DVR Users Aren't Costing Ad Revenue -- Just Making It More Efficient

from the not-necessarily dept

Thu, May 4th 2006 7:49pm — Mike Masnick

Research firms seem to really enjoy claiming that some new technology or service will "cost" an industry some amount of money -- even if that's not really the best way to look at it. Remember all the fear about how much Craigslist was "costing" newspapers? In that situation it wasn't Craigslist costing the newspapers anything -- it was those newspapers' inability to adapt to the changing marketplace. Blaming Craigslist is a way to take responsibility off the newspapers. It's similar in the entertainment industry, with the movie industry blaming piracy for costing it some amount that it's clear they would never have received from revenue. The latest, though, is in the DVR space. A research firm is claiming that all those people who skip commercials on their DVR may be costing TV firms about $8 billion. Again, that's backwards. It's not the DVRs or the users costing the industry, but the industry's inability to change with the times. Already, we're seeing many creative attempts to deal with commercial skippers. What will happen over time is that, as certain methods are found to work, more TV ad dollars will shift to the methods that work, and the "loss" balances out. To assume that commercial skipping costs the industry money is ignoring the fact that most of that money is probably wasted right now. A large part of commercial advertising isn't very effective -- with most TV viewers not caring about those ads. What commercial skipping is doing is helping to highlight for the industry how to make sure their advertising efforts are more effective. If they want to look on that as "costing" them revenue, then that's their own loss.

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37 Comments

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rijit, 4 May 2006 @ 9:27pm

Woot 1st
Yeap, ia m costing big biznezz millions of dollars right now not watching tv, listening to the radio, or buying their junk. I love to cost other money =p

I agree, it does not "cost" them anything, yet there it is.
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Anonymous Coward, 4 May 2006 @ 9:28pm

VCRs
It's not like people didn't skip commercials when they recorded TV shows using VCRs. With VCR plus codes, it made recording TV shows nearly as convenient as TiVo, but I don't remember networks getting all up in arms about that. Same with piracy. How many people do you know that haven't recorded movies off of TV using (my god) a VCR...
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- Jason Ritenour, 4 May 2006 @ 9:34pm
  
  Re: VCRs
  If I remember correctly they did fight the VCR when it was first coming out. They eventually got over themselves and adapted.
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Anonymous Coward, 4 May 2006 @ 9:30pm

like how much tax cuts "cost" and how they are going to be "payed for" ...
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Stephen, 4 May 2006 @ 9:53pm

Oh... I don't know about that
TV Commercials are a lot more effective than you might think... Yeah, sure people don't care, and they don't like them, but when they can't escape them they engage them, if only subliminally... and when they are shopping they will prefer, not pursue, that which they trust, the one they saw on tv with all the pretty colors. You're prognosis is fine, they'll definitely adapt, but it is hurting them more than it may seem.
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- Joe, 5 May 2006 @ 8:06am
  
  Re: Oh... I don't know about that
  In regard to the DVR's & Tivo's costing the advertiser their ad dollars there have been studies that found that brand awareness went up when a consumer skipped the ad via tivo/dvr more then when they just watched TV to begin with....Anyone want to guess why?
  
  It's simply because when someone is fastforwarding past an ad they actually pay attention to the visual part of the commercial. When they are forced to watch an ad they tend to change the channel or go and make themselves a sandwhich. So Tivo/DVR is costing the ad industry nothing and actually making the ads more effective.
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A chicken passeth by, 4 May 2006 @ 10:20pm

This isn't an argument of the effectiveness of a TV commercial. The problem is that if the media wants us to watch commercials, it should not attach "wrongbad" connotations to it. By implicitly preventing skipping, they're sending a subliminal message that commercials are not to anyone's benefit, and that viewers watch them only because "it's the law".

Unfortunately, tho, media moguls don't seem to care for basic economics and sociological theory. They are in a different line of education, after all.
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- Brad Eleven, 5 May 2006 @ 7:44am
  
  Re: "media moguls ... are ... different"
  Yes. They are in a completely different world. This is why wealthy people look so weird (and are so fascinating) to the rest of us. My favorite example is George W. Bush, followed closely by the rest of his gang.
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  - Jonathon Suggs, 5 May 2006 @ 12:38pm
    
    Re: Re: "media moguls ... are ... different"
    I (almost) always admire anyone who comes from nothing and becomes wealthy. Even if it is something that I don't agree with. Seeing problems or opportunites and either solving or exploiting them is why they are different. What seperates them from you is action. They actually do something instead of sitting around complaining or just doing what they are told.
    
