It can be said that every time the technological communication environment changes so to does the advertising environment. Advertisers who do not carefully monitor and adapt to the technological communication environment run the risk of losing millions of dollars on inefficient advertising expenditures. The digital video recorder (DVR) is the latest technological innovation to which advertisers must adapt. By easily allowing the viewer to skip commercials the DVR is a device that could have potentially huge implications on advertising creative and placement strategies. The DVR is a clear threat to the advertising industry, but there are some opportunities for advertisers that can be explored because of DVR technology. The opportunities exist through an interdependent relationship between television networks and advertisers in creating a communication environment that is economically beneficial to both entities. The focus of this article is on understanding how and why DVR’s are being used by the audience and examines the potential threats and opportunities that advertisers must be aware of in adapting to this technology.
The technological communication environment of how messages can be distributed and can be retrieved by the audience, and the audience use of these devices are always factors that advertisers must consider in developing their creative and placement strategies. It can be simply stated that every time the technological communication environment changes and causes the mass media use behavior of the audience to change, the advertising industry must also change. Advertisers need to place their messages in locations where they will be noticed by their desired target audience. Advertisers who do not carefully monitor and adapt to the technological communication environment run the risk of losing millions of dollars on inefficient advertising expenditures.
The digital video recorder (DVR) is the latest technological innovation
to which advertisers must adapt. Although DVR penetration was between 4
and 5% of television households in late 2004, Nielsen predicts
penetration could double to 10% by the end of 2005 (McClellan 2004).
The DVR allows users to record and store programming digitally, skip
commercials with a touch of a button, pause live television at any
time, record programming through a digital menu up to one week in
advance, or record the same program every week for an entire season.
All of these features of the DVR provide the audience with more choice
and more control over the television viewing experience. The feature
that advertisers are obviously most concerned with regarding the DVR
technology is that the device allows users to easily skip commercials
by fast-forwarding through them. In fact, a Forrester Research survey
revealed that over 50% of all DVR users said that being able to
fast-forward through commercials was their favorite feature (Fann-Im
2004).
Although the future role
of DVR’s in the economic structure of broadcast and cable television is
uncertain, many of the opinions emerging from industry practitioners
reflect the belief that these commercial-skipping devices have the
potential to alter the existing advertising-supported business model
(Learmonth 2003). Early estimates indicate that the amount of lost
advertising revenue as a result of DVR users skipping commercials alone
will reach $5.5 billion by 2006 (Greenspan 2003). A survey of 121
senior advertising industry executives of the American Advertising
Federation revealed that more than 75% believe the DVR will have a
dramatic impact on the television advertising, leading to continued
growth of nontraditional advertising formats (McClellan 2004). If DVR
usage is to increase as predicted by many industry professionals
(McClellan 2004; Posnack 2004), advertisers have to understand not only
the threats, but the opportunities that are presented by this device.
The purpose of this article is not to suggest that DVR’s will eliminate
the thirty-second commercial, or force a drastic restructuring of the
commercial television system. The focus instead is on understanding how
and why DVR’s are being used by the audience and examine the potential
threats and opportunities that advertisers must be aware of in adapting
to this technology.
Any advertising environment presents both threats and opportunities for advertisers to achieve their communication goals. Advertising communication goals can be parsimoniously stated as reaching a target audience, increasing brand recall, and increasing sales (Fortunato and Dunnam 2004). Developing advertising strategies to achieve these goals centers around two critical factors: (1) understanding the communication vehicles to reach the audience and (2) understanding the use behavior of these mass media vehicles by the audience. All other strategic decisions (i.e., media placement or creative tactics) emanate from an understanding of these two factors.
Theoretical frameworks can provide an understanding of these two critical factors and assist in analyzing the threats and opportunities that are presented to advertisers through audience use of the DVR. The mass media use behavior of the audience and the nature of communication vehicles are constantly changing as new technologies emerge. Ferguson and Perse (2004) point out that the DVR may forever change the way most people watch television. The DVR can change the relationship between the audience and the television medium in how they now experience television as the functions of the device allow for more choice and more control by the viewer. The uses and gratifications literature helps explain the relationship between the audience and their media use by focusing on concepts of an active audience’s choice and control. This new television viewing experience caused by the DVR should alter the relationship between television networks and advertisers who are counting on the viewing behavior of that audience to sustain their respective businesses. Media dependency literature helps explain the relationship between television networks and advertisers by focusing on the economic needs and interactions between these two entities
Media use can be a purposeful behavior on the part of the individual audience member as indicated in the uses and gratifications literature (Blumler and Katz 1974; Rosengren, Wenner, and Palmgreen 1985). This purposeful behavior is based on an expectation of the audience member that his or her needs will be satisfied as they have been in previous experiences with that medium and/or the content that was provided. In their seminal uses and gratifications work, Katz, Blumler, and Gurevitch (1974) claim that uses and gratifications “simply represents an attempt to explain something of the way in which individuals use communications, among other resources in the environment, to satisfy their needs, and to achieve their goals” (p. 21). More recently, Rubin (2002) explains that from the uses and gratifications perspective, “communication behavior is largely goal directed and purposive. People typically choose to participate and select media or messages from a variety of communication alternatives in response to their expectations and desires” (p. 528-529).
The
most notable characteristic of the uses and gratifications perspective
is that of an active audience. Hunt and Ruben (1993) describe the uses
and gratifications approach as a general perspective rather than a
specific theory, claiming “it represents an attempt to understand
audience members as active information consumers, and to place the
emphasis not on what media do to people, but rather what people do with
the media” (p. 83). In this media use the active audience is behaving
as people who are volunteering to participate and selecting where they
participate is the determination of the audience member themselves with
this behavior motivated by their own needs, values, beliefs, and goals
(Levy and Windahl 1985; Lin 1993).
