Broadband and Broadcasters

Illustrate your essay with specific examples.

Are program makers being forced to change the way they create and distribute content due to advances in technology and increased demands by viewers?

Abstract

New technology such as Digital Video Recorders and broadband is greatly affecting how much control viewers have over what, where, and when they watch material. This is having a great impact on how advertisers reach viewers, no longer being able to rely on the traditional 30-second ad spot that has become so routine. As a result, traditional advertising models are threatened, but this is leading to new and perhaps even more effective ways for producers and advertisers to reach consumers.

Introduction

As each day goes by, technology in Western society pushes the boundaries of what is possible further and further back, increasing the choices modern consumers have in their daily lives. We have become accustomed to getting what we want. The Baby Boom generation first felt this in America as a reaction to their parents’ struggles before and during World War II and the domination of America in the post-war economy. This sensibility came to full fruition by Generation X and has now permeated throughout the United Kingdom and Western culture. In turn, getting what we want has changed from being a luxury to being perceived by a majority of consumers as a right or an entitlement. The power that lies in the ability to have infinite choice often results in the feeling of anger or being cheated when we cannot have access to entertainment material when we want it. This power of choice has inevitably spread through television and is reshaping all aspects of broadcasting and advertising. Never before has the consumer demanded so much from news, sports, and entertainment, and there is a direct impact upon our economy.
The 1960’s were a time of huge technological development and television was one of the most significant of these. Television has become a substantial part of modern life and since the 1960’s when television first became widely available, it has had a strong impact on millions of people’s lives. What was once private was now public and on a colossal scale. And the main drive fueling the rise of television and its networks was advertising. The 30-second commercial spot has become part of our everyday lives, in some ways even representing an expression of a culture. And since the early days of television, there has been very little change in the way broadcasters generate this infinite source of revenue. Advertising spots in between segments of programming has worked consistently, and thus such programming has been shaped around these advertising methods. For more than four decades the process worked, in general, quite smoothly and effectively.
However, recent technological advancements have come to threaten this tried-and-true method of bringing products and consumers together. New technology such as broadband internet and Digital Video Recorders (DVRs) is making the viewer much less dependent upon the producer of material to deliver the programming on the networks’ terms, and is allowing views more leverage in terms of what they watch, and when they watch it. This has posed massive problems for broadcasters as a once constant audience is slowly melting away. Instead, viewers scour the internet to download their favorite shows legally or illegally, or use devices such at TiVo (a leader in DVR technology) to record shows and watch them without commercials, or simply to pause programming during commercials as they are delivered to their homes from the networks. In fact, according to the UK Film Council, film piracy in the UK rose by 83 percent in 2002, as broadband technology began to spread farther and wider (Bristol Evening Post 2003). For advertisers and the networks that receive money from them, this new technology has the possibility of being devastating. Yet it also creates the potential for more innovation and creativity, and perhaps even more effective ways of advertising.

