Part 1 of this two-part series discusses the efforts made by the television industry to maintain advertising’s relevance in the face of technologies like digital video recorders.
TV advertising’s halcyon days appear to be fading further and further in the rear-view mirror. While the medium still carries a lot of clout (especially on Super Bowl Sunday), its growth rate has slowed, and companies are earmarking their spending for other media. Ironically, these new options may soon lead to a refashioning, if not a rebirth, of TV as an advertising vehicle.
TV advertising has remained flat recently (at most low single-digit growth), and it’s clear where companies are placing a growing portion of their money: the Internet. Screen Digest forecast that online advertising will grow an average by 17 percent from 2008 through 2012. “The Internet has become a primary advertising medium for many corporations,” Gordon Borrell, president of Borrell Associates, an advertising market research firm, told the E-Commerce Times.
Rather than fight the move, the TV industry is searching for ways to integrate itself with new online techniques. The Web is being used as an auxiliary distribution mechanism, a complimentary advertising medium, and a promotional vehicle. Much of the work is in early stages, and some initiatives have not fared well. However, prognosticators expect the overlap between TV and the Internet to grow.
Friend or Foe?
Initially, TV executives regarded the Internet as a threat to their programming: If users were online, they weren’t watching their shows. More recently, however, that perception has changed and the networks are looking to use the Net to increase their viewership. If individuals are not home and don’t record their favorite shows, they can watch them on their PCs or even cell phones. ABC, for example, makes some of its prime-time programming, including “Desperate Housewives,” “Grey’s Anatomy,” and “Ugly Betty,” available for viewing on its Web site.
However, watching online is not as simple as turning on the TV. Just finding a show to watch often involves some hunting and clicking. Consumers often have to install special plug-in software on their computers (a one-time process that can take one to a couple of minutes, depending on the speed of a person’s connections). The choices are limited: typically, only a handful of episodes for a given show are available. Also, viewers have to sit through a commercial or two before they can see their favorite shows — fast-forwarding usually isn’t an option.
The networks have also been dabbling with cross-pollenization possibilities between their shows and the Internet. Shows like “American Idol” and “Dancing with the Stars” often drive individuals from their living rooms to the Internet to vote for their favorite contestants. Similar crossover promotions take place during collegiate and professional sporting events.
An Emerging Synergy?
Such cross promotions are also popular with advertisers. “What advertising vehicle do companies use to drive eyeballs to their Web sites? TV,” Barbara Bacci-Mirque, executive vice president at the Association of National Advertisers (ANA), told the E-Commerce Times.
Consumer goods suppliers are working with TV networks to make their commercials more enticing. Lots of commercials end with advertisers either listing their Web site or encouraging consumers to visit it. Some advertisers have turned their spots into mini-dramas — the initial scenes are on TV, and the wrap-up is viewed online.
Consequently, the dividing lines between TV and the Internet media outlets are fading. As evidence, TV networks have been buying up Internet entities. News Corp., for instance, is the parent of the Fox TV network as well as MySpace. Many of the network’s top personalities have established MySpace pages, and Fox TV video is distributed through MySpace.com as well as MyFoxLocal, a network of Web sites that correspond to Fox’s local television markets.
Still Working Out the Kinks
While cross promotion ideas have been taking hold, not all of the initiatives have been successful. TV shows are available on the Web, but relatively few individuals watch them there. “A user still to go through many steps to watch TV via the Internet,” David Graves, a principal analyst at Forrester Research, told the E-Commerce Times. In addition, viewers are often left unclear about which shows are available online.
In addition, some cross promotion synergies have not sprouted as well as corporate executives would have liked. In April, NBC News and MSNBC partnered with MySpace to launch Decision ’08, a part of MySpace’s Impact channel for civic and social engagements. The site will allow users to access NBC News features and video, in addition to interacting with anchors and reporters.
It appears odd that MySpace, a subsidiary of News Corp., would walk hand-in-hand with NBC, a direct competitors to News Corp.’s Fox Network. In August — perhaps in response — Fox News announced an agreement with Facebook, MySpace’s chief rival, to develop pages so that users can watch, share and comment on Fox new videos via Facebook.
Despite those issues, the synergy between TV and the Internet is becoming clearer. Increasingly, the set-top boxes being used to deliver TV content are looking more and more like mini-PCs. “A few years ago, all of the Web sites looked like newspapers; now they are looking more and more like TVs,” Borrell said.
Eventually, the TV in your living room will offer as many choices as and have similar capabilities to the PC stationed in your office. A great deal of back office hardware and software has to be developed before these next-generation devices become available. Once that’s in place, TV and Web advertising will be firmly bonded.