From a new study out today by The DVR Research Institute: (click the link for more information)
Study: As Skipped Ads Increase, Advertisers Adapt their Ad Strategies to DVRs
This past Friday, the DVR Research Institute published results from a research project conducted among leading advertising executives on their perception of and response to an increase in DVR viewership.
“While many reports focus on changing viewing habits, few address the implications of these changes on the efficiency of TV advertising,” says Tom Schultz, managing director of the DVR Research Institute. “Even fewer deal with the crucial issue of how advertisers can adjust their advertising strategy to deal with increasing DVR penetration,” he says.
Advertising in the DVR Age addresses all of these issues. The study reveals that advertising executives believe DVRs represe nt the greatest challenge for TV advertising in the next three years. A shocking 80 percent of advertising executives believe that DVRs will negatively impact the effectiveness of TV advertising during this time. Only 58 percent felt that the advent of newer entertainment formats (games, Internet, etc.), considered the second greatest threat, would have such an impact.
The study was based on in-depth responses from 200 top U.S. advertising executives, interviews with industry thought leaders, an evaluation of the revised strategies advertising executives are contemplating, an analysis of best practices and an analysis of past and future industry trends.
“Our research is focused around four key themes,” says Schultz. They are: awareness of, and concern about, DVRs among advertising executives, the magnitude of the issue that DVRs create for TV advertising, the impact of DVRs on the effectiveness of TV advertising and the impact of DVRs on TV advertising strategies. Although ad executives see DVRs as the greatest threat to TV advertising, they are not well informed about the actual level of impact.
“More than half of the ad executives involved in TV advertising decisions are dead wrong about the basic facts of DVR use such as the number of TV households that have DVRs,” says Schultz. “Nearly half of those responding have not made any changes to their advertising strategies because of DVRs over the past three years,” he says.
The problem is likely to grow. The number of skipped ads is expected to almost triple in the coming three years. Some programs (in particular some primetime broadcast programs) may see up to half of their ads skipped in DVR households.
Despite concerns among both advertisers and agencies, these research results indicate that neither group feels confident that it has the information needed to make adjustments in advertising strategy to address the impact of DVRs.
Nearly 70 percent of the advertisers “somewhat” or “completely disagree” that they have all the relevant information about DVRs and their impact on TV advertising. Yet, while – overwhelmingly – neither advertisers nor agencies think they have the information they need, a majority of both groups believe the other group is better informed than they are!
“With only six percent of commercials estimated to be fast-forwarded at the end of 2008, DVRs have had, to date, only a mild impact on the effectiveness of TV advertising,” says Schultz. “Yet, by the end of 2011, 16 percent of commercials are expected to be fast-forwarded. This potential reduction in reach is too significant to not have consequences for advertising strategy,” he says.
Advertising in the DVR Age suggests ways in which advertising executives can change their advertising strategies to address the DVR reality. The growth in DVRs represents both challenges and opportunities in terms of how ads are purchased, where and when they’re placed, and the length, format, style and content of the ads themselves.
The use of appropriate strategies will serve to maximize the effectiveness of advertising efforts as executives respond to the growing impact of DVRs on both advertising rates and viewership.