What Ads Would Cost If Fox Really Cut Them to 2 Minutes Per Hour

When ad buyers and networks hashed out ad prices ahead of the current TV season, they landed at roughly $300,000 for 30 seconds during Fox's "Empire." By 2020, those 30 seconds might cost $1.6 million. Well, not really. But if Fox really wants to reduce ad loads to two minutes per hour in the next two years, as ad-sales chief Joe Marchese suggested at an industry summit recently convened by the network, it would have to make up the lost ad revenue somehow. Fox today sells much more commercial time—10.6 minutes per primetime hour in January, for example, according to Pivotal Research Group. At that estimated upfront price of $300,000 for a spot in "Empire," 10.6 ad minutes would mean $6.4 million for Fox. To match the revenue in a world with only two minutes of commercials, Fox would have to more than quintuple its price. That's not going to happen. More realistically, it would have to pin its hopes on a dramatic and ambitious evolution in the TV ad model, replacing traditional spots with a robust package of new formats, targeting and brand integrations that often demand extra effort from advertisers. The near term will likely see movement on all these fronts: new tactics and technology combined with higher prices to achieve a reduced ad load. Pushing the limits Contrary to some headlines that followed the summit, Marchese didn't exactly promise two minutes by 2020. During his closing remarks at the event, Marchese asked the audience of rival TV executives, media buyers and marketers what it would take to bring commercial loads on broadcast TV down to that level, according to two media buyers who were there. With traditional TV ratings in long-term decline and ad-free options on the rise, it's a question worth asking but a tough one to answer. Broadcasters averaged 13 minutes of ads per hour in 2017, according to Nielsen. It seems like marketers would get more value from advertising in shows with less commercial clutter, giving their spots a greater chance to be seen and remembered, but there's no real data to prove it, much less quantify it. So neither Fox nor any other TV network expects marketers to simply sign off on price increases for the same units and strategy they buy now. What they are looking to do is to find ad formats and strategies beyond the traditional 15-, 30- and 60-second spots, approaches that would help marketers' messages work harder. Fox and others are already experimenting with six-second ads that can land a punch quickly, before viewers change the channel or find the fast-forward button. AMC has been running six-second ads just before new episodes of "The Walking Dead," and NBC used them during the Winter Olympics in Pyeongchang. Last week NBCU also announced a reduction in its commercial loads starting next season as well as new ad formats including something called a "prime pod," a 60-second break filled with advertising matched by artificial intelligence to shows' scripts. The thinking is that advertisers will be willing to pay a premium for better positions in shows or the ability to link their ads more closely with the show's content. There are certainly some ways to do this. Take Pepsi's 2015 meta integration with "Empire," where the beverage giant was featured prominently in the show and culminated with a music video that ran in a commercial pod starring a character from the show. But these types of integrations are complex, costly and timely, and can't be done for every episode of every show. Even more ambitious goals include interactive TV ads and expanding the addressable advertising now available through cable and satellite providers. They're all plausible scenarios. But given how slowly TV has moved in the last decade, two years seems an awfully short time to see that much drastic change to the TV ad model.

What Ads Would Cost If Fox Really Cut Them to 2 Minutes Per Hour

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