The nation's largest media companies have finally found a way to strike back against those dreaded ad-zapping digital video recorders.
In recent months, according to media buyers and other executives familiar with the situation, Time Warner 's Turner, four cable channels owned by Comcast's NBC Universal and a small number of cable outlets operated by News Corp. have quietly added viewers who watch current programming through video-on-demand options into the impressions they use to carry out advertiser plans. Cable outlets owned by Viacom and A&E Television Networks have also been "experimenting," according to people familiar with the matter.
The goal is to convince marketers that a video-on-demand viewer is just as valuable as one who watches TV in more regular fashion, a step toward safeguarding ad revenue. Executives have seen video-on-demand streams for NBC Universal's Oxygen increase 15% year over year as of early September, said Tony Cardinale, exec VP-brand planning and strategic insights, entertainment and digital networks and integrated media at NBC Universal. USA, SyFy and Bravo are also using VOD viewers in their audience reporting.
At USA, a new series called "Suits" notched increasing impressions on VOD as buzz for the program grew after its premiere, said Ted Linhart, senior VP-research USA Network. "It does show that perhaps when people hear about shows that get a lot of buzz, they may want to go check it out" on VOD, he said.
In a world where TV viewers expect absolute control over how, when and where they watch TV, tacking VOD into the mix could be seen as a Hail Mary move by Big Media, a recognition that getting paid for alternative TV-watching methods will be crucial. "We are conditioning people for the future," said one senior ad-sales executive familiar with the new policies.
Here's how it works: At present, the industry uses a metric known as "C3" to tally how many viewers saw the ads accompanying TV shows either during their live broadcast or played back on a DVR within three days of the air date. TV executives have begun to figure out that , so long as video-on-demand shows run in a certain fashion, their viewers may also be able to count toward that total.
The VOD selections have to have the exact number and "load" of ads as did the original broadcasts of the episodes being viewed. If "In Plain Sight" on USA ran ads from Unilever, Apple and Coca-Cola in a certain ad break and in a certain order, the VOD episode must "mirror" that . And the viewer impressions only count if the couch potatoes have to watch the ads -- an easier feat in an increasing number of cases because some programmers and cable distributors have disabled fast-forwarding for VOD selections.
The efforts are only tests, of course, and represent just an incremental number of viewers. Not every cable system offers VOD programming in the manner required to make this plan work.
But the maneuver has raised a few eyebrows in the advertising community, according to one senior ad-buying executive, as the networks did not explicitly tell clients earlier this year when they started adding VOD impressions into the mix. That aside, so long as advertisers are not paying for viewers who watch more than three days after their original air date, advertisers are likely to accept the change, this buyer suggested.
"VOD is good for us, because it goes into our TV ratings . VOD with fast-forwarding disabled is even better than a DVR," said Jack Wakshlag, chief research officer for Turner Broadcasting. "We thought it was good for advertisers, as it gives them more impressions, and also probably better-quality impressions, because people who are watching on VOD are more likely to be upscale and younger than the general-interest viewer."
VOD (defined as any sort of service that allows consumers access to programming without having to use a TV network's regular feed) will be in nearly 58% of U.S. homes with TV by the end of 2016, according to Interpublic Group's Magna Global, while DVRs will stand in approximately 51.3% of homes. Neither audience can be ignored, but VOD hasn't been at the forefront in the thinking of some of the big media corporations' minds as the DVR threat has loomed more immediately.
The new willingness to use VOD as a means of catching up with regular programs or sampling TV shows that have generated word-of -mouth can add new viewers to the overall mix, said Mr. Cardinale. When it comes to Oxygen's recent reality series, "The Glee Project on-air started in an OK place," he said, "but all of those non-linear impressions that generate when people found it on VOD is a tremendous part of the overall market."
Cable distributors have had reason to put more emphasis on VOD in recent months, said Sam Rosen, an analyst at technology market-research firm ABI Research. The Scottsdale, Ariz.-based company projects growth of 20% for VOD equipment between 2010 and 2016, spurred in part by so-called "catch up" TV services. "The convenience of Hulu and "watch it when you want' has really led the cable operators and other video providers to move faster than they otherwise might have," he sad.
At present, the bulk of ad revenues for TV networks comes from, well, TV. Marketers give credit for viewers who watch ads within three days of the original air date, and only if the viewer actually watches the commercials and doesn't skip past them. More media concerns are floating the notion that a tally really should include all viewers in three days, whether they use TV, online video or mobile devices, and thus bring about a return to the more eyebrow-raising numbers the networks had in the 1970s and 80s.
Whether or not VOD viewers permanently change the system remains to be seen. Already, media futurists envision a day when even VOD will be seen as too narrow.
Ultimately, said Kurt Scherf, VP-principal analyst at market-research firm Parks Associates, media companies will "move much more rapidly" to deliver TV programs via a high-speed web-enabled device, and use web-based tactics such as behavioral and contextual analysis to deliver very specific ads to individuals. "They're going to get much more meaningful results from that ."