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ABC Makes Commercials the Price of On-Demand Content

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NEW YORK ( -- Walt Disney Co., which has kept its own Disney Channel ad free as a way to cater to families, isn't above forcing people to watch ads they might otherwise avoid on its other networks. Through its ABC TV network, Disney has taken a leadership position in scoping out new venues where consumers can watch TV, then devising systems that make advertising part of the experience.
Making sure fans of 'Desperate Housewives' and the like will accept commercials in new venues is crucial to ABC.
Making sure fans of 'Desperate Housewives' and the like will accept commercials in new venues is crucial to ABC.

After testing whether couch potatoes would accept watching ABC shows on-demand through cable providers who disable the ability to fast-forward, ABC is now trying to add more commercials to its web-video viewer and partnering with a researcher who has worked for several years to understand whether viewers who watch traditional TV will react to new types of commercials.

Making sure fans of "Desperate Housewives" and the like will accept commercials in new venues is crucial to ABC and rival TV outlets. "I don't know that you've got much of an economic model when you've got no revenue stream," Mike Shaw, ABC's president-sales and marketing, said in a recent interview. "We would love to be able to test all forms of advertising, particularly as we see our content migrate to additional platforms. We want to be there and we want there to be an advertising opportunity," he added.

Balancing act
At the same time, ABC has to tread carefully with its ad experiments in order to keep viewers happy and not annoyed. "They need to be careful balancing that consumer experience with monetization," said John Moore, senior VP-director of ideas and innovation at Interpublic Group of Cos.' Mullen. "Yes, there's tremendous pressure to monetize it, but they need to move slowly, cautiously, prudently."

So far the network has met with some success, albeit the kind that could irk some folks. ABC has made programs such as "Ugly Betty" and "Grey's Anatomy" available via video on demand, so long as the cable providers who offer the service disable a viewer's ability to fast-forward past any advertising. In a trial with Cox, ABC found 93% of people who had their fast-forwarding capabilities removed when watching ABC programs on-demand found having to watch ads an acceptable exchange for getting to see the programs free. About 20% of users said they used on-demand to watch an ABC program rather than using a DVR.

ABC recently struck an agreement with online-video distributor Veoh Networks that calls for ABC and ESPN content to be available through Veoh -- but seen with ABC's online video player, which does not allow viewers to avoid ads (though it only runs one ad in each break, usually from the same marketer). ABC is also looking into whether it can run more commercials in the breaks when people watch its shows online.

'Difficult to go back'
The move has the potential to misfire, said Drew Corry, VP-director of Amphibian, a unit of Interpublic Group of Cos.' Initiative focued on digital media. "You kind of set the precedent with the viewer" when the player was first unveiled, he said. "It's probably a little bit difficult to go back now and start trying to add in inventory."

Others also worry about consumer backlash. "I don't like to take toys away from people when we already gave them," said Jen Soch, VP-activation director-advanced TV at Publicis Groupe's MediaVest, referring to consumers' ability to fast-forward. "I don't love that they are disabling fast-forwarding," she added.

Whether it be on-demand or online, a venue in which ordering content is left entirely up to a single individual creates a difficult challenge, said MediaVest's Ms. Soch. "The key is to try to keep [consumers] through the whole program and make them order up the program again," she said. "We do need to be careful of the ratio of content to commercials ... it's not like you can just change the channel and come back" when a viewer grows weary or distracted. Viewers of both types of content can easily stop the entire show and choose to go somewhere else.

ABC's opinion
ABC might beg to differ. "It turns out that this generation has a voracious appetite for information, entertainment and media -- and they're more than happy to accept advertising to get it all for free," said Anne Sweeney, co-chair, Disney Media Networks and president, Disney-ABC Television Group, at a March conference held by the American Association of Advertising Agencies. The executive did not explore whether consumers might fast-forward past VOD-content ads if ABC allowed them to do so.

ABC's latest efforts include setting up several "laboratories" where it will be able to test viewers' reactions to new kinds of commercials. The network said recently it will partner with Duane Varan, a professor from Australia's Murdoch University who has studied a spate of new advertising formats on behalf of a consortium of TV networks, advertisers and agencies. Some of Mr. Varan's tests involve video games superimposed over ads, while others investigate how a viewer might react to seeing a large advertiser logo superimposed on screen.

Whatever ABC's findings from these tests and experiments, what seems clear is that the network plans on having people view advertisements --no matter how great their inclination might be to avoid such things entirely.
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