Research

Something good

to say about TiVo

Ads viewers do watch lead to high share of sales

By David Moore

Ever since personal video recorders made their debut, advertisers have been terrified that devices like TiVo would give viewers the ability to skip commercials in their entirety.

But a recent study of PVR users suggests that the fallout for advertising might not be quite as apocalyptic as advertisers might think.

While PVR users do indeed skip a distressingly high proportion of commercials, there’s no reason to think they do so at much higher levels than they already do with TV and in print.

That’s not exactly reassuring for advertisers, but it doesn’t spell the end of TV jingles, either.

The study, released last week by CNW Marketing Research, found that 71 percent of PVR users skip over commercials when watching recorded programming.

Some 43 percent of those respondents say they already strive to ignore commercials when watching live TV, making the skip rate 66 percent higher when TiVo enters the picture.

The study found that fast food commercials and credit card spots were the most ignored categories. Viewers skipped both of those kinds of ads at a rate of about 94 percent.

Beer commercials and prescription drug ads proved to be the most intriguing to TiVo users, with skip rates of only 33 percent for beer and 47 percent for drugs.

Art Spinella, the vice president and general manager of CNW, which conducted the study, says that it’s no surprise that a lot of people don’t watch commercials.

“But that has to be balanced with the other part of the study,” Spinella says, “which found that people don’t pay a lot of attention to print ads, either. Skipping over ads in print is just as common as skipping over ads on TV.”

Spinella notes that TiVo users who did not skip over an ad have an enormously high percentage of buying.

For example, perhaps one-half of one percent of viewers who see an automobile ad on broadcast television will buy a car.

Among TiVo users, 90 percent of viewers who watch car ads end up buying a car.

“The bottom line is that ad agencies and marketing executives have to be far more specific and far more creative in how they reach their potential customer base,” Spinella says.

“Just going to TV doesn’t do it, just going to print doesn’t do it. It really becomes a science, rather than throwing money at any particular medium.”

Mark Edmiston, managing partner at AdMedia Partners, says the findings are consistent with the phenomenon of buyers favoring product placements over traditional ad buys.

“Buyers are basically placing an ad in the context of the show, with product placements and contests,” say Edmiston.

The varying skip rates on the different categories of commercials, Edmiston says, fall in line with the different types of pitches each product requires.

“Anyone over the age of seven could probably name the fast food restaurants and what they serve, so there’s not a lot of interest there,” Edmiston says.

“Pharmaceuticals get higher viewership because, first of all, it’s harder to figure out what they’re about, and second because for people with illness, there’s a personal interest in it. Beer commercials try to be fun.”

Edmiston predicts that product placement on television will only increase, for example, with sitcom characters trading quips over fast food and brandishing their cell phones.

“The only good news is that there aren’t a lot of PVRs in people’s homes yet,” he says.

Spinella from CNW estimates that there are currently about one million TiVo subscribers nationwide, out of about 70 million total households. The TiVo household skews fairly upscale, with an average income of $95,000.

So how far does the TiVo phenomenon stand to spread?

Spinella says that estimates that TiVo users will eventually hit 20 million are probably overinflated, because with only one device necessary per household in most cases, there’s a limited market size.
“We’re probably five or six years away from the kind of penetration that TiVo manufacturers would like to believe they’ll have,” says Spinella.
One other finding of note from the CNW study is that audiences for cable shows tend to be more involved in the commercials than broadcast audiences.

That’s to be expected, since the more specified nature of cable programming means that ads are already more likely to be targeted.
July 9, 2002© 2002 Media Life

- David Moore is a staff writer for Media Life.