The active audience in selecting media according to the uses and
gratifications perspective is applicable to implementation of the DVR
because it signifies choice and control over the television experience.
The DVR provides choice and control over when to experience specific
programming and how the medium of television can be used to improve the
overall individual experience with that medium. Ferguson and Perse
(2004) claim DVR owners watch both live and recorded television with
more enjoyment and greater control. Viewers using the DVR can have a
different level of satisfaction than non-users causing them to always
use the device and its features. If one of the primary functions that
viewers consistently find satisfying is skipping commercials (Fann-Im
2004; McClellan 2004; Posnack 2004), any increased use of the DVR
becomes problematic for advertisers.
One of the ways that the DVR could increase the satisfaction of
experiencing the television medium is through the element of time. By
skipping commercials viewers are not “stuck” for an hour to watch a
program and by watching it faster they could then move on to other
activities or experience more television content in the same amount of
time. The time spent with a medium and how it relates to audience
behavior and the overall experience with a medium has been examined in
uses and gratifications research. The element of time relates to the
leisure time that people have available to experience the medium. Gantz
and Zohoori (1982) claim that accommodation to television changes may
be a function of two factors: (1) type of time and activity involved
and (2) television content and gratifications associated with it. The
element of time deals with the opportunity for media use and is
separated into what they refer to as “non-disposable time for required
activities such as work or sleep vs. disposable time for leisure
activities such as watching TV” (p. 265). They summarize their position
claiming:
The likelihood of accommodation for television is maximized when it involves the rearrangement of leisure activities during disposable time for content sought out and uniquely associated with desired gratifications. The likelihood of accommodation for television is minimized when it involves the rearrangement of non-leisure activities during non-disposable time for content of little interest or value to the viewer (p. 265). |
Accommodation
of media use behavior to the other activities and responsibilities that
people have to perform in their daily lives cannot be overlooked. As
indicated by Gantz and Zohoori (1982), the amount of leisure time
available is clearly a factor in how the television medium can be
experienced. The amount of leisure time increases if an hour-long
television program can be viewed in half that time. Thus, if the
audience is receiving gratifications from using the DVR to skip
commercials by having to spend less time with the television medium and
allowing for more flexible time choices, a threat to the economic
system of advertising supported media is potentially being created.
Media Dependency
While the uses and gratifications perspective helps explain the relationship between the individual and the television medium, the media dependency theoretical model helps explain the relationship between the television and advertising industries. A dependency on the mass media can develop and exist on both an individual and organizational level (Ball-Rokeach and DeFleur 1976, 1986). Ball-Rokeach and DeFleur (1976) define dependency as a “relationship in which the satisfaction of needs or the attainment of goals by one party is contingent upon the resources of another party” (p. 6). Dependency exists on an individual level through a reliance and satisfaction of needs by mass media use. The consistent dependency on the mass media to satisfy needs makes participation by the audience in the media more likely. The need for information, entertainment, and social uses are among these needs that create an individual dependency on the work of mass media organizations. The stronger the individual media dependency, the greater the likelihood of media use. It is the individual dependency to use the media to satisfy needs that relates to the uses and gratifications active audience characteristic.
On an organizational level, dependency exists for advertisers who need the mass media as the vehicle to reach an audience. Advertisers need to know the media behavior of their target audience in developing their placement strategies. Once customer media use behavior can be ascertained, advertising placement strategies can be better formulated. Reaching potential customers has always been the primary concern for advertisers. McAlliser (1996) claims that “advertisers know that the first necessary (but not sufficient) condition for persuading a potential customer to buy a product is to force the consumer to notice the message. If the consumer does not see the ad or ignores the ad, then the advertiser’s message is wasted” (p. 18).
Being noticed is merely the first important step toward trying to achieve the desired behavior (i.e., sales, voting) being put forth by the advertiser. Advertising is an important function because the audience gets the idea that advertised products are better than their competitors. Sutherland and Galloway (1981) state, “products that are advertised heavily have a status conferred upon them – they are felt by customers to be ‘the more popular’ products. The media are assumed to carry that which is more important, more in demand, more notorious. Just as ‘the ordinary person’ does not appear on TV, neither does ‘the ordinary product'” (p. 27). They conclude, “advertising (media prominence) functions as a significant cue to the customer in judging what is and is not acceptable and popular with others” (p. 28). This is especially important for the first time making a purchase decision about which brand to select in an unfamiliar product category.
The
primary threat of the DVR is, therefore, that the device simply has the
potential to hinder the advertised message being noticed. Technology
and the multitude of media vehicles have made viewing and noticing
television advertising more difficult. Commercial television has also
been acknowledged in research to be the most intrusive advertising
format for consumers (Elliot and Speck 1998). Studies indicate that the
public’s perception of the level of advertising clutter in various
mediums is not consistent with the actual level that is present. For
instance, television, which has less than 25% of total airtime in ads,
is perceived by 80% of the population as having too much advertising.
Conversely, the Yellow Pages, which is 100% advertising, is only
perceived by eight percent of the population as having too many
advertisements (Elliot and Speck 1998). The significance of this is the
relationship between perception and how each medium is consumed. The
Yellow Pages offers individuals not only a voluntary opportunity to
view advertisements, but a method of choice and control to easily seek
out the exact information they are looking for. Television advertising
on the other hand, due to its involuntary nature when viewing
programming, is considered to be the most disruptive (Elliot and Speck
1998). As the advertisements on television continue to interrupt the
flow of the desired communication, the person watching could be more
likely to develop a negative perception about the advertisements
themselves or that form of advertising in general.