Chapter One

The changing face of the advertising landscape

Advertising on television has redefined Western society, linking entertainment with the selling of products like never before. Such sources of entertainment – the various television shows and movies – are made to be good for the central reason that if they are, people will watch them, and therefore networks can convince advertisers to pay to air their advertisements. From a certain point of view, the central reason why television entertainment exists is to sell things to people. With shows like American Idol drawing over 30 million viewers per show, companies know that their commercials will be seen on a mass scale, and if the makers of these commercials do their job right, their products will sell. However, as many people know, as they watch American Idol with their friends on a Tuesday evening, the commercials are a time to pause and talk, get food or refill beverages, etc. In the past, the commercials were simply part of the programming – people watched or heard them while they prepared for the next segment to come on. In fact there was even a risk that missing them might cause one to miss the start of the next segment of programming. Today, however, while watching American Idol with a friend, one might find that through TiVo the show is paused by a person wielding the remote control when the inevitable commercial comes on. After a few minutes the show is started again, and it is as if there were never any commercials at all. While the invention of the remote control, and the ability to surf hundreds of channels while waiting for the commercials to end, began to shake the leverage commercials had with viewers, new technology like DVR (TiVo) can, if the viewer wishes, almost completely remove commercials from their viewing experience. Suddenly, companies are paying millions of dollars so that their commercials might be seen. As technologies like TiVo continue to increase, the power and value of a television commercial to a company will decrease dramatically. This will have a ripple effect leading to shrinking revenue that networks receive from companies trying to sell their products in the 30-second spot, and thus will challenge the very nature of television programming.
One method could be for advertisers to increase the use of that which has worked in the past: Product placement. Product placement is common, as seen in the popular U.S. reality series Survivor, and this will certainly be increased in usage. However, to mirror the success advertisers have had with reaching audiences in a post-DVR world, advertisements might have to be incorporated into the shows themselves, even more so than mere produce placement. Perhaps we could see elements of commercials appear in the actual dialogue of the shows, whether into the actual plotline or in a way that would make one feel that by missing the advertisement they are missing part of the show itself. It might seem a bit drastic for sitcoms, but shows might more and more be shaped around how to advertise products within them. In surveying the history of television as we have already done, such reshaping would make perfect sense. One of the reasons mainstream television exists, as we know it, is to sell products, and how new technology is used will only make this fact more and more apparent.
In the last ten years we have seen advertisements move into the movie theater, combining with previews as one reason for the viewer to be a little late to show up on time. For those who are there on time, this setting is perfect for advertisers, for they have an audience that has no choice but to watch what is placed in front of them. What is even more interesting is that they have to watch them on the big screen, in enormous proportion to the viewer. This ideal situation for advertisers would surely compel them to attempt to make use of this situation more and more as the viability of the 30-second ad spot decreases. Whether this will mean more advertisements at the beginning of a film, or perhaps someday breaks for advertisements during the course of films, it is rational to expect advertisers to make more use of this situation in the movie theater, especially with the advancement of digital projection and the fact that movie audiences remain quite strong.
Movie theaters are moving quickly with replacing old celluloid projectors with digital projectors, making distribution of films much easier, even achieved eventually through broadband. With the move of movie theaters toward digital projection technology, it will also be important to see to what extent movie-goers allow the movie-going experience to mirror that found in their own living rooms. A downside to the digital projection is a loss of the “magic” that celluloid created, and the distinction between it and what is seen on television. This could already drive more viewers to stay at home to watch movies, especially as wide screen televisions and home theater centers become cheaper and cheaper. The closer the advertisers mirror television methods in the theater, the further it could drive the public away from the theaters. The advancement of digital projection technology in motion pictures will surely be a fine line for distributors and advertisers to tread.
Already one of the most dominant forms of advertising in the 21st Century takes place on the internet. In 2006 advertisers in the UK spent 235 million pounds more on internet advertising than the year before, a 19 percent increase (Sanders and Holton 2007). We all know that one of the major methods advertisers use is pop-up advertising, where a viewer has to confront an image or statement before navigating to the desired page or web article. In this case, even if the viewer quickly closes the window, they have still been subjected to the advertisement, and if the ad is well-enough conceived, the advertisement has already had an impact. (However, it is important to note that with advanced web browsers such as Mozilla Firefox and others with pop-up blockers, this method is beginning to lose its relevance and effectiveness.)
In some cases, viewers must actually sit through an entire advertisement before they are able to read the article or watch the segment. Take Salon.com as an example. In order to read the full length of an article, one must either subscribe to their website, or as an alternative, obtain a “day pass” by watching an advertisement. As the majority of casual readers will opt for the day pass, Salon.com has created an effective situation for advertisers. And it is conceivable that eventually they make more money from these ads than from people actually subscribing to their website. Such a method will likely increase dramatically as television advertising decreases in impact and relevance, and the industry shifts more to internet advertising. This might be the new way to get a viewer to experience a product, a ‘rite of passage’ to whatever might be their internet destination.
A third and most widely used method is banner ads that are placed above, below, and to the sides of web content. This way, a reader constantly finds themselves in the presence of advertisements. Some are even interactive, enticing a user to shoot a gun at some target, shoot a paper airplane, or hit a golf ball toward a hole – and by doing so they are redirected to the home page of the sponsor of the advertisement. Given the popularity of video games not just with children but also increasingly in adult populations, this is an effective way to get the attention of the consumer. In addition, as seen in Google’s mail service, key words are recognized in an email and links to relevant advertisers and web pages are included to the right of the email that the user reads. More will be discussed about the ability of the internet to allow advertisers to target individual users in Chapter Five of this essay.
However, the risk of these methods is that they will annoy viewers and thus start a competition among companies to have the fewest or least- intrusive advertisements as a way to draw viewers away from similar but more annoying web pages. This of course will not help the companies to sell their products. One recent example is of an advertisement on the online edition of The Washington Post, which used sound to get the viewers attention. However, the sound was of methodical buzzing bees that remained constant as long as one was on the page, or reading whatever article was attached to it. The sound was so disturbing that people, including this writer, were not able to concentrate and had to leave the page, a reaction that The Washington Post certainly didn’t intend by accepting such an advertisement, no matter how well-paid. It is interesting to note that this writer does not remember what company had created the advertisement or what it was about, only that it was terribly annoying.

