Advertising in the DVR Age - New Study Reveals Strategic Response of Leading Advertisers to DVRs

On May 1, the DVR Research Institute, will be publishing results from a research project conducted among 200 leading advertising executives. A shocking 83 percent of advertising executives believe that Digital Video Recorders will have a substantial negative impact on the effectiveness of TV advertising over the next three years. While nearly half of the respondents have not made any changes to their advertising strategies because of DVRs over the past three years, about 90 percent expect to make substantial changes in the next three years. The research study examines how leading advertisers are changing their strategies because of DVRs and what the impact of these changes will be.

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Los Angeles, California (PRWEB) April 29, 2009

On May 1, the DVR Research Institute (http://www.dvrresearch.com) will be publishing 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, research 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 represent the greatest challenge for TV advertising in the next three years. A shocking 83 percent of advertising executives believe that DVRs will have a substantial negative impact on the effectiveness of TV advertising during this time. Only 66 percent felt that the advent of newer entertainment formats (games, Internet, etc.), considered the second greatest threat, would have such an impact.

The study is based on the survey response from 200 top U.S. advertising executives, in-depth interviews with industry thought leaders and an analysis of past and future industry trends. The study includes a thorough review of the advertising strategy changes that are being contemplated or implemented and an assessment of the best practices in responding to the new DVR reality.
Four key themes are explored:
1. Awareness of, and concerns about, DVRs among advertising executives. How do advertising executives assess the impact DVRs have on TV and ad watching?
2. How big is the "problem" DVRs create for TV advertising? How many commercials are fast-forwarded? What numbers do ad executives use in their decisions?
3. Impact of DVRs on the effectiveness of TV advertising. How has CPM been adjusted for DVRs? What is the economic impact of DVRs on the value chain in the TV industry?
4. Impact of DVRs on TV advertising strategies. How are ad executives adjusting their TV spending levels, advertising mix, TV advertising formats, program and daytime selections, creative strategies, airing frequency, etc.?

Some findings from the report include:

  • Ad executives see DVRs as the biggest threat to the effectiveness of TV advertising, ahead of the Internet.
  • Nearly half of the respondents have not made any changes to their advertising strategies because of DVRs over the past three years, but about 90 percent expect to make substantial changes in the next three years. The study discusses in detail what changes are contemplated.
  • The number of skipped ads is expected to almost triple in the coming three years even using fairly conservative assumptions about future DVR penetration. In three years some programs (in particular some primetime broadcast programs) may see up to 40 percent of their ads skipped (up to 85 percent in DVR homes).
  • Nearly 75 percent of the respondents say that they do not have relevant information about DVRs and their impact on TV advertising. While brand managers consider their advertising agencies to be better informed than they are, advertising agencies think the same about their clients.
  • Advertising executives expect to reduce spending for TV advertising by 10 percent in the coming three years because of DVRs. Not all formats are, however, equally affected.
  • 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.

"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 Tom 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 new 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.

Tom Schultz, managing director of the DVR Research Institute, has extensive experience in the field of marketing. He has previously worked at the Boston Consulting Group, Nike, Procter & Gamble and Netflix. Mr. Schultz was awarded an MBA from Kellogg School of Management. He is a recipient of the Richard M. Clewett Scholarship awarded for academic excellence in the field of marketing. While at Kellogg, he was also awarded the American Marketing Association George Hay Brown Scholarship.

About the DVR Research Institute
(http://www.DVRresearch.com)

The DVR Research Institute is the leading provider of market research and consulting services specific to the impact of Digital Video Recorders (DVRs) on advertising strategies. Advertising in the DVR Age is available on the DVR Research Institute's web site.

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