What is helpful to advertisers in terms of the economic communication
environment is that mass media organizations also need advertisers for
revenue. Mass media organizations have to work with advertisers to
create an environment economically beneficial to both the mass media
organization and the advertiser. This coordination between advertisers
and media organizations is not difficult as it is in the interest of
both entities to create a system and establish relationships that would
be successful for both. Meehan (1993) claims that “media firms and
their agents must also develop increasingly sophisticated techniques of
selling advertising-desirable audiences” (p. 387). Ball-Rokeach and
DeFleur (1986) simply point out “the economic system could not operate
effectively if the media did not provide massive advertising links
between producers, distributors, and consumers” (p. 82).
In terms of the media economic system, any dependency relationship can
thus be better characterized as interdependent with advertisers needing
the mass media vehicle for exposure of their products to the audience
and television networks needing advertisers as their only source of
revenue. Grant, Guthrie, and Ball-Rokeach (1991) summarize the
relationship between broadcasters, merchandisers, and the public
stating:
Commercial broadcasting in the United States has been built on dependency relationships between broadcasters and merchandisers. In this system television programs are produced to attract large audiences, with merchandisers buying access to those audiences so they can air advertisements designed to entice viewers into buying their products. Broadcasters depend on the proceeds from the advertising sales to produce their shows. Merchandisers depend on television to reach consumers (p. 773). |
With the threat of a more gratifying television viewing experience through the use of the DVR to skip commercials, the purpose of this article is to explain how and why DVR’s are being used, and more importantly to examine the threats and opportunities that advertisers must be aware of in coping with this technology. An application of the uses and gratifications and media dependency theoretical models to the functions of the DVR allows for some philosophical ideas of how advertisers can address technology to be formulated.
In
terms of the overall advertising industry challenge to have advertising
noticed, Blake Calloway, media planning supervisor for Lopez Negrete
Communications, describes the DVR as simply another fragmenting
technology that gives consumers more choice and more control (personal
communication, February 10, 2005). While the general dilemma of coping
with technology and trying to attract audience attention might be a
problem that advertisers have confronted before, the features of the
DVR do create a new set of challenges to advertisers. The DVR allows
users to record and store programming digitally, skip commercials with
a touch of a button, pause live television at any time, record
programming through a digital menu up to one week in advance, or record
the same program every week for an entire season. All of these features
give the viewer much more choice and more control in their television
experience. This choice and control could lead to a more gratifying
experience with the television medium.
For advertisers the concern of easily skipping commercials is obviously
paramount. The DVR is not the first time that advertisers have had to
confront the issue of skipping commercials. The technological
innovation of the DVR is most similar to the video cassette recorder
(VCR). From an advertising perspective the VCR created the same problem
by enabling consumers to record programming and skip over commercials.
The simplicity of the DVR’s operation coupled with its ability to store
programming like a computer, have led many to consider it something of
“a souped-up VCR” (Allan 2003). Atkin, Jeffres, and Neuendorf (1998)
explain that similar media may serve similar needs and replacing the
time spent with traditional media could occur if the new technology is
perceived to have an advantage over previous technology. Therefore, the
DVR with its enhanced features, along with the DVD, means completely
replacing the VCR is probable. Communication technology is only an
issue if the audience deems the equipment valuable. If the VCR or DVR
did not make the television experience more gratifying for the viewer,
their impact would be nominal and limited use irrelevant.
Where the DVR has an unquestioned advantage over the VCR is in its
flexible time-shifting capabilities. Shifting of television programming
to a time convenient for the viewer is another important feature of the
DVR (Ferguson and Perse 2004; Posnack 2004). Time-shifting can be
defined in its most general sense as watching a television program at a
time other then when it was originally provided by the network. With
the DVR’s ability to watch and record a program at the same time,
time-shifting could be as limited as beginning to watch a program only
a few minutes after its actual start time on the network.
The combination of the time-shifting feature and the ability to skip commercials are creating duel problems for advertisers in trying to get their commercials noticed. Posnack (2004) claims that up to 80% of all prime-time programming in DVR households is recorded and viewed later and that when viewing time-shifted programming, DVR users skip 65-75% of all commercials. Mandese (2004a) reports a Starcom study which revealed that “an average of 53 percent of TV commercials are skipped in DVR households, but the ad zapping is much higher, 77 percent, for the portion of programming they view on a recorded basis” (p. 27). A joint tracking study by Starcom Media Vest Group and DVR pioneer TiVo revealed that less than 50% of all subscribers viewed the commercials of such top rated shows, such as “CSI: Miami,” “American Idol,” and “Friends” (Chunovic 2003). By using these two features of the DVR people are doing more than skipping commercials, they are changing the entire way they watch television and the economic implications for advertisers and television networks are immense.
Because
of its capabilities the DVR has to be characterized as a threat to the
advertising industry and something that advertisers have to address.
From an advertising perspective the biggest threat is obviously that
the audience members receive gratifications in their television
experience by not viewing commercials. A CBS survey revealed that 75%
of DVR users said they fast-forward commercials (McClellan 2004). In a
Forrester Research survey, over 50% of all DVR users said that being
able to fast-forward through commercials was their favorite feature
(Fann-Im 2004). The DVR features threaten the primary desire and
necessity of advertisers, having their message noticed. Advertisers
like the one-stop shopping that network television once provided. The
current media environment for advertisers is problematic in that the
DVR technology allowing the audience to easily skip commercials is
compounded with already declining ratings on network television and
advertisers being asked to pay more money to reach a smaller audience.
