Commentary

TV Nets Cut Ad Time, And Time-Shifting May Be To Blame

by Wayne Friedman , Staff Writer, March 7, 2018

Traditional TV time-shifting comes courtesy of DVR technology. Is it finally having an effect on what TV networks do this upfront season?

It was revealed yesterday that a second major TV network group -- Fox -- plans to dramatically cut back its advertising during prime time. NBCUniversal had made an announcement the previous week about cutting back on ads in prime time.

In two years, Fox aims to cut prime-time advertising to two minutes an hour from a whopping 12 to 13 minutes an hour on average. (It’s a bit more time on mature cable TV networks.)

Ultimately, all this would be -- by any estimation -- a seismic change in the way ad-supported TV networks work.

The logic for many is that traditional TV advertising is a bargain for many marketers. But higher prices may be a consequence of getting rid of that advertising clutter. That means getting back to TV’s "scarcity" issue of premium commercial time.

For the last few years, TV executives have said traditional time-shifting wasn’t all that bad. In fact, 50% to 60% of viewers actually view TV commercials. In addition, TV marketers continued to spend more, with national TV revenues climbing.

But now, as offline media consumption has risen -- and advertising dollars shift to Google and Facebook -- there have been some major effects. Rising yearly ad revenue volumes are harder to come by.

If Fox does get to its dramatic goal of just two minutes of advertising time per hour by 2020, it would have a major effect, competing with Netflix, Amazon, Hulu and other subscription-based TV services that don’t carry advertising.

But this doesn’t mean total abandonment. Fox -- and others -- are ramping up efforts to produce more branded entertainment content -- in theory, to replace standard 15-second, 30-second and 60-second commercials.

This may the end of DVR fast-forwarding to skip commercials. Instead, one can just scroll away on social media feeds, associated YouTube content and fan-centric TV internet content -- while traditional TV programming is playing.

Is that better?

advertising, cable tv, tv

3 comments about "TV Nets Cut Ad Time, And Time-Shifting May Be To Blame".

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Ed Papazian from Media Dynamics Inc, March 7, 2018 at 4:45 p.m.
When TV began, an average hour of primetime entertainment on the broadcast TV networks had only six minutes of in-show commercials---all "60s"---plus two station breaks usually with one 20-second and one 10-second spot, each. This was considered to be a very fair price for viewers to pay for watching Jackie Gleason, Sid Caesar, "I Love Lucy", "Dragnet", etc. and unaided ad recall norms were very high ( 40% ) with 20% of program viewers able to play back the average commercial's basic sales message the following day.By way of comparison, today virtaully no viewer can recall what brands were advertised on a show last night unless prompted, let alone what the commercials tried to tell them. So less ad clutter certainly is a good thing. But are we to believe that Fox really plans to cut its primetime commercial "load" to a mere two in-show minutes per hour in two years? It would take a 500-600% increase in CPM for the network just to break even and even though this would be a boon for viewers as well as advertisers, the latter can't expect that their ads will garner so much added selling power that this would justify the huge CPM hike that would be entailed. This seems more like a trial balloon, floated to gauge buyer reaction---which is fine. But the more likely outcome will be several shortened breaks per hour offered to "premium" advertisers at higher CPMs coupled with the more cluttered breaks we see today---more or less as NBC has been touting recently in its own trial balloon.
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John Grono from GAP Research, March 7, 2018 at 5:51 p.m.

There are two sides to the ledger as such a plan would also be an expense impact.

They would have to pay for the acquisition or creation of an additional 10 minutes per hour. Across the 24-hour day that is about 4 more hours of programme content each day.

Put another way they currently have 12 mins of ads and 48 mins of content. They are planning 2 mins of ads and 58 mins of content. So ads are down by 83% and content is up by 21%.

Sounds like a job for Harry Houdini.

Ed Papazian from Media Dynamics Inc, March 7, 2018 at 6:33 p.m.

Good point, John. Or they might fill the extra time with promos for their other programs and, maybe, their SVOD offerings and some PSAs.