Chapter 2

Recent advancements in technology and their effects on advertising

As mentioned in Chapter One, DVR technology is reshaping the television experience and thus the advertising market. In fact, about 60 percent of advertisers say they plan to cut their budgets for the traditional 30-second spot as DVRs become more and more a regular part of a household (Lombardi 2006). In addition, with the popularity of websites such as YouTube.com, viewers are coming to expect more and more the ability to watch what they want, when they want. This inherently removes the power of traditional television advertising, which is fueled by the television network – having the ability to control what the viewer watches and when. As a result, this will cause industries to completely rethink how they go about connecting with the public.
Mark Pesce, an expert in the field of advertising, lectured in 2005 at the Australian Film and Television School about piracy and the future of advertising. In this lecture, titled “Piracy is Good?”, he claims that television as we know it is dead, due to new broadband technology and the ability for consumers to download material from the internet that they would normally have had to watch on television. Pesce makes the argument that ‘piracy’ and downloading are not a threat to the industry but an opportunity for creative and innovative advertisers and producers to have an even greater impact on the public. In his presentation he raises the example of Battlestar Galactica a British series made by ITV in the UK that was to be shown on the SciFi Channel in Australia. Before the series was aired, a copy of the program was leaked on the internet, downloaded, and viewed. Though at least one person in the company was fired over the leak, Pesce believes that this leak may have actually helped boost the popularity of the show, which went on to become the highest-rated SciFi show ever. The reason for the success of the show, he thinks, comes from word of mouth – which was made possible by the Internet leak. Some viewers did indeed download the show, but instead of that satisfying their curiosity and thus hurting ratings for the show once it aired on the SciFi Channel, these viewers liked it so much that they told their friends how great it was, compelling friends, and friends of friends of the downloaders, to watch the program, probably along with those who had already downloaded it. In this case Internet piracy, hated by networks and producers, was actually the most effective advertising tool available to the SciFi Network. Piracy, it seems to Mark Pesce, isn’t all bad.
What this instance reveals, Pesce explains, is that consumers will no longer be told what to watch by the networks, but instead by their friends. With the increasing enormity of content on the Internet and on television and thus increased choices for consumers, networks will no longer be able to tell viewers what to watch. But how will viewers be able to know what is good and what isn’t? Word of mouth, according to Pesce, will be a major tool that navigates many people through this content, instead of what networks make available or what they advertise to consumers. And though producers will have less control over what people watch, word of mouth could also be one of the most effective, and cheapest, marketing tools available to them.
coHowever, the downloading of material from the Internet does not completely remove the opportunity for advertisers to reach consumers. One example Pesce shows is similar to the way networks brand their shows on programming today. Pesce take some television footage and adds a small, non-intrusive ‘Nike’ icon that remains on the screen for a period of time – several minutes, or for a smaller and more subliminal method of appearing for just a few frames now and then. In this way, the advertisements are within the program itself. This also relates to the idea mentioned previously that advertisements could exist within the production, or even within the plotline, of future sitcoms or other downloadable entertainment or those subject to the filtering of DVR. Whether or not consumers would get used to such an omni-present icon is unknown, but given the tolerance of network icons it seems this strategy could be effective.
Another point Pesce reiterates is that the 30-second advertisement will be a thing of the past as consumers become more and more able to watch what they want, when they want, with the advent of broadband and DVR technology. The exception to this, however, will be live programming, such as news, sports, and other events that television will broadcast as it happens. Here traditional advertising spots will still be relevant, because they remove the ability for consumers to download material from the internet. This could, at least in the short term, propel networks to think of new ways to create programming that is indeed live-based in order to continue traditional advertising methods. Take the example of American Idol that was used previously. The show is broadcast live, and just like the news or a live sporting event, has little value if a viewer watches it a day or even hours after it happens. It is a program that must be experienced live, and thus is still subject to the traditional advertising model. One way of maintaining this form of advertising is to create more material that would fit into such a model. Live reality television shows would be the ideal scenario, produced very cheaply, and securing an audience for the coveted 30-second spots.
However, the central point to Pesce’s presentation is that these new technologies will not be a detrimental problem to advertisers and producers of content, at least in the long term, and will instead be a great source of possibility and innovation. Since the relationship between producer and advertiser is symbiotic, there is incentive on both sides to find a solution to continuing changes in the technological landscape. And in fact these changes might allow advertisers to reach consumers even more directly, individually, and specifically, as we will see later in this essay. Change, even in advertising, can be good.