With so many mass media options, television ratings have been on the
decline in comparison to previous generations. For example, the number
one prime-time entertainment show for the 2003-04 season, CSI, had an
average rating of 15.9, while the top program in 1983-84, Dallas, had
an average rating of 25.7, and the top show in 1963-64, The Beverly
Hillbillies, had an average rating of 39.1. As recently as the
mid-1980’s, large advertisers such as General Motors, Proctor and
Gamble, and Coca-Cola could count on reaching 40% of the population
with a prime-time television presence. However, with the continued
fragmentation in the media, the best advertisers can hope to reach
today is only 15% of the prime-time market (Foust and Grow 2004). When
opportunities to reach a large audience are available, advertisers
continue to put up the money. Advertisers paid an average $2.4 million
for each thirty-second commercial spot during the 2005 Super Bowl
(Mandese 2005) because they know a large audience will be viewing.
Advertisers also pay an average $658,333 and $620,000 respectively for
a thirty-second commercial on the Wednesday and Tuesday telecasts of
American Idol (Atkinson 2004).
Although giving consumers more media choices has resulted in lower
ratings for the television networks, it certainly has not come at the
cost of advertising revenue. Despite losing 30% of their prime-time
viewers in the last decade, the network’s per-viewer rate charged to
advertisers had gone up 110% (Woolley 2003). For the 2003-04 prime-time
season, the average thirty-second commercial cost $126,674, up 9.4%
from the 2002-03 season (Linnett 2003).
With the current environment of declining television ratings, yet still
increasing advertising fees, television networks are not as concerned
as advertisers. Even with the ownership of DVR’s expected climb, some
network executives dismiss the overall impact as minimal at best. David
Poltrack, CBS executive vice president, research and planning,
estimates that when DVR penetration hits the 20% mark it will result in
a five percent loss in commercial viewing, while a 75% penetration will
only cause a 20% reduction (McClellan 2003). If advertisers continue to
write big checks like they did in 2003, the networks appear to be
content with these losses. Alan Wurtzel, NBC research head stated that,
“until you can find an alternative that’s better, they (advertisers)
really will have no choice” (Woolley 2003). Networks can claim that
DVR’s will have only minimal effects on commercial television, but that
claim may begin to ring hollow if advertisers want to be compensated
for the loss in viewers. If, as TiVo suggests, only 39% of their
viewers watch the commercials during “Friends,” advertisers could argue
that the $2 million dollar price tag during the finale should drop to
$780,000 for that segment of the audience.
There are some conflicting opinions as to the impact of the DVR on the
future of the thirty-second commercial. In a 2004 survey of 121 senior
advertising industry executives of the American Advertising Federation,
21% reported that the DVR might kill off the thirty-second commercial,
up from 13% in 2003 (McClellan 2004). The same survey had 55% holding
that the thirty-second commercial will remain as the foundation of the
television advertising industry, however supported by other alternative
marketing strategies including product placement, sponsorship, and
online opportunities (McClellan 2004). Adam Troyak, senior strategist
for the integration group at GSD&M Advertising, claims the
thirty-second commercial is not going to die and it will remain part of
the overall marketing mix, but points out that “traditional advertising
might now be used more to drive people online for longer form content”
(personal communication, January 7, 2005). Don Cole, executive vice
president for Fletcher Martin Ewing Advertising, however, predicts “the
DVR will rock the marketing and advertising industry to the core. The
mighty thirty-second spot, our industry standard, will die a slow
death. Its utility will diminish greatly over the next five years, and
will be a minimal part of the mix ten years from now” (Cole 2004).
DVR Opportunities
There
are some opinions that because of its features the DVR provides
beneficial opportunities for the advertising industry. Mandese (2004b)
reports that “DVR’s actually enhance the overall TV viewing experience,
including advertising, making viewers far more ‘satisfied’ with
television, including its advertising” (p. 35). Mitch Oscar, executive
vice president of Carat Digital and the executive managing
director/editor for the Association of National Advertisers’ enhanced
television initiative, comments, “if people are fast-forwarding through
commercials, then they are concentrating on them, particularly on when
a program might start” (cited in Mandese 2004b). Oscar adds, “they’re
looking at your video. They might not be seeing every frame of it, but
they have a sense that a brand or a commercial is running. And if
they’re interested enough in what they see, they will stop, rewind and
play it back” (cited in Mandese 2004b).
The two features of people at least seeing the commercial even if
fast-forwarding and having the feature to playback the advertisement
were highlighted as opportunities by industry professionals. These
features put more of an emphasis on the creative, visual components of
the advertisement. Andy Hunter, strategy director for the integration
group at GSD&M Advertising, describes the DVR as “a wake-up call
helping the process along to look more closely how advertisers
communicate creatively” (personal communication, January 7, 2005). Adam
Troyak, senior strategist for the integration group at GSD&M
Advertising, claims there is now more emphasis on the creative aspects
and that “clever commercials will get stopped and replayed” (personal
communication, January 7, 2005). In posing the simple question of “how
do you make advertising interesting enough so people watch?” Martin
Rubinstein, group account director for Lopez Negrete Communications,
points out that visually attractive commercials will be noticed, even
if fast-forwarding (personal communication, February 9, 2005). Blake
Calloway, media planning supervisor for Lopez Negrete Communications,
says the bar has been raised for people on the creative side of the
advertising industry and that the features of the DVR can be used as an
advantage in people watching commercials repeatedly and even storing
the advertisements claiming, “people want to capture entertaining
content” (personal communication, February 10, 2005).
The simplicity of the DVR device in time-shifting programs could also
be an advantage if people are recording shows during times when there
was no opportunity to view the program at its scheduled broadcast time.
