DVR to Transform TV Advertising

A survey of advertising leaders by the American Advertising Federation (AAF) found that the vast majority of those surveyed said that digital video recorders (DVRs) will have a major impact on TV advertising in the coming years.

Over half of those surveyed forecast growth of non-traditional advertising formats to counter the ability of DVR users to skip over 30-second commercials, and 21% said that traditional TV advertising will disappear altogether. Only 4% said that DVRs are overhyped -- a drop from 13% who expressed that opinion in a similar survey in 2003. And the number who believed DVRs will have only limited market penetration dropped from 22% in 2003 to 8% this year.

This correlates with research that has found that over 90% of DVR owners use their devices to skip over some or all of the commericals in programs they record. The research is also aligned with surveys projecting explosive growth in the DVR market within the next five years.

However, these same concerns were voiced years ago when the VCR entered the mass market, and 30-second spots are still with us. Truth was, people didn't use their VCRs to record TV programs that regularly, preferring instead to rent movies on video and watch videos they recorded themselves. The difference will appear if and when DVRs truly change the way people watch television -- something VCRs never really did.

So what are the trends we're likely to see if these predictions hold true? Some possibilities include:

• Heavier, less subtle use of product placement in programs
• More interactive content, and greater use of websites and text messaging connected to programs
• Incentives for watching advertisements, such as coupons or other special offers
• A return to the fully-sponsor-owned model of programming that was common in TV's early days (i.e., Texaco Star Theater)
• The end of commercial television as we know it, and the rise of the HBO-style subscription channel model
• A la carte programming, whereby viewers pay for each program they watch (in my opinion, the least likely option)
• Programming that follows the PBS model of corporate underwriting. Corporations and nonprofit groups could -- for tax incentive, public relations and other reasons -- fund channels and programs that serve the common good. The danger here is that programming could devolve into political shenanigans.
• The use of social networking to create fan groups, and promote gatherings during which advertisers' products would be features. This might work very well for high-profile sports events, which are social in nature to begin with. Otherwise, this would only be effective with extremely popular programs.

The growth in DVR use could have other effects as well. For instance, if a majority of viewers record the shows they watch, scheduling will become less important. It won't matter if a show is on at 8 PM, 8 AM or the middle of the night... the viewer will simply set his or her DVR to record the show accordingly. This could affect everything from the concept of "prime time" to the need for shows to fit into tight 30- and 60-minute time slots. Real-time programming will be reserved for news broadcasts and live events.