Commentary

Will TV's Ad Glut Be Forgotten As Consumers Have Obvious Options?

by Wayne Friedman , Staff Writer, May 11, 2022

Streaming video platforms have put traditional ad-supported TV -- especially cable TV networks -- on the back foot.

The reason: Too much of that advertising, which is something historically cable TV networks have scheduled more than broadcast networks. All that continues.

We are talking about the overall TV ad glut -- and so is Charlie Ergen, chairman of Dish Network: “If you are watching two hours of TikTok, you are not watching two hours of Discovery,” he said to analysts during the company’s recent earnings call. “The video business needs to innovate ... 15-16 minutes of [cable TV network] commercials needs to change.”

Cable TV networks have been losing anywhere from 4% to 8% of subscribers per year for a while now -- partly due to the high monthly cost, but also because of too many commercials.

In turn, pay TV providers are also suffering. Dish Network witnessed a combined drop to over 462,000 pay TV providers in its most recent first-quarter period -- about half each of those losses for the Dish Network satellite platform, with the other half dinging its virtual pay TV service, Sling.

This is not new. Advertising glut has long been an issue for TV networks, where advertising and promotion content can be as high as 18 minutes per hour on some networks.

Broadcast networks also have this issue -- but the glut typically is not dire -- although still not acceptable, according to advertisers and viewers.

So is there any relief? Now with massive streaming options, consumers are leaving in droves.

Previously, consumers made other choices under their control -- fast-forwarding through advertising on DVR machines or cloud-based DVR services.

But don't expect any of this live, linear TV ad glut to slow down on TV networks, all the while those same legacy TV networks groups also own top premium services with “limited-advertising” options.

But what can the likes of Dish Network and DirecTV do about it?

Maybe Dish’s Ergen has a plan.

Perhaps not to do business with those cable TV networks with high commercial loads? One might doubt it.

Still, the likes of Dish Network and DirecTV need to come up with something. DirecTV, for one, has adopted the new marketing brand in a word "stream" for its DirecTV Stream business.

In turn, Dish has been trying for many years with digital and virtual Sling TV.

The long-term answer to the question of what will keep pay TV video consumers from fleeing is easy: Fewer TV ads and lower monthly bills. Now what are businesses going to do about it?

advertising, earnings, satellite tv, streaming, television, tiktok

2 comments about "Will TV's Ad Glut Be Forgotten As Consumers Have Obvious Options?".

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Ed Papazian from Media Dynamics Inc, May 11, 2022 at 10:27 a.m.
Wayne, the most common reason given for cord cutting---which is proceding at a slower pace than before---is the cost of cable or satellite service distribution. Not likeing commercials is increasingly a secondary consideration---especially now that cord cutting has moved into the older but heavier viewing and less anti-commercial segments.

We should also note that some people are coming back to cable so it's not a one way street. A recent survey by YouGov asked such people why they returned to cable and got answers like streaming costs are too high, as well as the cable systems were offering bundles of services---phone and internet access most likely---so the entire bundle , including "pay TV" was attractive now for some cord cutters. Another reason mentioned was the difficulty of browsing on streaming---I take that to mean that you need to change apps if you want to explore what's available on another service you subscribe to.

As for cutting back on the number of commercials on traditional TV--especially cable---- the likliehood is that commercial clutter will increase and that advertisers will be asked to pay even higher CPMs to obtain such time---as there simply isn't a glut of GRPs from CTV and AVOD sources to serve as an alternative and the CPMs on CTV and AVOD are higher than on "liner". I doubt that this will cause people to watch less TV though they will probably increase commercial avoidance. But as measuring such avoidance is not part of any of the proposed new TV rating systems the sellers will happily market their vastly inflated "impressions" and advertisers will have little choice but to pay.
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Paul Bledsoe from Bledsoe Advertising/Productions, May 12, 2022 at 2:40 p.m.

Great commentary. Who really knows what may happen. I have been in the advertising/media business for over 40 years, even I have the urge to leave a network because of the consistent commercials, just too many!

I understand the commotion with the cuts and adds of streaming and cable networks. But I truly believe there is an answer. Should an advertiser buy a current cable network or streaming channel show that best fits their demographic appeal? Of course, target marketing to an extreme. Both media and current advertisers should find a fine line that creates a
win-win for each party. Limited commercial breaks and enhanced viewing which can mean a higher ROI and continued network revenue from a loyal customer.