Chapter 3

Piracy and the rise of China and India

Piracy has been a large problem for producers since the invention of the Internet, and this came to a head with the rise of Napster. The lack of regulatory possibilities on the Internet has allowed for the ingenuity of users to distribute material free of the traditional commercial constraints. This has opened the debate, since Napster, about who has the rights to intellectual property, and has advanced the debate about free access to artistic property versus the economic gain that allows artists to get paid to create and the incentive for producers to create new and interesting content. Broadband Internet has increased this threat, allowing consumers to download much larger and more expansive material such as movies and television shows. Thus the threat of piracy, and the damage that it can inflict on the UK and global economies, expands more and more.
An economic sector that is particularly vulnerable to piracy is that of developing countries such as China and India. With huge populations and a difficult regulatory structure, piracy is much more prone to spread. And with a rapidly growing impact upon the UK and global economies, piracy in these regions poses a particularly tough challenge not just to these nations, but to the world. World governments are becoming increasingly aware of the impact that piracy is having not only on foreign governments but upon the West as well. This impact is large and is growing rapidly. For instance in the United States, the annual U.S. revenue for ‘Bollywood’ films is 1.5 billion dollars, which has contributed to India’s being placed on the U.S. government’s “priority watch list,” joining China, to protect intellectual property rights and in turn the US economy. In fact the level of personal computer software piracy in India last year was estimated at 72 percent resulting in an estimated loss of $566 million (Indo-Asian News Service 2006). And the situations in China and India have contributed to the fact that the UK economy is one of the hardest hit in the world, ranking third behind the U.S. and Mexico (Doran 2006). Clearly all parties have a vested interest in tackling this issue. It appears in early 2007 that the United States will bring formal charges against China through the World Trade Organization to try and force the Chinese to crack down on piracy.
It is no wonder that the two most populated countries in the world are getting so much attention. In addition to the exportation of material to the UK, as these countries continue to develop their consumption power will be enormous too, and the lack of regulation could be quite problematic to companies in the UK. If piracy becomes embedded into the process of development, this could make these billions of potential consumers even less tolerant of control by advertisers, networks, and producers. Therefore not only would it be all the harder for the Chinese and eventually Indian governments to crack down on piracy but also as consumers get accustomed to working outside of the ‘system’, installing a more Western-style programming and advertising model would be all the harder to achieve.
To compound the problem, not only is piracy in these nations a problem to the producers of material, it is also a great threat to the advertising industry, in ways that we have already discovered in this essay. China is becoming one of the largest advertising markets in the world, and the impact of piracy on advertising there can be even more enormous than that found in the United Kingdom. In a nation developing so quickly, the habits of billions of consumers will be shaped quickly as well. As mentioned previously, if piracy and other black market forms of obtaining material become the norm, the population will be even less tolerant than in Western markets of traditional methods of advertising that restrict when, where, and how they have access to the material. Given China’s growing potential of being the number one consuming nation in the world, combined with Pesce’s perspective that this new technology could be a great source of possibility, the growing Chinese landscape could reshape methods of advertising that effect the entire global market. This could thus speed up current trends in the UK and other Western markets, as savvy Chinese consumers might demand even more than UK consumers do. In addition, China’s advertising is having a broad impact on advertising in the UK. China is blamed at least in part for the slow rate of growth in advertising in the UK in 2006, down 1.6 percentage points from 2005 (The Times 2006).
The effect of China and India upon the UK and Western producers and advertisers will be enormous, and the ability for various governments to work together to curb piracy will have a major impact in how these new models work themselves out. If governments are able to stop piracy, they will be able to control these growing markets and conform them, to a degree, to fit their own economic gains. If piracy is able to succeed, it will have an impact (though not perhaps entirely negative as Pesce points out) on the future of distribution and advertising, thus perhaps decrease the impact of the West onto the growing Chinese entertainment economy.

