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Fox Finds That Fewer Ads on TV Don't Necessarily Mean Less Ad Revenue

By Published on .

Actress Chloe Grace Moretz accepts award for Choice Movie Actress: Comedy onstage during Teen Choice Awards 2016 at The Forum on July 31, 2016 in Inglewood, California.
Actress Chloe Grace Moretz accepts award for Choice Movie Actress: Comedy onstage during Teen Choice Awards 2016 at The Forum on July 31, 2016 in Inglewood, California. Credit: Kevin Winter/Getty Images

Fewer TV commercials don't necessarily have to mean less ad revenue.

Fox Networks Group is lowering the national ad load in Sunday's broadcast of the Teen Choice Awards by 20%, but the awards show is on track to book 30% more ad revenue than last year, according to Suzanne Sullivan, exec VP of entertainment ad sales.

The Teen Choice Awards are the latest front in a growing experiment in TV, where ratings are on a long-term decline. The awards show itself drew just 1.8 million viewers last year, a 30% drop from the year prior. Networks hope reducing commercial interruptions can help keep viewers tuned in and increase the impact of the ads that remain.

But there are plenty of questions surrounding the economics. In order to maintain ad revenue while decreasing ad loads, networks have to raise prices on the inventory. Marketers are far from convinced that they should necessarily pay more to be in a program with less commercial clutter.

Not everyone is finding it easy to maintain ad revenue while working to improve the consumer experience on TV. Viacom CEO Bob Bakish blamed the company's 2% decline in ad revenue during the most recent quarter on the company's decision to reduce inflated ad loads on its networks, which include MTV, VH1 and Comedy Central.

At the same time as Fox is reducing ad loads in the broadcast, the network is experimenting with the six-second ad format that's been championed by YouTube since last year. And YouTube has signed on to be a partner of the awards show, with plans to stream Teen Fest 2017, a free music and arts festival held in conjunction.

The same six-second ads that will air during the broadcast of the Teen Choice Awards from Mars and Duracell on Fox will also run in YouTube's stream of Teen Fest. Ultimately, the partnership is part of an effort by Fox to help standardize new, more consumer-friendly ad formats across TV and digital and guarantee audiences to advertisers no matter where they are watching.

According to The Wall Street Journal, marketers are paying a premium for these spots, as much as $75,000 for the six seconds of air time.

That amount of money got advertisers 30 seconds of time in programs such as "Hawaii 5-0," "Hell's Kitchen" or "20/20" last season. For comparison, the season finale of "Hawaii 5-0" drew 8.2 million viewers.

In these experimental stages of commercial disruption, there are surely marketers willing to pay a premium to be at the forefront of efforts to find fixes. But it remains to be seen whether these experiments turn into common practice, and whether marketers are willing to keep paying premiums to participate.

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