Rogers
The TV advertising marketplace is facing a meltdown in the next few years that will be far more destructive than the wallop the biz is enduring in the present financial crisis and recession.
That was the bold wakeup call TiVo prexy Tom Rogers delivered to a half-empty ballroom Wednesday morning during the keynote sesh at the NATPE confab.
"In two to three years, the TV industry is going to face an advertising crisis that is more severe for it than this current financial crisis," he said.
"You need to take this threat as immediate," Rogers emphasized. "The entire landscape of TV consumption is about to be turned on its head."
Rogers, an industry vet who launched CNBC during his long tenure at NBC, based his assertion on the fast-accelerating growth of DVRs in U.S. TV households and evidence that the majority of viewers use the ad-skipping function. DVR penetration now stands at about 30% of the nation's 114 million households. Rogers predicted it would reach 50%-60% in the next three years.
More than once, Rogers told the crowd (which he noted was spare, given the sharp drop in NATPE attendance this year) that the traditional TV biz needs to heed his call to action, warning of ad spending plummeting amid a "crisis of having the vast majority of homes that you want to reach (who) are not watching ads."
Some in the biz questioned Rogers' dire predictions for what DVRs will do to the TV ad market.
"How deep do DVRs go? I don't know," said Neal Sabin, prexy of Weigel Broadcasting, which has indie stations in Chicago and Milwaukee.
David Poltrack, chief research officer of CBS Corp., argues that DVR ownership may plateau in the near future after all the hardcore entertainment enthusiasts and early adopters have bought their machines. He questioned Rogers' assertions about how many TiVo users regularly use the ad-skipping function.
Poltrack said CBS' studies have found that DVR playback viewing usually accounts for about 40% of the overall time DVR owners spend watching primetime TV, and within that viewing, they usually skip about 60% of the commercials.
In his keynote, Rogers also pointed to TiVo's ability to serve as a direct-to-consumer distribution platform for Hollywood's majors and other content owners. Rogers said 85% of recent TiVo users have hooked up their boxes to their home broadband Internet service, which means TiVo can funnel programs and other content directly into homes, as it does with selected movie titles through its partnership with Netflix. Rather than warily eyeing TiVo as the enemy, Hollywood should get hip to new ways to harness its growing potential as a distribution platform, Rogers said.
"Programmers can decide the business model in the infinite world of broadband-delivered TV," Rogers enthused. He assured the audience that TiVo would not impose terms on content suppliers, but he also warned that others might if Hollywood doesn't take the lead.
On the advertising issue, Rogers said the biz needed to get serious about interactive advertising and to get creative in coming up with new ad placement ideas. He made some suggestions that may be anathema to TiVo users, including the notion of ad placements when a user pauses playback and pop-up ads, as well as creative ideas for getting messages out even during the fast-forwarding process.
In general, television needs to broaden its horizon beyond the traditional form of ad placement and take a page from Google's system of delivering ads for relevant subjects based on viewer demographics, program preferences, etc. TiVo and other DVR platforms give nets and advertisers the ability to track, second by second, what a viewer is watching or not watching and what kind of interactive barker features draw the most traffic, Rogers said.
"The urgency on the part of the industry is really lacking," he said during the post-speech Q&A with New York Times reporter Brooks Barnes. "And there's a hell of an opportunity sitting in front of you. ... For once it would be nice to see the (traditional) media sector get out ahead of" the upheaval.
However, CBS' Poltrack discounts the long-term threat from DVRs, calling them a "transitional technology," or a half-step to the burgeoning era when all TV programming is readily available via on-demand sources. According to CBS studies, younger viewers are saying they see no need to buy a DVR when so many programs are available for free Web streaming or paid downloads via iTunes and other sources, Poltrack said.
"Certainly all new technologies are a challenge to the old ways of advertising," Poltrack said. "But the DVR itself is not going to be the biggest factor."
Contact Cynthia Littleton at
cynthia.littleton@variety.com