Chapter 4

What you want, when you want, where you want

Even in the United Kingdom where the tradition of the 30-second spot is strong, the relationship between the consumer and the material they consume is changing rapidly. Mark Pesce makes the point that in the fifty years since the creation of television, consumers have learned to get what they want, when they want. Incremental advances such as the remote control, the VCR-recorder, and the proliferation of available channels to view have created the foundation for this sensibility. Broadband and DVR technology has used this foundation and fulfilled this trend, no longer restricting the viewer to having to be at a certain place, in front of a certain glowing box, at a certain time to get up to the minute news or to watch their favorite program. Now any website is likely to be as quick if not quicker at updating breaking news, for instance. YouTube and other video-content websites make it possible for the viewer to say “oh well, I will just catch that some other time.” The viewer has little incentive anymore to play by the rules set out by the networks and advertisers. More and more, the consumer has the control over what they watch, and more importantly, the viewer is learning to expect to have this control. As such expectation spreads; the advertising and programming landscaping will never be the same (or at least increasingly advanced).
However, the more choices that are available to the consumer, the more the consumer will want to know what to watch. As Pesce points out in his presentation, and as this essay has already addressed, the valuation regarding what to watch that was once filled by networks is now falling more and more to word-of-mouth. Whether it is blogs, email groups, or old-fashioned conversations, word spreads quickly if something is good, or if it is not. Networks have less power to create the idea that something is good. Instead, with the overwhelming choice to consumers on hundreds of television channels and the infinite depths of the internet, more and more things have to be good in order to be watched. This could increase the quality available to the consumer. Once this quality expectation increases, there will be no going back, as new producers will try more and more to fulfill these expectations if the established producers fail to.
Sports and other event programming have escaped this and will continue to for some time. In American college basketball for instance, the dead-ball timeout every four minutes played in order to make time for commercials is something dictated by the networks and the athletic associations. The value of sports is to watch what is happening in real time, and to share that experience with others in that same time. As long as these breaks can be dictated, the consumer will remain comfortable with them. As the Super Bowl is an example of, the social qualities that sports possess make for an ideal time for advertisers to reach a mass audience at once. During this American football championship, advertisements have even become a spectacle rivaling the event itself, especially for those who aren’t interested in American football, which is an ideal scenario for networks – and the companies that can afford to advertise during the Super Bowl (cost of an advertisement being $2.6 million per 30-second spot). In addition, the advertising situation in sports generally is symbiotic between the teams and the advertisers, since those affiliated with the athletics programs make money from the networks because they draw the crowds that see the commercials and go out afterward to buy the products. Though streaming video on the internet might be able to change this relationship down the road, the consumer would more likely remain comfortable with this model as it is today – one that the producers of the content and the advertisers would like to keep the same as well.
However, this model used for sports that is liberated from consumer’s expectations of watching what they want, when they want will likely transform into other programming as well, as has already been discussed with regard to ‘event’ television like American Idol. The consumer still values the magic that exists in the feeling of watching something communally, alongside millions of others. This factor is likely to continue to produce a shift in what network television produces and what cable and others produce – unless a newer advertising model actually becomes more successful.

