Commentary

What If Ads Are Seen, But Consumers Can't Buy The Products?

Barry Diller says everything is upside down in the modern TV industry— and will get worse. In short, there is a big tease going on for some lower-income level homes when it comes to TV advertising.

Speaking on CNBC recently, the chairman/senior executive of IAC, and former longtime TV and movie studio executive, said: "All of broadcasting is endangered because of what’s happening with streaming and other services. The only people who are watching commercials are people who can’t afford to buy the products being sold. That’s an existential, long-term issue."

Commercials getting tons of awareness for consumers, alongside a growing inability to buy those products? Maybe there is some truth there.

While lower-income TV households continue to subscribe to traditional pay TV providers — or their discounted services, digital or otherwise — not every home includes DVR time-shifting and fast-forwarding capabilities.

According to Nielsen, only 54% of all U.S. traditional TV homes have DVR. Research has shown roughly around 50% of U.S. consumers actually use the DVR platform to fast-forward through TV commercials.

On the surface, all this might prove good news for traditional pay TV providers and their discounted pay TV services -- via cable, satellite or new digital products. For marketers, there is also good news — 75% or so of U.S. TV households still sign onto traditional pay TV providers, where traditional TV commercials primarily air.

That said, inexpensive services like Netflix — at around $13 month — are complicating this environment even more, with consumers shifting viewing more to non-ad-supported TV viewing OTT services, like Netflix, Hulu's ad-free service, Amazon and others.

But what happens when a new generation of OTT ad-supported services from Walt Disney, WarnerMedia and NBCUniversal ramp up?

Will all those services have ad-skipping abilities? One would imagine they might not — even as those traditional media companies talk up efforts that new OTT services would have “limited” advertising commercial loads.

Does that mean even higher viewership of TV commercials on these platforms for parts of the population? Now flip the picture around: Will higher income homes continue to have the wherewithal to take another route?

1 comment about "What If Ads Are Seen, But Consumers Can't Buy The Products?".
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  1. Ed Papazian from Media Dynamics Inc, July 15, 2019 at 10:44 a.m.

    Wayne, with all due respect for Barry he should do some homework before making some of those doom and gloom statements about TV viewers. It's absolute nonsense that TV's remaining audience ---presumably he means poverty ridden oldsters---doesn't have the money to buy the products advertised on TV. In fact, the average 65-year-old has a net worth far in excess of the typical--and much prized ----millennial. It's just that a  fairly high proportion of the 65+ group is retired and their current incomes are generally lower than, say, the 35-49s.

    What TV gives advertisers---and always has---is a bonus over delivered audience of low brows and older viewers, along with lighter viewing younger consumers. But the latter are still being reached by TV for about 2-3 hours a day.Given the leeway, a smart media planner can show a like minded client exacty how to target both the older, lowbrow segments---who do buy many products---as well as the more "sophisticated" younger types. The answer lies in using cable as well as broadcast TV and freeing the brands from corporate time buying so they have the flexibility to use some of the improved targeting concepts that are available.

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