Because these shows are being recorded the advertisers now have an
opportunity to be seen, when without the recording option there was no
opportunity for the viewer to see the commercial. Calloway points out
that when a person is not available to be in front of the television
they were going to miss the program and all of those advertisements
anyway, with the simplicity of the DVR recording the show the
advertisements now have a chance to be seen.
Even with these potential advantages of the DVR for advertisers, the
system of an audience skipping commercials is not the ideal scenario
for advertisers. Better opportunities might exist for advertisers
through the leveraging of their interdependent relationship with
television networks in potentially creating a media environment that
helps facilitate their brands being noticed. Despite a decline in
ratings and a potential increase in DVR use, advertising opportunities
exist in that television networks desperately need them as a revenue
source. Advertisers have opportunities because of the fact that they
are the sole revenue source for broadcast television (although it is
important to note that some cable television networks receive
subscription fees in addition to advertising revenue). Advertisers
should be examining their options or continue paying more money for
less of an audience.
Some evidence of this interdependent relationship and the television
networks understanding that they must work with the advertising
industry or risk losing their revenue source is evident in sponsorship
and product placement strategies. People might change channels during
commercials or use the DVR to skip commercials, but it can be logically
concluded that if they tuned in to watch a television program they
virtually cannot escape certain brand name exposure. Advertisers can
simply try to receive the necessary brand exposure within the context
of these programs when the audience is watching. McAllister (1998)
claims that, “from the sponsors’ point of view, advertisers have been
continually frustrated with the viewer’s ability to “zap” ads, with the
fragmentation of the media audience, and with the high cost of spot
advertising in different media, and they have turned to sponsorship as
a corrective to these problems” (p. 359). He makes a distinction
between sponsorship and spot advertising or buying a single commercial
within a program. He defines sponsorship as “the funding of an entire
event, group, broadcast or place by one commercial interest in exchange
for large amounts and special types of promotion connected with the
sponsored activity” (p. 358).
For similar reasons of a diminished television audience and the ability
to easily avoid commercials, product placement strategies of exposing
the brand during the context of a program are also being utilized. Les
Moonves, chairman and chief executive of CBS, describes product
placement initiatives as the future, stating “there’s going to be much
more product placement. We did it with Survivor, obviously. They’re
doing it with American Idol. I saw Minority Report, Steven Spielberg’s
movie — that had more product placement than any TV show I’ve ever
seen” (cited in Gay 2003). Moonves adds, “you’re going to see cars
incorporated into shows, and instead of Ray Romano, sitting there with
a can of nondescript soda, he’ll be drinking a Diet Pepsi. That is
going to happen” (cited in Gay 2003).
Advertisers simply move to sponsorship and product placement to put
their brand name in a position where it is virtually impossible to be
ignored. Corporations make the investment into sponsorship and product
placement just like traditional commercial advertising strategies
because there is the perceived and expected return on the investment.
With the increase of DVR technology, media diversification, and the
audience having multiple media options, all indications are that in the
future sponsorship will continue to be part of the strategic
communication plan of many corporations (Miyazaki and Morgan 2001;
Parmar 2002).
Sponsorship and product placement strategies are emblematic of
television networks and advertisers working together to create an
environment that assists both entities. The key advantageous
characteristic for a corporation in utilizing sponsorship as a
communication strategy to reach its audience is the ability to
negotiate with the mass media organization and leverage the agreement
to further benefit both the media property and the sponsoring
corporation (Fortunato and Dunnam 2004). Much like sponsorship
strategies, negotiation is pivotal in product placement. It can be
negotiated how the brand is seen, or whether the brand get mentioned by
any of the characters. In these negotiations, television networks do,
however, still force some conditions to advertisers. For example, to
become a sponsor of a television program an advertiser might have to
make a commitment to buy commercial time during the program. The
forcing of sponsors to buy commercial time helps the television network
sell a substantial portion of the commercial inventory for that
broadcast and allows it to increase the price of the remaining
commercial spots as the supply has been limited for a media location
that might have strong demand. In speaking of the record advertising
rates for a thirty-second commercial for a weekly program, Atkinson
(2004) points out that a “reason for the dominance of American Idol is
that it has sponsorship deals that guarantee airtime to those
marketers, limiting the number of spots sold in the open market” (p.
77).
Moves toward sponsorship and product placement do not, however, mean
the end of the broadcast commercial spot or print media purchase. While
having the advantage of brand product exposure within the context of
the program, there are potentially two major disadvantages to these
sponsorship and product placement strategies. The first disadvantage is
if the brand will be noticed as people could be so engrossed in the
plot of the program that they did not notice that it was a Coca-Cola
that the actor or actress was drinking. If possible, this problem could
be solved by having the brand constantly seen or the character
repeatedly state the name of the brand so it is noticed. The film
Castaway with Tom Hanks is one example where Federal Express and Wilson
made their brand names such a prominent part of the movie that it was
virtually impossible for the audience not to notice the product
placement and recall the brand.
The second disadvantage is that the advertiser often cannot talk about
the features of the brand through product placement or sponsorship. For
example, people could see the Lexus automobile in a movie, but learn
nothing about the product. It is the thirty-second commercial, magazine
advertisement, or Internet communication that explains the features of
the Lexus brand. Therefore, sponsorship and product placement
strategies are often used in conjunction with the purchase of
commercial time. In this scenario, however, with DVR use allowing
commercials to be skipped, the outcome could be some brand recall, but
still would not allow for any of the brand’s features to be
communicated to the audience.
Brad Aronson, executive vise president for Avenue A / Razorfish
Advertising, comments that consumers getting greater control over
advertising is “leading to the exploration of more integrated
sponsorships and product placements for broadcast and a look at
alternative advertising vehicles that allow for more impact amidst both
consumer control and clutter” (personal communication, February 7,
2005). The movement to product placement and sponsorship according to
Andy Hunter, strategy director for the integration group at GSD&M
Advertising, illuminates the need for “many touch points for the brand
with the consumer” (personal communication, January 7, 2005).
