ANA 2008

TiVo CEO Says End Is Nigh for TV Ads

But Many in ANA Crowd Think He's Skipping Ahead

By Published on . 2

ORLANDO (AdAge.com) -- TiVo CEO Tom Rogers did everything but hang an "end is near" sign around his neck as he tried to rouse a Saturday morning breakfast crowd at the Association of National Advertisers annual conference with warnings of fast-approaching doom for conventional TV ads.
Tom Rogers
Tom Rogers Credit: Art Beaulieu

At issue is whether DVR penetration is about to reach the tipping point at which advertiser-supported TV goes the way of the music industry and newspapers -- a scenario Mr. Rogers warned repeatedly is coming soon unless advertisers begin investing in TiVo-proof vehicles sold by TiVo.

"In the next two to three years, the television industry is going to face a crisis more severe for it than our current financial crisis," Mr. Rogers said.

He said 25 million U.S. homes have DVRs today, adding that "most analysts agree today there will be 50 [million] to 60 million in the next three years, with the vast majority of those homes time shifting most of their programming and fast forwarding through ads.

"Probably two thirds or more of the households advertisers care about reaching will be fast forwarding through television ads," he said. "Brands that have been around for decades suffer major erosion in DVR homes when the ads do not get through."

In a classic problem-solution format, of course, TiVo also offers the solution, he said, in the form of interactive ads, tags, billboard ads, insertions when viewers are asked when they want to delete shows, "and many more forms of inventory to come."

Video on demand, he said, is not the solution, because at best it accounts for 3% of viewing in households. And he said addressability and better targeting "only marginally affect" fast forwarding.

David Poltrack, exec VP-research and planning for CBS, seated in the first row, wasn't quite buying the apocalyptic tone -- though he noted he is happy to buy TiVo's research, which he finds quite useful. Mr. Poltrack noted afterward that recession could postpone or prevent the day of reckoning, as consumers grow more resistant to investing in hardware or ponying up the extra money needed for digital and DVR service.

"If you listen to Tom, you'd think no one is seeing any commercials," Mr. Poltrack said. "In fact it's about 60% who fast forward."

He said he's also encouraged by research showing 75% of DVR playback is of network TV, as opposed to only 40% to 50% of live programming, meaning the networks get back some of the viewership lost to DVRs.

Mr. Poltrack said he's also encouraged by research showing people often stop fast forwarding during movie ads, "so good ads don't get fast forwarded through as much as poor ads. ... We're trying to get our commercial pods as consumer friendly as possible."

But beyond that, Mr. Poltrack questioned whether DVR penetration will ever reach levels Mr. Rogers predicted. It's now at around 28% of households, he said, and may not top 40% before the availability of streaming video, video on demand and other options start crowding DVRs out.

"A lot of people currently do not have DVRs who do not want to pay $12 a month," he said. "There's nothing new coming with DVRs to change their minds."

And just as research shows that resistance to buying a DVR or other new entertainment device evaporates when the price falls below $200, it also shows resistance to buying entertainment and telecommunications services rises when total subscription costs top $200, Mr. Poltrack said.

"Land line, cellphone, television and internet -- it's starting to get around $200," he said. "And the question becomes what are you going to cut to keep it manageable? ... In this recession period you're going to see some cutback."
In this article:

Read These Next

Comments (2)