Chapter 5

Broadcasters fight back

Although things are changing fast in the world of advertising, broadcasters are changing too. As mentioned earlier, some ad space still sells exceptionally well, such as during the Super Bowl and other live entertainment. Each year, greater sums are paid to obtain a commercial spot during the Super Bowl. In 2007 that figure rose to $2.6 million for a 30-second spot, which would have been seen by 90.7 million viewers (La Monica 2007). Companies attempt to make these commercials sufficiently entertaining so that members of the public will actually want to watch them, and the reward is access to over 90 million viewers. (Though of course this poses less of a problem with football in the UK and the fact that there are a very few commercial breaks.)
As the 30 second spot declines in productivity, product placement is becoming more and more useful to advertisers, and they are becoming more creative about using it. This kind of advertising will likely increase, perhaps even to the point of having particular products written into the script of sitcoms to counter the ability of viewers to skip the commercials with DVR technology or by downloading the material from the internet.
However, a new method of product placement is being used as well that puts far less pressure on script writers and production schedules: Painting the products into the frame in post-production. Instead of having the product on set while the filming is done, products are being inserted in post-production in the most effective situations.
TiVo is also using its ability to capture user data about what channels and programs they watch and when to target viewers with on-demand advertising. Viewers thus can choose which commercials they wish to see and which ones they want to skip, and the advertiser only pays for those that are actually viewed. Though this is a low-risk prospect for the advertisers, it is still unclear as to whether consumers will wish to watch the commercials regularly enough to make it worthwhile.
It should be noted, however, that it is estimated that only 10%-20% of households in the UK possess DVR technology (Woods 2006). And according to RTL Group, UK Television advertising is expected to grow after the worst decline in the last five years (Reuters 2006). So in the short term at least, networks aren’t too alarmed at the impact of such technology on traditional advertising models. And though trends are pointing to the minimized use of 30-second spots, it will be interesting to see to what extent the consumer is still willing to watch commercials – to what extent, even, that they feel commercials are all part of the television viewing process. The cultural power of commercials, and the feeling of unity and sense of common-experience they instill into a culture, should not be underestimated.
Another method networks are using to try to increase incentive for viewers to watch commercials is to hide information within them that viewers must look for specifically. This kind of “Where’s Waldo” approach to advertising was used in America in September 2006 in a “Gold Rush” event where viewers had to monitor commercials and shows on CBS to gather clues about where to find two million dollars. ABC also used this method to create “fake” commercials that held clues to about the show Lost. Whether or not this could be a successful long-term solution for the United Kingdom isn’t clear, but there may be a trend toward this approach to trying to stop viewers from ‘TiVoing’ the commercials.
In addition, there has been a rise of “entertaining” advertising, which has created a phenomenon in which viewers like an advert based on its entertaining qualities alone enough that they wish to watch it later or show it to a friend. In general, the advertising community has not yet made this easy, although some have used the Internet to widely distribute their adverts to anyone wishing to see or hear them. This would be an ideal scenario to advertisers, to create work that exists on its own as a form of entertainment or spectacle but that also sells the product that it was created for in the first place. Though difficult to succeed in, this sort of direct advertising to consumers could multiply with the internet being a prime tool for connecting directly with individuals, especially if the advertisers can make the vehicle of the advertisement unique and entertaining.
Often in broadcasts of sporting events, companies will sponsor certain statistics or a specific part of the game like the “Player of the Game”, or the best reply, etc. Advertisers here hope to join a positive aspect of the game with their product, and often will try to find an element of the game that is directly involved with their own product. This can be a very useful tool for advertisers to become integrated with a popular sport or even a sporting team.
On the Internet, advertisers are finding ways to reach viewers as well. For instance if someone wants to gain access to certain material on the Internet, they must first watch a short advertisement in order to view it. Consumers seem quite willing to do this. While advertising time pales in comparison to traditional television models, this method of making a viewer sit through an advertisement before even having access to the material is a beneficial one to the advertisers. This is another way that advertisers are adapting to new forms of technology.
In fact, in October 2005, Bill Gates claimed that the future of advertising is the internet Whitehead 2005). He envisions this in more personalized way of reaching the viewer as being one of the key components to 21st Century advertising. Gates projects that it will be harder to build big brands on the internet – something traditional advertising has been so good at and so focused on – but easier to connect more directly with the consumer, instead of a lowest-common-denominator approach. For instance, while news bands about certain topics will reach consumers directly, so will advertisements related to that consumer. This is being done already. In Google’s web mail service, website advertisements are listed to the right of the emails regarding topics that have been mentioned in the email. This information is not recorded or seen by an individual, so there are no privacy issues, and the ads are not images but simply words, so they are not disturbing to the viewer. An ingenious tool that is also being used in search engines, which is ideal to advertisers, is that if a person types in a search term, advertisements relating to that term will be presented to the viewer. After all, it is highly probable that they would be interested in products relating to that term. If advertisers can link their products with on-demand activities such as internet searching, this will help quite a great deal.
And these niche or targeted ads are of growing importance. Also brought about by the internet and the theory of The Long Tail advertisers will have an increasing ability to reach narrow audiences. In the past, the most efficient way to deliver a message was to blanket the largest mass market audience possible. However, usage tracking, customer profiles, and the growing popularity of niche content brought about by everything from blogs to social networking sites provides advertisers with audiences that are smaller but much better defined, leading to ads that are more relevant to viewers and more effective for companies to market their products. Among others, Comcast Spotlight is one such advertiser employing this method in their video on demand menus. These advertisements are targeted to a specific group and can be viewed by anyone wishing to find out more about a particular business or practice at any time, right from their home. This causes the viewer to become proactive and actually choose what advertisements they want to view. The more specific an advertiser can be at reaching relevant consumers, the greater the chance the consumers will buy their products. So even if the advertiser reaches a smaller audience, a greater percentage of that audience might actually buy the product, thereby helping to offset any losses.