    Granted those things are a lot easier to do when you already have the money, and its also easier to maintain once you are on top. However, if they don't keep on top of what they are doing, either by improving or just holding on and fending off competition with a stick, then they will eventually be replaced with the next person ready to solve or exploit.
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parched, 4 May 2006 @ 10:49pm

who's costing whom?
I would like to address how much it is costing us to maintain a congress that works for the RIAA, MPAA, etc.

Now that, in my mind, is theft.
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Darknet, 4 May 2006 @ 10:59pm

More FUD, more spin, more bullshit ways at how the consumer empowering themself is costing the large corporates money.

They need to realise, on the whole we hate their crappy ads..they need to adapt and deal with it.
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Adskipper, 4 May 2006 @ 11:04pm

Let skip
My two methods to skip ads:

1. Mute button.
2. Change channel, go back in 2/3 minutes.
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Apennismightier, 4 May 2006 @ 11:35pm

I record TV shows with my DVR on my computer and a TV Tuner, and I also obtain shows in HD format via "other" ways for future archiving so that I can one day pop them into my computer, or even my own custom DVD and watch them again in high quality. While watching stuff with my DVR forces me to fast forward through the commercials, the "other" way doesn't include commercials at all. No matter what, I don't give a shit about commercials.

I also have absolutely no idea what's going on in the world. Not that I care to begin with, but it makes for awkward moments when your friends are well advised on current events and products and you're just finding out about something that's been advertised for months.

The main things I DO care about that I miss out on are movies and upcoming new TV shows I might be interested in. But if it doesn't grab my attention right away anyway, screw it. I'm waiting until those morons decide to put commercial tickers at the bottom of the screen or even worse and more shameless product placement... like Techdirt Online! Post comments to pertinent articles for everyone to read!
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- Marketing Genius, 5 May 2006 @ 12:40pm
  
  Scrolling Ads IN shows
  Ok, we'll get rid of the 30sec and 1min ads for a continuously scrolling ad ticker. Pure Genius!!!
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Apennismightier, 4 May 2006 @ 11:39pm

P.S. The commercials ANYONE cares about the least bit are the Superbowl commercials. Why? Because they are usually humorous and entertaining. When car commercials become funny, I might watch them.

Attention all advertisers. Watch 30+ hours of beer, videogame, and internet commercials and emulate.

And someone PLEASE put a stop to the sh** of all sh** commercials like the Taco Bell ads or the Vonage commercials who fail miserably at trying to be funny with a stupid random thing going on in the background. Those are more insulting than simplistic commercials in themselves.
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Brandon, 5 May 2006 @ 12:18am

I have a great way for commercials to adapt to Tivo...

SLLLLOOOOOOOWWWWW THEEMMMM DOOOOOOOOWWWWWNNNNN
they wouldn't even need to have music or voice, just text and pictures. but I guess they would only be able to play one of these Tivo Ready commercials per break since it only takes a few seconds to get back to the show.
Sure it will be annoying for non Tivo users,(...5 mins later"MY GOD THIS COMMERCIAL IS LONG, I don't even remember what it's about") but who cares, get with the times bra!
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John, 5 May 2006 @ 1:59am

Opportunity, not threat
I applaud the few experiments to "get around" ad skippers.

As a broadcast medium, I expect adverts make very little impact overall. Now, to find new ways to reach consumers, we may get a better model where adverts are better matched to those who are receptive, and ignores those who ignore it.

In other words, consumers are giving loads of feedback to advertisers on what grabs them, and what doesn't.
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Warhol, 5 May 2006 @ 3:23am

The best commercial
...would have no sound at all. Imagine the silence in the living rooms of the world. just some words appearing slowly o the screen then maybe an image. It would stand right out.
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DreadedOne509, 5 May 2006 @ 5:22am

Dedicated Channels Anyone?
They should dedicate channels for commercials only. Have a channel for nothing but competing car manufacturers, another for clothing, yet another for beer etc. This way my wife can see what is available in the fashion marketplace, and I can see all the different types of crappy beer I don't drink and still get to ogle bikini clad women.

The point a lot of people are missing here is that if your product is so damn good you wouldn't need to advertise it (initially sure), people would be scrambling to get one/it/a box of...Only the new products and the crappy ones rely heavily on commercial advertising.
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JODI, 5 May 2006 @ 7:05am

JUST A NEW WAY OF SKIPPING COMMERCIALS
DVR'S IS JUST A NEW WAY OF SKIPPING COMMERCIALS, WHAT ABOUT THE VHS TAPES, WE RECORD OUR TV SHOWS TO WATCH LATER AND STILL WE FAST FORWARD THREW THE COMMERCIALS. BECAUSE TECHNOLOGY IS DIFFERENT AND THEY CAN ACTUALLY KNOW WHAT WE ARE DOING THROUGH THE TIVO DOESN'T MEAN WE HAVEN'T BEEN FAST FORWARDING FOR YEARS. IT ALWAYS HAS BEEN HAPPENING. INDUSTRY NEEDS TO STOP BLAMING ON EVERYONE ELSE.
PS NOT YELLING IT'S AN ARCHITECTURE THING.
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- Hurt Ears, 5 May 2006 @ 12:44pm
  
