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Will increased DVR use cut into TV advertising revenue?

We have been cable free for 6 years. My family gets very little interaction with cable television and I am very proud of that. Nearly all of our television interaction comes when visiting friends and family. Live TV programming is an annoyance, however, and I tend to cut off or turn down TVs when I visit to escape the barrage of commercial advertisements. Have you tuned into a network television show on live TV lately? In an hour of television viewing you could see up to 18 minutes of commercials.

Perhaps the increase in commercials is because of the increase in DVR use. Suppose companies figure that if you are actually viewing live television then they might as well saturate you with advertisements while they can. Advertising on live television is cheap right now, too. Airing your commercial during American Idol, for example, costs nearly half as much as it did in 2004. This could be because DVR users fast forward commercials, never once thinking about the products being advertised.

Although we prefer to watch current shows through the DVR if possible, I feel like this has only caused companies to be more creative when promoting their products. Instead of being able to just slap 30 seconds of video together for a commercial, companies have to reach out to popular shows and do product placement ads. Making popular products a part of television shows and movies creates a sense of permanence.

Of course DVR use is not the only issue regarding traditional television advertising. The internet is taking over at a rapid pace, and so even more intense creativity is needed to capture the attention of computer users. Advertising companies are catching on and keeping up, creating very detailed stories to promote their brands and sometimes even creating mini-movies to enjoy during streaming. Viewers demand more authentic, exciting advertisements. A commercial that meets these needs is often remembered and generates a better consumer recall rate.

Will increased DVR use cut into TV advertising revenue? Traditional television advertising is cheaper leaving room to promote products in more modern way. If a company utilizes all possibilities of the new era in advertising, then revenue should remain the same. A company that uses both in-stream ads and television ads will get almost double the recall. People are still anxious to get their hands on great products, and a more advanced way of watching television is not going to put a halt to consumerism.

Disclaimer: This post is a submission for the Technology for Tuition Scholarship. I have not been compensated, however I may receive a $1,000 scholarship for my college education.
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Comments

  1. I’ve noticed brands creating their own little movies now, instead of quick little commercials. I personally think that a lot of brands have already started to decrease their TV ads for more online ads, like videos, blogs, and ad placement.

    • Yes that’s what Donald Snahz was saying in his article about the decline in product placement. And yet according to the Chicago Tribune 45% of recorded DVR advertisements are still viewed. That was two years ago, but might explain why commercial gaps have expanded during our favorite shows.

  2. I think they should look at putting more money into YouTube ads. Even though you can skip many they could be better targeted.

  3. Interesting. We watch very little traditional television. Mostly we watch the History channel or SyFy or the Weather channel. Most of the time, we are on On Demand. I completely tune out traditional ads anyway.

  4. I often forget to fast forward through the commercials when we are watching our recorded shows. 🙂

  5. Hmmm… great points. We’re getting ready to give up our TV, well cable and satellite and go straight to HULU and Netflix. We hardly have a chance to watch TV, but when we do it’s ALWAYS through DVR. My parents will say “Have you seen that commercial…?” Nope. I NEVER see commercials – thankfully!

  6. Maybe this is why shows like Biggest Loser have so many mini-commercials in the actual show? Each episode seems to have some sort of visit to Subway or curbing snacking by chewing Extra gum. Crazy!

    • I know The Girl loves infomercials, and thinks we need it all.

      Commercials at the movie theater bug me, but yesterday they didn’t show any.

  7. that’s a really good question. i don’t watch live TV myself since we have a Roku, but i do know that companies are starting to switch to advertising on phones and starting app to show programming to make up for the loss of revenue. it is getting interesting.

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