The DVR might also bring about movements to some alternative media
placement options rather than the traditional thirty-second,
over-the-air commercial. Martin Rubinstein, group account director for
Lopez Negrete Communications, believes that cable television still
remains a viable option as the content is very niche oriented and this
niche audience can be as interested in the niche advertisements on a
network such as the Food Channel as they are in the actual program
content. Don Cole, executive vice president for Fletcher Martin Ewing
Advertising, points out that radio is still a wonderful placement
option as part of the marketing mix especially for local and regional
advertisers (Cole 2004).
Another opportunity where television networks might be willing to
capitulate to advertisers is in facilitating driving the audience to an
Internet site. This would allow the placement opportunities to co-exist
with the creative opportunities of longer-form content that exist
through the Internet. Perhaps television networks will permit
advertisers to utilize the bottom corner of the screen during
programming to not only display a brand name and logo or slogan, but
also an Internet site address. Once at the site, both the company and
the consumer are not restrained by a thirty-second format and all of
the brand features can be provided and explained. There have been
instances where Internet advertising has been extremely effective.
Prominent examples, such as BMW Films or Reebok’s Terry Tate long form
advertisements, focused on pulling consumers into an Internet site with
content rather than pushing them to it with other Internet site banner
style advertising. The 2001 BMW Films series was specifically designed
to appeal to a younger audience by producing short on-line action
“mini-movies” featuring the cars. The campaign drew more than 13
million people to the Internet site, the favorability of the brand
among the target skyrocketed, and BMW sales rose 12.5% in a year in
which they had no new product releases (Olsen 2002).
The activity of visiting the Internet site is also consumer behavior
driven and can easily be monitored by the advertiser. Both the DVR and
the Internet also provide critical opportunities to learn about
consumers and their media use patterns. Johnson (2004) reports that the
DVR can provide valuable information about the audience member to an
advertiser, including “when viewers watch a personally selected
program, how long they watch, whether they keep it and watch it again,
even when and where they pause, fast-forward and rewind it” (p. 12). He
adds, “with time-shifted recordings allowing viewers to watch on their
own schedule, advertisers can learn customized viewing habits and break
out of the sitcom-on-at-8-p.m. world. The additional abilities to save
recordings, watch programs multiple times, set up series and delete
recordings all betray preferences and offer additional targeting
opportunities” (p. 12). Johnson (2004) simply contends, “continuing to
ignore DVR-specific data or worse, stubbornly adhering to outdated
broadcast models means throwing away an advertising gold mine” (p. 12).
The
advertising industry always has to understand the communication
vehicles to reach an audience and the use behavior of these mass media
vehicles by the audience.
As the technological communication
environment changes and causes the mass media use behavior of the
audience to change, so to must the advertising environment. Advertisers
have to adapt to any new technological communication innovations used
by the audience. Advertisers are always reacting to the audience and as
the audience moves to different media locations, advertisers must
recognize this and move with them. Advertising placement has to be in
the locations where their potential customers participate and can be
exposed to the message. The entire sales process breaks down without
exposure and consumer knowledge that the brand exists and knowledge of
the brand features. For corporations, to not adapt is to risk losing
millions of dollars on
inefficient advertising expenditures.
The DVR is the latest technological innovation to which advertisers must adapt. The changes brought about by the DVR clearly present a threat for advertisers with the audience having a device that can easily skip commercials. The skipping of commercials combined with the simplicity of the DVR and its ability to easily time-shift programming to when it is convenient for the viewer provides them with more choice, more control, and an overall more gratifying television experience. A theoretical application can be made to better explain the threats and opportunities that the DVR technology presents to the advertising industry. Uses and gratifications literature illustrates a threat on an individual level as the audience might have a better experience with the television medium if they can time-shift program viewing and skip advertisements.
The threat from the DVR or any other change in the communication technological environment is only fulfilled if there is no action by advertisers. The biggest threat for advertisers is to accept the status quo in their relationship with television networks and not recognize the flaw of the current system; to continue paying more money for commercials and receive a declining television audience. The media dependency theoretical model illustrates an opportunity for advertisers to leverage their relationship with television networks as these networks have to accommodate advertisers because they too are dependent on them as their source of revenue. Advertisers should not continue down this economic path as the threat is not necessarily the DVR, or any other future technological advancement, but advertisers failure to adapt to a changing environment.
The changes brought about by the DVR could present an opportunity for advertisers to re-think their relationship with broadcast television networks and re-examine what these networks might be willing to do to facilitate their relationship with advertisers in helping create an environment that economically benefits both industries. After all, broadcast networks must be somewhat accommodating to their only revenue source. The specific opportunities through the strategies of product placement and sponsorship are already being practiced. Both of these strategies, however, do have flaws of the brand being noticed and not being able to explain the features of the brand to the audience. The real opportunity for advertisers could be to use their leverage in an interdependent relationship with television networks. For example, advertisers could convince television networks to allow the advertisers to use the bottom corner of the screen during television programming to not only display a brand name and logo or slogan, but also an Internet site address where the advertiser has unlimited time to creatively, and in a longer form, explain the features of the brand.