  Then get a new Architecture
  I'm not screaming, I'm just talking REALLY LOUDLY!!!
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spugbrap, 5 May 2006 @ 7:11am

don't forget what we learned about commercial-skip
From an article on techdirt last month, DVR Owners Don't Watch Commercials... But Still Remember Them:
Another report finds that DVR owners remember ads just as much as non-DVR owners. The reasoning is pretty straightforward: fast forwarding through commercials takes more concentration on the actual commercials.
This was linked to from the text "skip commercials" in this story, but I think it deserves highlighting. According to the study cited in the story last month, DVR users that skip commercials remember as much from the ads (if not more) than non-DVR users do. So this whole "lost ad revenue" study totally conflicts with that other study.
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RMartin, 5 May 2006 @ 7:17am

30-second skip
I can tell the advertisers the BEST way to place their ads. Most TiVo users will use the 30-second skip hack to start bumping commercials as soon as they break from the program. That usually takes a 1-3 second reaction time. If they advertiser puts something REALLY visually exciting (naked women, a hot car, a car crash, a popular celebrity - you get the picture) in the first 4 seconds of their ad, they WILL get some TiVo users to NOT push the skip button again. I've been know to hit the skip by mistake when my brain registers "HOT PICTURE" and then skip BACK to actually WATCH the commercial.
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Scottitude, 5 May 2006 @ 7:47am

What's next, a channel
I don't even watch commercials during real-time viewing. When the break starts, the channel surfing begins; CNN, Bush News, a few music or video channels, or even two minutes of a different show fills the commercial break reather nicely.

What's next, stations "locking" me onto their channel so I can't watch two minutes of a Seinfeld rerun while they push the latest must-have product that's sure to make my life better?
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- Scottitude, 5 May 2006 @ 7:53am
  
  Re: What's next, a channel
  Subject shoudl read "What's next, a channel "lock"?. Don't know why it was dropped...
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Andy Huckaba, 5 May 2006 @ 8:00am

Right on the Mark!
Bingo! You're exactly right about this. Strangely enough, I blogged on the same subject today, prior to reading this. Check out my post called DVR Users Skipping Ads??? Glad to see someone else gets it!
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Andy Huckaba, 5 May 2006 @ 8:02am

Right on the Mark!
Bingo! You're exactly right about this. Strangely enough, I blogged on the same subject today, prior to reading this. Check out my post called DVR Users Skipping Ads???

Glad to see someone else gets it!
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SomeBody, 5 May 2006 @ 8:27am

What the hell
Who says I have to watch the commercials? Screw all of these companies and their "lost" revenue. Last I heard (although the government is trying to take it away) America is a free friggen country. There is no law that states "Thou shalt watch all commercials lest the big wigs at Walmart might looseth their money" (I know that sounds more commandmentish). Screw them and anyone else that thinks they should force people into watching commercials. The purpose of buying a product like TiVo is to benefit the consumer not the advertisers. The reason I spend extra money on my cable for HBO is to have no commercials. That's my right as a consumer.

I don't have a DVR and I really don't have a need for a DVR. I don't watch commercials as it is. I usually change the channel. If I do leave the commercial on it's because I'm at my computer basically using the TV as background noise. Why should I be forced to watch the Law Office or Burnetti PA personal injury attorney, commercial? Honestly if every show was prefaced with a quick, "this eppisode is brought to you by Jack Mehoff's tires," (similar to PBS) I might actually watch more TV and not skip commercials.

I'm not anti commercial. I have no problem getting free TV because advertiser are willing to pay for the show by placing ads throughout. I am anti anyone telling me, "No, you have to watch these commercials." Maybe if manufacturers made better products, maybe if advertisers made entertaining commercials, then just maybe, this would all be a moot point. Believe me, I didn't hear about TiVo from a commercial. Everyone I know that actually owns a TiVo raves about them. It's a good product and the word spread about it.
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BigEd, 5 May 2006 @ 8:46am

I Like commercials...
Thats my break time to get more snacks, refill my drink glass or a run to the toilet maybe a chat with the person I'm sitting with. I know there is a pause button but I like the challenge of getting back on time, the minute to let sink in what I just watched.
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JamesW, 5 May 2006 @ 9:10am

Bring Back BlipVerts!
Sounds like the Networks need to take a hint from Max Headroom.

BlipVerts..

