Life After TiVo, Experts Debate The Next Generation Of Broadband Enabled DVRs

  • by May 25, 2004
Broadband service will be tied into next-generation personal video recorders (PVR), enabling interactivity, increased personalization, and a host of new advertising and direct marketing models, according to experts speaking on a panel at Ad:Tech on Tuesday. The next iteration of PVRs will offer DVD functions (DVD-R) and addressable technology to enable geographic (by ZIP code) and demographic targeting--and TV programming will enter the living room seamlessly, according to Kimber Sterling, director, advertising and research sales for TiVo. Speaking on the panel "The Box Changes Everything: PVRs," Sterling said that some PVRs already offer broadband connectivity. The benefit of the broadband connection is that it can enable real-time lead generation, couch commerce, instant polling (without a cell phone), long- and short-form branded content, and any manner of viral Web promotions.

The broadcast networks, Sterling says, have little choice but to work with cable providers that have already built PVR functions into their set-top boxes and TiVo, to configure new advertising models that can creatively address the 30-second skip function. But ad-skipping continues to haunt advertisers, according to Forrester Research.

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According to research conducted by Forrester and the Association of National Advertisers, when asked "If large numbers of consumers could skip commercials while watching television, which of the following forms of advertising would you spend more on?," advertisers responded that they would spend more on interactive media and new TV formats. For example, 45 percent responded that they would spend more on interactive advertising during programs; 40 percent would embed ads within video-on-demand programming and ads within PVRs' main menu; and 35 percent would spend more on ads within video-on-demand menus.

While these percentages show advertiser willingness to shift dollars into new media ad formats, particularly within the PVR environment, 53 percent of the 55 national advertisers surveyed said they would continue to place advertising emphasis on sponsorship of TV programs or televised sports events, and 51 percent would continue to invest in product placements within TV shows.

Asked "If large numbers of consumers could skip commercials while watching television, which of the following forms of advertising would you spend more on?," 73 percent of the advertisers questioned said they would spend more on Web ads--banners, rich media, and online sponsorships. Radio advertising came in at 56 percent and magazine advertising at 53 percent; search engine marketing programs drew a 53 percent affirmative response. "I think it really shows how open marketers are to shifting dollars into new media," said Charlene Li, principal analyst, devices, media and marketing, Forrester, and the panel's moderator.

"PVRs are simply a new form of advertising, and they need to be an element or extension of the programming that lives within TV," said Allan McLennan, managing partner, Puremac Digital/IP-DTV, an interactive entertainment and media consultancy. He cited data showing that 51 percent of TV is viewed from a recording of some kind, while 49 percent is viewed "live." Among consumers who own PVRs, 64 percent skip commercials, and 20 percent of those households find they're watching more TV since owning a PVR. Interestingly, 80 percent of PVR owners are recording up to 20 programs per week.

Panelist Larry Gerbrandt, formerly an executive with Kagan Media and now an independent consultant, estimated the PVR/DVR (digital video recorder) universe at 3.4 to 3.6 million. He projects that it will hit 5 million by year-end--and "that's when it begins to have an impact on the TV viewing audience and on the economics of TV," he said. The problem for networks, he said, is that they must increase the number of programs that can be watched live such as sports, awards shows, special events, and reality shows such as "American Idol." The TV business makes money from a handful of hit shows such as NBC's "Friends," which can be syndicated; these shows carry the freight for the networks, making up for shows that bomb and high production costs. That's why, Gerbrandt says, the sitcoms, action shows, and dramas are being kicked to the curb in favor of reality programming and magazine "news" shows that are less expensive to produce.

"The real advertising opportunity is creating hot applications from programming," TiVo's Sterling says. TiVo, by year-end, will offer a new tagging technology that will enable advertisers to embed the digital tags in 30-second spots. He showed a test example of the tagging used in Fox's hit show "24" in which a viewer watching the show via live TV can click on an option that will take them--if they choose--into long-form video content. Nissan was the advertiser.

Panelists maintained that PVRs can offer personalized and interactive marketing opportunities, but the process of creating them needs to be standardized and streamlined to make it easier for agency media buyers and planners.

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