Madison Avenue Says It Doesn't Fear Apple's Ad-Skipping TV Service
Madison Avenue isn't concerned over reports that Apple is talking with TV networks about a service that would help viewers skip commercials.
Apple wants to pay networks for the ad revenue they would lose, according to a report by former Wall Street Journal reporter Jessica Lessin. But media buyers say they don't believe TV networks will go along.
"The networks are very unlikely to support any service with their linear feed that allows for commercial messages to be skipped even if they get some form of compensation," said Rino Scanzoni, chief investment officer for WPP's Group M, in an email. "This is not a viable economic model and subscribers to the system would not pay an adequate premium to compensate for it."
It's not clear how Apple's service would differ from current cable and satellite DVRs that let viewers fast-forward through recorded TV, but Apple's offer to pay networks for lost ad revenue suggests it would make ad skipping easier.
Another executive said TV executives don't want to encourage ad skipping whether there's cash in it for them or not. "Why give viewers yet another place to get use to ad skipping and give another technology money they could potentially use to create their own competing shows?" said Gary Carr, senior VP-exec director of national broadcast at TargetCast. "It's just another opportunity to train viewers to skip commercials."
It would also be extremely complicated to deduce how much ad-revenue is being lost with such a model, Mr. Carr said.
Networks aren't the only ones with a stake in the current ecosystem or the leverage to affect it. The cable and satellite providers that pay networks to carry their programming won't be happy if their partners enable a disruptive new competitor, said James O'Neill, VP-director of interactive media at RJ Palmer.
Even if an Apple ad-skipping service does materialize, however, it wouldn't necessarily shut out advertisers, Mr. O'Neill said. "There's an opportunity to incorporate advertising into smart TV home screens and within the app universe with branded apps," he said. "There can be interstitials that air between episodes during binge viewing."
Such a service would force advertisers to figure out how to present messaging differently, something they must do whether or not Apple actually successfully brings it to market, Mr. O'Neill added. Skipping commercials is "what consumers want," the said. "They are already doing this with DVRs."
Another media buyer agreed. "I have thought for a long time things will evolve to a point where people will pay for content without ads and if they are going to watch ads they are going to want it for free or at a reduced price," said Ira Berger, brand media director in The Richards Group. "The industry will have to adapt; what's the choice?"
Apple is only one of many interlopers trying to join the battle for TV viewers. Google has also approached network owners about a potential web-based TV service, according to a new report in The Wall Street Journal, although there was no word of ad-skipping. Intel is planning to introduce its own TV platform this year.
Dish Network has also introduced ad-skipping with its Hopper, which allows users to automatically record prime-time programming from the Big Four broadcasters sans commercials. The broadcasters, who aren't compensated by Dish for the eliminated ads, are trying to shut the service down in court.
Even though ad buyers aren't keen on the Hopper, Mr. Berger noted, that hasn't stopped them from giving Dish Network money. "Everyone will complain, but they will find a way to make it work," he said.