Changing consumer viewing habits and new interactive technology will affect all the players in the traditional TV advertising value chain. Here are some winning strategies for access providers, broadcasters and advertisers themselves. By Theresa Wise
Outlook Journal, January 2006
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PDF Help The marketplace for television advertising is undergoing fundamental change, driven primarily by the advent and rapid growth of personal and digital video recorders, devices that, among other things, allow viewers to fast-forward through commercials. In fact, 40 percent of US homes are expected to have one of these recorders by 2009—up from 8 percent in 2004. We project—somewhat conservatively—that as a result, 9 percent of all commercials will be skipped by viewers in 2009. This shift is indeed significant—but hardly fatal. 
Broadcasters and advertisers are using various tactics to combat ad skipping and neutralize its effect. Tactical reactions designed to make recording—and therefore ad skipping—more difficult include staggering program start times and shifting air dates. Among the more strategic responses are true, live video-on-demand services. Rather than approximations of the on-demand experience (currently available through digital or personal video recorders or pay-per-view within certain time slots), these services deliver content 100 percent controllable on demand by the viewer. Interactivity
  With each approach, interactivity will be key. And technology advances are playing an important role in enabling this phenomenon. To exploit this opportunity, ads will need to blend compelling creative content with sophisticated targeting, and then use these attributes to focus on what interactive ads do best: generating cost-effective sales leads for bigger-ticket, relatively complex and/or programming-related products.
 The three key factors that determine whether interactive ads will work are the product itself, the type of show the ad is placed in and the purpose of the ad. Experience shows that these three determinants can be combined into a number of best practice guidelines to predict whether a particular interactive ad will be viable and cost-effective. Then, the following two important decisions to consider are when the ad should run and the intent of the ad. For example, interactive TV ads are more appropriate and cost-effective for generating sales leads than for building brands.
Opportunities for growth
As long-standing economic assumptions and boundaries fade away, both access providers and broadcasters have opportunities for new revenue streams—although from different sources—while advertisers have the opportunity to provide more powerful advertising by engaging their targets. At the same time, each group faces challenges—from the need to develop new skills to managing multiple channels. Contrary to some premature reports, the 30-second slot is not dead, although the way advertisers fill it will change. The content they offer will be compelling. It will be interactive. It will move to broadband as audiences move to broadband—for search or for entertainment like IPTV. And it will be closely targeted to the viewer, perhaps via the search engine through which he or she finds the content. For all the players in the traditional TV advertising value chain—access providers, broadcasters and advertisers themselves—the world is changing. And now is the time to develop new strategies and solutions for the interactive world. About the Author Theresa Wise is a London-based partner in the Accenture Media & Entertainment operating group. Her recent focuses include digital and interactive television (especially video-on-demand and interactive advertising) as well as broadband strategy and content. Ms. Wise has worked across Europe, in Japan and in the United States for global cable companies, media conglomerates, public service broadcasters and commercial broadcasters. Her comments on developments in interactive television, broadband, sports rights, advertising markets and the music and publishing industries have appeared in the Financial Times and The New York Times and on CNN, the BBC, CNBC and Bloomberg Television. Robert Clauser, a recently retired partner in the Accenture Communications & High Tech industry group, contributed to this article. For more information, please contact us. Back to contents
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