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US TV networks return cash to advertisers 

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The future of advertising is starting to arrive in the US this week and it could be here soon as well. TV networks there are returning cash to advertisers as the impact of digital video recorders start to bite.
US TV networks are facing a ratings decline and the three major networks -- ABC, NBC and CBS -- are compensating advertisers mostly with extra commercial time, while NBC is actually giving cash back. It seems like an anathema and is all down to the growing use of digital video recorders like TiVo.

NBC is reported to have begun reimbursing advertisers for fourth-quarter prime-time ratings shortfalls, averaging about $500,000 per advertiser, marking the first time in years a network has taken such a step because it had already sold much of its available commercial inventory.

It could happen here next, just take a look at the numbers. Last month BSkyB hit a record 14% quarterly growth in subscribers to Sky+, up 323,000 on the previous quarter to 2.7m, and the service is now in almost a third of Sky homes.

That figure will grow again next year as Virgin Media starts pushing its own DVR service although its marketing to customers is generally so poor that most probably don't even know that the service is available (plus it has an onerous installation cost, double that of Sky+).

I'm a big fan of Sky+. It is Television how it was mean to be. And when I say I don't just mean television without the advertising (although it’s a major bonus), but also TV when you want it.

Video on demand is alright and Virgin Media's catalogue of programmes and films is extensive, but it is not necessarily want you actually want to watch. It's not what I want to watch at least, but then I have already gone through the pain of getting rid of my service if not the box (I can not for some reason get Virgin Media to take it away for love nor money; nor indifference and loathing for that matter either).

If you happen to be in and there is something you want to watch it's much more pleasant to go off and do something more useful for ten minutes and then return to the programme and skip through the ads.

Of course, even fast forwarding at x30 you don't miss the messages. You see the logos, recognise the brand trimmings and have taken on a message all the same. Just not all of them and just not in the same way as before.

Everyone knew that the 30 and 60 second broadcast ad spot would have to change and this is only more confirmation of that.

For US networks this problem will be exacerbated next year for other reasons as the writers' strike continues to run and schedules are loaded up with reruns and reality shows. That will have an impact as well on British schedules and some channels will be harder hit than others.
Published Dec 12 2007, 10:05 AM by Gordon Macmillan
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Gordon Macmillan

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