Attention, package-goods marketers: TiVo is threatening your brands.
Early results from a study by Information Resources Inc. and TiVo involving a consortium of package-goods players confirms marketers' worst fear-that DVRs really do undermine what advertising is designed to do: sell.
In one case, the study found sales volume for an unnamed package-goods brand ran 12% lower in homes that had used DVRs for 18 months than in homes without DVRs.
"In every household that has a DVR ... sales of all products are down, and sales of new products are down even further," said Sunnil Garga, president of IRI's Analytic Insights Group. "That makes sense because new products get most of their awareness from TV."
For the first time since joining forces in late 2004, IRI and TiVo slightly lifted the veil of secrecy over their project at the IRI Summit in Las Vegas on Feb. 28. The research combines second-by-second viewership data from TiVo with detailed purchase data collected by IRI among 2,300 households in four test markets.
A key takeaway for the glass-half-full crowd might be that TV advertising really does work-except when it doesn't because of TiVo. But while the TiVo effect can be dramatic, it's remarkably uneven. Another unnamed brand in the study lost only 5% of its volume in TiVo households, and a third saw only a 1% decline.
J.P. Beauchamp, senior VP of IRI's Testing Solutions Group, declined to say which of the brands in the study produced the most representative results. But he did offer some explanation for the disparity.
The brand that lost 12% of sales is in a particularly price-sensitive category, he said, indicating its TV ads may be overcoming price sensitivity among consumers who see them.
The brand with almost no sales difference between TiVo and non-TiVo households simply may not have had very effective advertising, he said. Another possibility is that its media plan was heavy on sports, news or weather programming, which TiVo users generally watch live.
A brand such as Cialis, which advertises heavily on programs and in dayparts with more live viewers, may see very little commercial-skipping by DVR users, Mr. Beauchamp said. But a brand advertised heavily on daytime-the most heavily time-shifted daypart-could lose a majority of its audience.
While daytime CPMs are relatively low to begin with, Mr. Beauchamp said a marketer doing media planning around the TiVo data might shift $5 million to $6 million of a $10 million daytime outlay elsewhere.
Todd Juenger, VP-general manager of TiVo audience research and measurement, showed a second-by-second analysis of a November episode of "Grey's Anatomy" in which live viewers skipped very few commercials, while about 80% of those who time-shifted skipped ads. And its research shows people do more time-shifting and ad-skipping the longer they use DVRs.
The question remains how many consumers will adopt DVRs. Household penetration stands at 15%. TiVo and IRI predict 38% of U.S. households will have DVRs by 2008, while eMarketer puts the number at 26%.
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An earlier version of this story misspelled the first name of Sunil Garga, who is global president-business and consumer insights, not president- analytic insights group. Data cited in the story came from IRI's national consumer panel, which includes 7,000 DVR users, including 2,300 TiVo users, but not from research specifically funded by a consortium of package-goods advertisers based on just the 2,300 TiVo users.