There are important opportunities for future research to study the many
aspects of advertising relating to television and DVR technology. In
specifically researching the use of DVR technology analysis of the type
of programming that is being time-shifted is important. Perhaps there
are certain programming genres that become time sensitive because of
the social, interpersonal communication components that result from the
shared experience of viewing at the same time. For example, sports and
some reality television programs become topics of conversation and
analysis in social settings immediately after their airing. To watch
those types of programs in a time-shifted nature, especially if not on
the same day, make it difficult to participate in the social aspect and
potential gratifications associated with viewing that program. In
addition to the type of programming, studying the viewer and if there
are demographic variables that can be learned about who is using the
DVR can be important. Advertisers could recognize these trends and
adjust their placement strategies accordingly.
The DVR changes the relationship between the audience and the
television medium through the leisure time element and the amount of
time they can participate in that medium or any other activity they
desire. With the DVR, an hour-long program can be viewed at a time
other than when it was originally scheduled and can be viewed in half
the time. It would be important to learn if in this “additional”
leisure time people are watching more content or engaging in other
leisure time activities. If they are watching more content the
opportunity to reach people through the television medium remains. It
is then perhaps a matter of shifting strategies to more widespread
product placement and sponsorship to reach an audience (assuming they
are still using the DVR to continue to skip commercials during the
additional programming content they are now consuming). If they are
continuing to use the television medium, understanding creative
approaches that resonate with the audience can also be analyzed. In
this vein, studies on the issue of message framing could be
incorporated into advertising scenarios. The measurability of viewing
and skipping patterns of the DVR technology offers a unique opportunity
to understand the content that people really want to see. If people are
using their “additional” leisure time away from television, or the mass
media altogether, any dependency on those vehicles is disappearing. A
dependency on the part of advertisers for some communication vehicle
does, however, remain for brand exposure to the audience. The challenge
is thus not only knowledge of mass media behavior, but a more detailed
social behavior of the audience as well.
A prominent aspect that is revealed through some of the studies of DVR
use is that people like the choice and control of the viewing
experience that is provided with the technology. Because television
networks will continue to have a dependency on advertisers for revenue,
perhaps, advertisers can work with the networks to create a system
where people can choose the type of product advertisements that they
are going to see during a program. Advertisers have tried to create a
product match with many variables (demographic, psychographic, etc.) of
the viewer through their placement strategies, but the dynamics of the
relationship between the viewer and the advertiser could change if the
viewer is creating the link. If people were to be able to choose and
control the advertisements they could see, viewing commercials could
become a gratifying experience of television. An example of this
dynamic can be demonstrated in studies of Internet advertising
effectiveness and the difference when people are exposed to a pop-up
advertisement that was essentially sent to them outside of their
control or when choosing on their own to click on an advertisement link
for a product.
If the activity of skipping commercials becomes pervasive, the media
economic system might be breaking down (especially if advertisers no
longer capitulate to a system where they are asked to pay more for a
decreasing audience). The potential ability of DVR’s to “kill
commercial television” by creating an easy option for consumers to skip
commercials does exist. It is important, however, to keep in mind both
the framework of the current economic system, as well as the
thirty-second commercial’s ability to survive other innovations before
making such dramatic statements. The DVR is merely the latest
development emblematic of a system where advertisers have to consider
technology and audience media use in their creative and placement
strategies. Consumers have been able to skip advertisements since the
inception of broadcast television. Whether it has been the bathroom,
the refrigerator, the remote control, or the VCR, the voluntary nature
of advertising supported content has always given viewers the choice to
opt out. However, the ability to skip commercials has never been this
easy and for advertisers to simply ignore this threat would be a
potentially grave mistake. The challenge to advertisers is figuring out
new and effective ways to communicate with people in the manner that
the people welcome. More important than any one specific strategy,
advertisers should have a philosophical approach to monitoring and
adapting to the communication technological environment. Understanding
the DVR or any new technology and the impact it can have on commercial
television is a complicated hurdle, but one that advertisers must
overcome.
Allan, Roger (2003), “The TiVo Box Redefines Television Viewing as it Creates a New TV Viewer Lifestyle,” Electronic Design, 51 (3), 41-46.
Atkin, David J., Leo W. Jeffres, and Kimberly Neuendorf (1998),
“Understanding Internet Adoption as Telecommunications Behavior,” Journal of Broadcasting & Electronic Media, 42, 475-490.
Atkinson, Claire (2004, September 27), “‘Idol’ Tops TV Price Chart,” Advertising Age, 1, 77.
Ball-Rokeach, Sandra J. and Melvin DeFleur (1976), “A Dependency Model of Mass-media Effects,” Communication Research, 3 (1), 3-21.
— and— (1986), “The Interdependence of the Media and Other Social Systems,” in the Inter/Media: Interpersonal Communication in a Media World, G. Gumpert and R. Cathcart, eds., (3rd), NY: Oxford University Press, 81-96.
Blumler, Jay G. and Elihu Katz, eds., (1974), The Uses of Mass Communication: Current Perspectives on Gratifications Research, Newbury Park, CA: Sage.
Chunovic, Louis (2003), “TiVo System Tip of Iceberg,” Television Week, 22 (23), 14-15.
Cole, Don (2004), “The TiVo Revolution: Are You Ready?,” Fletcher Martin Ewing White Paper.
Elliot, Michael and Paul Speck (1998), “Consumer Perceptions of Advertising Clutter and Its Impact Across Various Media,” Journal of Advertising Research, January/February, 29-41.
Fann-Im, Nancy (2004), “PVR’s and Ads: Peaceful Coexistence?” Shoot, 44 (15), 19.
Ferguson, Douglas A. and Elizabeth M. Perse (2004), “Audience Satisfaction among TiVo and ReplayTV Users,” Journal of Interactive Advertising, 4 (2), <http://www.jiad.org/vol4/no2/ferguson> (accessed on 8/22/2004).
