PVR growth prompts P&G shockwave

One of the world's largest advertisers reportedly plans to cut its commitment to traditional television commercials. The move comes as several industry observers question the effectiveness of 30-second commercials in the era of personal video recorders (PVR).

The Wall Street Journal said consumer goods giant Proctor & Gamble—the No.1 US advertiser, spending $2.5bn with US TV networks, more than 80% of its total advertising budget—was planning to cut advertising on cable networks by up to 25% and broadcast networks by 5%.

But the newspaper said that while cutting back on TV commercials, P&G was looking to divert advertising spending into other forms of television marketing, such as product placement within programmes.

Product placement is a fast-growing advertising segment since it is able to beat ad-avoidance behaviours offered by PVRs such as TiVo in the US and Sky+ in the UK, most notably fast-forwarding through the commercial breaks.

As The Wall Street Journal reported, P&G global marketing chief Jim Stengel told a conference last year: "There must be, and is, life beyond the 30-second TV spot. We must embrace the consumer's point of view about TV and create advertising consumers choose to watch."

In the US the product placement advertising format is still in development. Costs to advertisers are said to vary widely since brand exposure depends on ratings and how long product labels can be seen on screen.

The Wall Street Journal cited research by TV marketing data specialist Nielsen saying that the top 10 shows featuring product placements had 12,867 such occurrences in the first quarter, more than half the 23,526 for the top 10 shows in all of 2004. Coca-Cola was the most frequent product placer, with 1,931 brand appearances.

Product placement is currently banned in the UK but media regulator Ofcom said last month it would review matters as part of a consultation on broadcast advertising.

"The ban on product placement remains in place, however Ofcom acknowledges the pressure on traditional broadcast advertising as a key source of funding for commercial broadcasters and will consult on product placement in the context of a wider assessment of the broadcast advertising market later this year," said Ofcom.

In April industry forecaster ZenithOptimedia said TV's share of the worldwide advertising market would peak in 2006 before declining in future years. ZenithOptimedia knowledge management manager Jonathan Barnard said: "The probability that PVRs will gain popularity adds to the likelihood that television's market share is nearing its peak."

Simon Andrews, founding partner of Big Picture, said: "Ad avoiders are a real issue. Once people realise PVR captures live TV they choose to start viewing a few minutes into the programme and then fast-forward through each ad break."

Last November, TiVo, the US PVR pioneer, unveiled a new strategy aimed at placating fears that the new technology will kill traditional television advertising. TiVo is courting advertisers with a solution: static 'pop-up' ads overlaid on commercials while being fast-forwarded.

Last week, BSkyB was reported to be working on new technology enabling advertisers to reach Sky+ subscribers. Interactive ads will be recorded on the PVR hard disk after subscribers have opted to receive highly targeted marketing content.

Lovelacemedia  |  13.06.2005

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