Conclusion

Things change, things stay the same

As technology changes so does advertising. The recent and continued increase in such technology as DVR and broadband Internet has given consumers more choice than ever before to choose exactly what they want to watch, when they want to watch it. For consumers, this marks a great turning point in which they are not longer tied to a network’s schedule. As a result of this, however, a consumer is no longer tied to the traditional television advertising methods. This will have a major impact on advertising in the future, as consumers can edit out or otherwise avoid television advertising altogether. To combat this, television will have to find more creative ways of product placement, such as that found in Survivor, or even build advertising into scripts and plotlines. Networks might also shift to more live programming that can still maintain the traditional 30-second spot, not only for news and sports programming but also for other live event programs similar to shows like American Idol, when a large group of people are watching something all at the same time, and that the value of it is that it is happening live. One result could be more reality-TV episodes – which are inexpensive to produce anyway – combined with live television, to provide even more suspense while continuing to expose many viewers to advertisements.
TiVo advertising, like trends in Internet advertising, are attempting to target specific ads to specific consumers, increasing the chance that they will be interested in the products offered. Though legal constraints need to be worked out regarding the sharing of personal data, this could be an effective way of reaching consumers.
Advertisers will also address the shift of viewers from television to the Internet. One way they already do this is to make advertisements at the beginning of a downloadable program mandatory to watch, as Salon.com is doing for viewers to access its news content. Another method would be to embed this downloadable material with small graphics of advertisements in the programming itself.
Ultimately, advertisers will adapt, because they have to, and the networks and other technology that brings content to viewers will have every incentive to work with these advertisers because there is much money at stake for them as well. It is really a symbiotic relationship, at least while the viewing public, at least for now, is unwilling to pay for each program they watch directly. In fact, generations of viewers have become accustomed to some form of advertisements as not only part of their viewing experience, but part of a cultural connection that they might in some ways ultimately resist being without. While there are many changes for the future of the advertising industry, given all factors involved, the general well-being of the industry seems quite healthy and robust.
And finally, though new technology threatens traditional forms of advertising, it is not inconceivable that a new method might actually be more successful than the old. New technology might actually enhance the advertising industry as much as it has allowed consumers the ability to choose. The end of an old model of advertising, whether it comes in the next few years or next few decades, might actually be a good thing for the industry. And as Pesce reminds us, it creates a whole new world of opportunity for a whole new generation of producers and advertisers. Change can be good.