Fortunato, John A. and Angela E. Dunnam (2004), “The Negotiation Philosophy for Corporate Sponsorship of Sports Properties,” in the Sharing Best Practices in Sports Marketing: The Sports Marketing Association’s Inaugural Book of Papers, B.G. Pitts, ed., Morgantown, WV: Fitness Information Technology, Inc, 73-86.
Foust, Dean and Brian Grow (2004), “Coke: Wooing the TiVo Generation,” Business Week, Issue 3872, 77-78.
Gantz, Walter and Ari R. Zohoori (1982), “The Impact of Television Schedule Changes on Audience Behavior,” Journalism Quarterly, 59, 265-272.
Gay, Jason (2003, May 19), “At CBS, Les is More,” New York Observer, 1.
Grant, August E., K. Kendall Guthrie, and Sandra J. Ball-Rokeach (1991), “Television Shopping: A Media System Dependency Perspective,” Communication Research, 18 (6), 773-798.
Greenspan, Robyn (2003), “Remote Power: Can PVR’s Kill TV Spots?” <http://www.clickz.com/stats/big_picture/geographics/article.php/3080851> (accessed on 12/12/2003).
Hunt, Todd and Brent D. Ruben (1993), Mass Communication: Producers and Consumers. NY: Harper Collins.
Johnson, Stephen (2004, June 26), “DVR’s Offer a Gold Mine of Data for Advertisers,” Television Week, 12.
Katz, Elihu, Jay G. Blumler, and Michael Gurevitch (1974), “Utilization of Mass Communication by the Individual,” in The Uses of Mass Communication, J. Blumler and E. Katz, eds., Beverly Hills: Sage, 19-32.
Learmonth, Michael (2003), “The Attack of TiVo,” Folio: The Magazine for Magazine Management, 32 (2), 30-31.
Levy, Mark R. and Swen Windahl (1985), “The Concept of Audience,” Media Gratifications Research: Current Perspectives, K.E. Rosengren, L.A. Wenner and P. Palmgreen, eds., Beverly Hills, CA: Sage, 109-122.
Lin, Carolyn A. (1993), “Modeling the Gratification-seeking Process of Television Viewing,” Human Communication Research, 20 (2), 224-244.
Linnett, Richard (2003, September 15), “‘Friends’ Tops TV Price Chart,” Advertising Age, 74 (37), 1, 46.
Mandese, Joe (2004a, March 15), “Facing the DVR’s Future,” Television Week, 27.
— (2004b, June 7), “Study Says DVR’s, Ads Can Co-Exist,” Television Week, 35.
— (2005, January 31), “Big Ticket; Why a Commercial During the Super Bowl is Worth an Unprecedented $80,000 a Second,” Broadcasting & Cable, 14.
McAlliser, Matthew P. (1996), The Commercialization of American Culture, Thousand Oaks, CA: Sage.
McClellan, Steve (2003), “And Another Thing About Those PVR’s,” Broadcasting and Cable, Vol. 133 (16), 20.
— (2004, November 29), “It’s Inescapable: DVR’s Here to Stay,” Television Week, 17.
Meehan, Eileen R. (1993), “Commodity Audience, Actual Audience: The Blindspot Debate,” in Illuminating the Blindspots: Essays Honoring Dallas W. Smythe, J.Wasko, V. Mosko and M. Pendakur, eds., Norwood, NJ: Ablex, 378-397.
Miyazaki, Anthony D. and Angela G. Morgan (2001), “Assessing Market Value of Event Sponsoring: Corporate Olympic Sponsorship,” Journal of Advertising Research, 41 (1), 9-15.
Olsen, Stephanie (2002), “BMW Net Films Go For Star Power,” CNET News.com, <http://news.com.com/2100-1023-948815.html> (accessed on 2/10/2004).
Parmar, Arundhati (2002), “Sponsorship,” Marketing News, 37 (1), 13.
Posnack, Susan (2004), “It Can Control Madison Avenue,” American Demographics, 26 (1), 29-33.
Rosengren, Karl E., Lawrence A. Wenner, and Philip Palmgreen, eds., (1985), Media Gratifications Research: Current Perspectives, Beverly Hills, CA: Sage.
Rubin, Alan M. (2002), “The Uses-and-Gratifications Perspective of Media Effects” in Media Effects: Advances in Theory and Research, 2nd edition, J. Bryant and D. Zillmann, eds., Mahwah, NJ: Lawrence Erlbaum Associates, 525-548.
Sutherland, Max and John Galloway (1981), “Role of Advertising: Persuasion or Agenda-setting?,” Journal of Advertising Research, 21 (5), 25-29.
Woolley, Scott (2003), “Zap! The Day May Finally be Near When Digital
Technology Eviscerates a $60 Billion As Business. How Will the Networks
Survive?” Forbes, 172 (6), 76-82.
John A. Fortunato, Ph. D., is an assistant professor at the University of Texas at Austin in the Department of Advertising. He has recently published a book entitled, Making Media Content: The Influence on Constituency Groups on Mass Media (Lawrence Erlbaum). He has published articles in Communications and the Law, Journal of Sport Management, Public Relations Review, and, Rutgers Law Record. Email: [email protected]
Daniel M. Windels,
M.A., University of Texas at Austin (Advertising), B.S., University of
Oregon (Telecommunications & Film) is an Account Planner at
GSD&M Advertising in Austin, TX. His clients include AARP, American
Legacy Foundation, United Health Foundation, the University of Texas,
and Texas Parks & Wildlife.
Comments
regarding this manuscript should be directed to: John A. Fortunato, Ph.
D., Department of Advertising, School of Communication, University of
Texas at Austin, 1 University Station A1200, Austin, Texas 78712-0116,
phone: (512) 471-3482, e-mail: [email protected].