TiVo's Rogers: Embrace Change, Save Ad Base

Ignoring the danger signs of TV advertising dislocation and devaluation--just as early alarms about the current financial crisis were disregarded--will result in a similar implosion threatening at least one-third of industry dollars even after the recession abates.

Parallels between the "television advertising crisis" and the credit crisis are too stark to ignore, says TiVo CEO Tom Rogers, who delivered his stiffest industry warning yet in a speech at the ANA Masters of Marketing conference in Orlando.

Rogers said the advertising and television industries are running out of time to capitalize on--rather than to be victimized by--digital technology, even if it means fast-forwarding past commercials. Today's 25 million DVR homes will grow to as many as 60 million homes with DVR, a medium in which a majority of users across all demographics fast-forward through 50% to 70% of commercials--or more than two-thirds of the households that advertisers care most about reaching, according to TiVo research. Experts estimate that this could eventually take a more than 30% bite out of TV ad spending.



"Our data could not be more clear: Brands that have been around for decades will see significant purchase declines if their television messages fail to get through to consumers in ways they have historically relied," Rogers said in an interview Friday. "This television advertising crisis is going to have a far more severe impact than the recession. The industry will not be able to regain its historic momentum or growth."

An estimated 5% to 10% pullback in television advertising during the recession pales by comparison to a vast majority of television ads not being viewed in 60 million homes. Together, they constitute a devastating double whammy for ad-supported media.

"What do you think that will do to the level of TV spending advertisers will be able to justify?" Rogers said. Television's unique value proposition relies on viewers watching broadcast or cable commercials, regardless of the platform. Rogers estimates that the television industry has about 18 months to figure out an effective defensive response to this "dislocation" to avoid the unhappy fate of the music and newspaper industries.

While some could call Rogers' pleas self-serving, mounting industry statistics and trends make the case for radical changes in the creation, planning, placement and pricing of video advertising. Inevitably, that means understanding, embracing and making the most of interactive connections with consumers to solicit a purchase, detailed marketing data or the mining of an ongoing rapport.

In an effort to stay a step ahead of rapidly changing consumer behavior, and to keep itself relevant to secure its own future, TiVo has transformed from an early recording and time-shifting device to taking the lead on making television and advertising more interactive.

TiVo is partnering with Amazon to allow users to click on product ads or offers appearing alongside regular TV ads and programming. The action takes users directly on screen to Amazon, where they can explore and purchase the products before returning to their viewing at the precise point in the program where they left off. TiVo users also can save intended purchases on Amazon to make them later. The same ads are also featured on TiVo's interface. TiVo now allows customers with broadband-connected units to directly access YouTube videos from their living-room TV sets.

Rogers argues that TiVo's 3 million user base provides a microcosm for testing, evaluating and developing advertiser solutions in an interactive world. For instance, TiVo research shows that addressable, targeted ads are a minimal deterrent to fast-forwarding. Consumers who do not want their video experiences interrupted need to be highly incentivized and motivated to put it on hold for an ad.

In an intensely competitive digital universe, the Alviso, Calif.-based TiVo has been working to expand its distribution by licensing its TV-viewing software to large cable companies, like Comcast and Cox. TiVo also has announced a partnership with Research in Motion to deliver TV content to BlackBerrys, which can be used as long-distance TiVo remotes.

TiVo and other industry players are working overtime to identify and refine methods to catch the eye and attention of viewers to entice them to click on an ad for more information. TiVo measures every second of every live or time-shifted commercial in an effort to provide advertisers with Internet-like accountability and measurability. Such functionality and consumer intelligence should be assisting the television industry in forging its way to interactive glory days.

"The phenomenal set of developments involving consumer engagement can be pro-industry and pro-consumers," Rogers said. Ironically, many in the industry blame TiVo for many of its problems, although the digital revolution now permeates every aspect of our lives. The TV industry needs a serious makeover if it is to remain competitive, in both content delivery and actionable metrics.

Whether you believe Rogers or not, it looks like it's time to TiVo the industry.

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