The post title really says it all—or does it? The advent of DVR’s has generated all manner of concerns about their potential impact on advertising. A menace, a threat, the potential end as we know it to effective TV advertising. But are DVR’s really making your brands TV advertising less effective? Or, is it all just hype?
Ad Skipping – A Historical Perspective
Viewers have always had the option of skipping ads—even before the DVR. In the earliest days, they could switch channels, get up to get something to eat, go to the bathroom, etc.
Then came the VCR, which made recording and playback of TV shows possible, at least for those who could follow directions. If you think the DVR is controversial for advertisers, the VCR was even more so — it prompted the 1984 Sony Corporation v. Universal Studios court case on whether consumer copying of TV shows via a VCR was copyright infringement.
Pre-DVR research consistently showed that only 3% of all 30-second ads were skipped when the VCR gained a foothold in the 1980’s. And as of 2000, only 10% of VCR owners used the recording function, and an even smaller percentage skipped ads. So, advertisers continued to be willing to use TV advertising because of its broad reach and ability to engage viewers.
Less the court case, DVR’s simply take ad skipping to another electronic level. In theory, DVR’s make ads easier than ever to skip. So, what do we know about DVR’s?
Let’s start with some key facts to know about DVR’s:
- DVR household penetration is 25%, which is much lower than many people assume. DVR penetration, however, continues to grow. The total amount of DVR viewing is about 15% of total viewing, and is staying relatively constant. This is because the amount of DVR usage by program is declining.
- Viewership data shows that about 6% of ads are skipped on average when viewers are watching programs on a DVR. This would suggest that DVR’s have doubled ad skipping versus VCR’s.
- Channels make a difference to whether viewers DVR or not. Broadcast is DVR’d at a higher rate than cable.
- Not all programming is DVR’d at the same rate. Reality and drama programs are most DVR’d (15-16%).
How DVR’s Impact Ad Effectiveness
Nielsen IAG research tells us several important things about how DVR’s impact ads:
- DVR’s drive lower ad effectiveness. Ad effectiveness overall is -30% lower in DVR versus non-DVR households, but is not changing significantly over time.
- DVR impact on the total ad campaign is small. When we combine the -30% ad effectiveness metric with the 15% DVR viewing, this would suggest that the average ad campaign is losing about -5% in effectiveness due to DVR’s.
- Higher quality ads perform better in DVR households. Specifically, the most effective ads have 40% more impact when DVR’d than the worst ads.
- Program genre matters. Ads in Dramas are less impacted by DVR’s than ads in other genres, such as Sitcoms, Reality shows, etc.
- Last in pod Ads are least impacted by DVR’s. Additionally, multi-spotting your ad during a program does not make a significant difference in ad performance.
How Should Marketers Respond ?
Taken together, there are several important lessons here for Marketers:
- The overall impact of DVR’s on Ad Effectiveness is overblown. Yes, it’s true that 15% of viewing is now DVR’d. But combined with the fact that ads are 70% as effective in DVR households, the net -5% impact of DVR usage is relatively small. This is something that CMO’s should keep an eye on, but nothing that demands ringing the alarm bell.
- High quality creative can mitigate DVR’s negative impact. It’s a truism that great advertising creative is the most important factor in whether your campaign will build business or not. The DVR data showing that high quality creative is impacted less by DVR’s than low quality creative is just one more reason to focus on getting a great creative idea from the beginning.
- Media planning needs to account for DVR usage. Network, genre and pod placement all influence how DVR’s impact your advertising. Smart CMO’s should begin to demand that agencies take these factors into consideration when developing media plans.
DVR’s are pretty neat—it’s great to be able to DVR your favorite show and play it back whenever it’s most convenient for you, not the broadcaster. But, as the data above shows, they’re definitely not the end of TV advertising effectiveness as we know it.
DVR’s — Good for Advertising ?
And another thing. There’s at least two silver linings in all of this.
First, DVR’s are one of several factors that are actually driving TV viewership higher. So, there’s more opportunity than ever to connect your brand with viewers.
Second, Marketers who understand the real impact of DVR’s on advertising can build these learnings into their creative and media plans for competitive advantage.
And wouldn’t that be great for your brand—the DVR as a competitive advantage, not as a menacing technology that threatens one of your core Marketing programs.