Is this the year that TV advertising dies?

Television viewing habits

“The rapid rise of time-shifted viewing–driven by DVRs, video on demand options and mobile devices has decimated TV ratings.”

Claire Atkinson, New York Post Media Reporter

First, the bad news:

Last year there were a growing number of media reports about the decline in ratings of prime time programming.

  • In one survey, total prime time ratings fell 8%.
  • It was the 6th straight quarter of total TV ratings declines.
  • NBC reported a 40% decline, Fox 19%, ABC 6.2% and Cable 3%.

Pundits attribute much of this drop to the increase in DVR usage, as well as the increasing popularity of streaming video and video on demand (VOD). According to some of those surveys:

  • The number of households with a DVR has doubled in the past 5 years.
  • 52% of homes with pay TV service (cable or satellite) now own a DVR.
  • 47% of all U.S. households now own a DVR.

Now the good news:

  • In recent Cross Platform Reports, Nielsen has confirmed that 88% of programming is still watched live, while only 12% is time shifted.
  • 77% of people record a program on their DVR because there is something they want to watch on live TV at the same time.
  • There are still many programs most people watch live, like sporting events and the nightly news.
  • It’s true the average American spent over 13 hours a month watching time-shifted TV.
  • But the average American also spent 147 hours a month watching live TV.
  • There’s plenty of research that shows Americans are actually watching more TV as a result of being able to time shift.
  • Some surveys also indicate that Americans pay more attention to commercials when they time shift their viewing through streaming video.

What if you include the time people watch TV in streaming video, video on demand and on DVRs?

  • Right now the networks are paid by advertisers based on how many viewers watch the commercials in their shows over the first three days after a show is aired, known as “C3.”
  • But there has been a push (and Nielsen does already track this) to extend that to C7, or 7 days, allowing the networks to capture more delayed viewing.
  • When you add in people who watched a program 1-7 days out, Nielsen says the ratings of programs on the four major networks go up 15-20% and can increase as much as 60-70% for some shows viewed by younger age groups that favor time-shifted viewing.
  • When you consider that many people who time shift watch at least some of the commercials, that’s a hefty increase in audience.

What does all this mean for advertisers and their agencies? The DVR Research Institute recommends ad agencies take a three-step approach to tracking and modifying their media buying practices, to account for increased time shifting:

  1. Establish a fact base about DVR, video streaming and Video on Demand usage among your target audiences.
  2. Evaluate best-practice strategies you will implement going forward to deal with the changing way those target audiences are watching TV.
  3. Incorporate some of these strategies into your marketing and media plans.

In summary, there’s no question that the DVR, streaming video and other time shifting technologies are changing the way some people view TV. But Americans are still watching an enormous amount of live TV. And the trends toward time shifting has slowed and even declined. So while advertisers and their agencies need to shift their media strategies to account for the rapidly evolving TV viewing habits of American consumers, for at least the next five years viewership of live TV is projected to remain stronger than any other medium.

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