As More Consumers Pay for TV Programming, Advertisers Must Adapt

MPG Study Sees TV Going From 'Cold' to 'Warm' Medium

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NEW YORK (AdAge.com) -- Who will pay for the cost of TV programming?

At the Cannes International Advertising Festival, MPG Intelligence, the business insights team of Havas' MPG, unveiled the results of a study on the future of TV that predicted that as consumers are given the option to pay for ad-free programming, advertisers will need to adapt accordingly.
MPG sees traditional TV coexisting with new forms of interactive TV.
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Consumer-driven medium
According to the study, as TV consumption evolves, so too will the way TV is paid for have to evolve. As the medium becomes a more consumer-driven through time-shifting, video-on-demand and internet and mobile TV capabilities, advertisers will be forced to adapt and find new ways to reach audiences.

MPG does believe marketers will find a way to fit into the new landscape. The study predicts TV advertising will continue to grow through 2009. Consumer-enabling technology will create new opportunities for advertisers, as TV evolves from a "cold" medium, in which viewers passively accept content, to a "warm" medium, in which viewers engage in the TV experience.

"New TV platforms such as internet and mobile TV, along with new TV services like VOD, DVR and ITV can be thought of as hot media due to the active participation they demand from consumers," the report says. "These hot new media are introduced into the cold world of TV and are warming it up by encouraging interaction with audiences. These new channels and services can also provide a very hot relationship with the audience in which consumers decide and even create the content that is aired."

Changes by broadcasters
The study, led by researcher Sara de Dios Lopez, VP-business insights for MPG, was conducted throughout nine markets in Europe, North America and South America. T.S. Kelly, VP-research and insight for Media Contacts, the interactive agency of MPG, said after ABC and NBC made deals last fall to provide commercial-free, on-demand paid content through iTunes and DirecTV, there was a need to see where these trends were headed and what that meant for marketers.

"We've seen significant changes in the market since last October ... so we're talking about how video consumption is changing with all the broadband-enabled platforms," Mr. Kelly said.

Because networks are exploring new revenue options, marketers need to understand the changing climate and what options they have, Mr. Kelly said. The report says that, eventually, "free" broadcast channels will not be able to rely solely on advertising for revenues and will be forced to explore new revenue models.

Models will co-exist
Still, Mr. Kelly said, advertisers should be excited about the changes in the medium. The research shows that the traditional media models of broadcast and cable TV will coexist with the new consumer-enabled models for years to come.

"There's no way broadcast TV is going away," Mr. Kelly said. Still, the changes facing the medium are creating challenges for the industry. "In the future media companies will be reacting to these changes, so marketers need to be aware, be ready for the challenges ahead."
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