    Why no one has been discussing the amount of ads in a pod is amazing. 20 minutes of ads in an hour show is what people hate. Move it down to 10 minutes and people will appreciate the break to do whatever they need to and keep attention. That will cost, though. So figure it out.

  11. Linda Moskal from WNPV Radio replied, December 4, 2017 at 3:07 p.m.

    Amen, Paula!  The number of really bad ads in an hour show is enough to drive people to even read a book!  

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