So Spontanous Explosions occur in a percentage of viewers, it's all about the Benji's...
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Topher31, 5 May 2006 @ 9:16am

RE I Like commercials
BigEd, me thinks your VCR flashes 12:00 am constantly too. I.e. embrace new technology buddy! There is no challenge in life trying to pee within 2 minutes and there isn't that much on television to reflect on.

I can't skip ads with my DVR, only fast forward through them. The only time I stop on an ad if it looks humerous or is entertaining.

Shocker: Entertaining commercial actually get people to watch them instead of vapid annoying advertising.

Advertisers should never assume that their ads are effective, period. Even before DVR times, people would either mute the channel, or get up, or even turn off the TV for a few minutes. Mostly, people simply channel surfed, skipping commercials by watching 2 minutes of some other program. The BIG fact is there was never a guarantee that advertising on television was ever that effective, now there is just an easy scapegoat to blame for lack of advertising effectiveness. Because they can claim that DVR's explicitly allow viewers to skip commercials, then they MUST be blaimed for lack of efficiency.

These claims are made by rich ad executives who are loosing just enough money to prevent them from upgrading their 2005 Porche to a 2006 model. I.e. the industry CLAIMS they lose BILLIONS, but how many BILLIONS do they make in the first place!

I can't feel sorry for someone loosing 5-10% of a multi-BILLION dollar market.
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Bill Hicks, 5 May 2006 @ 9:18am

Advertisers
"By the way, if anyone here is in advertising or marketing, kill yourself. Thank you, thank you. Just a little thought. I'm just trying to plant seeds. Maybe one day they'll take root. I don't know. You try. You do what you can. Kill yourselves. Seriously though, if you are, do. No really, there's no rationalisation for what you do, and you are Satan's little helpers, OK? Kill yourselves, seriously. You're the ruiner of all things good. Seriously, no, this is not a joke. "There's gonna be a joke coming..." There's no fucking joke coming, you are Satan's spawn, filling the world with bile and garbage, you are fucked and you are fucking us, kill yourselves, it's the only way to save your fucking soul. Kill yourself, kill yourself, kill yourself now. Now, back to the show.

"You know what Bill's doing now, he's going for the righteous indignation dollar, that's a big dollar, a lot of people are feeling that indignation, we've done research, huge market. He's doing a good thing." Godammit, I'm not doing that, you scumbags, quit putting a godamn dollar sign on every fucking thing on this planet!"
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Kittyhawk, 5 May 2006 @ 9:53am

Skipping commercials an ongoing thing.
Like I stick around for the commercials most of the time with regular TV. I'm usually using the restroom, getting a drink, talking to family, ect. I don't watch commercials any more or any less with the DVR. Plus, with interesting commercials, I will actually review to catch it! Try that with traditional TV settings!
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Dion, 5 May 2006 @ 10:34am

The only thing constant is change...
The universal truth is that the world changes and successful people change with it, the really good innovate and cause change, e.g. TIVO. Media companies will adapt and the ones that succeed are those that adapt without forcing the consumer behavior through legislation and restrictions.

I skip over commercials, but I find myself stopping to review interesting and entertaining ones. More then once I have heard, "Wait, I like the commercial!" from one of my children. In my opinion, the advent of DVRs will force more creative ad placements, as well as, forcing media advertisers to get more creative to make interesting and flowing advertisements.

For example, the way that Paul Harvey (radio personality) flows between stories and advertisement spots almost seamlessly. The ad is just another article, till you recognize it as an ad.

As for those that denigrate the advertisements and the advertisers, and claim your ultimate right to skip and ignore the commercials, and wish they would just shrivel up and die, you have little understanding about where the money for the shows you are watching come from. No advertisers, means no high-paid actors, directors, and script writers. Which would ultimately leave us with shows that look like they come from a basement in Aurora, Illinois.

After all, have you seen some of the videos available from videos.google.com. A great technology to be sure, and a wonderful way for the collective creative genius to be presented to the world. But really, it will be a while before the open market produces consistently entertaining shows with depth, character, production quality, and significant length. Frankly, I like my CSI, and don't want to pay to see each episode. So Vive l'advertisers.
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Anonymous Coward, 5 May 2006 @ 10:39am

"Which would ultimately leave us with shows that look like they come from a basement in Aurora, Illinois."

Excellent!
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cheryl, 5 May 2006 @ 10:40am

so if they try and kill tivo
what's next, my mute button?

because I haven't unwillingly listened to an add since we got a TV with a remote in 1992.

THOSE dollars were certainly wasted.
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ITGuy, 5 May 2006 @ 11:01am

Next target will be....
Just imagine how much money people who dont have DVR devices are costing TV networks by getting up and going to the bathroom or running to the kitchen for a snack during commercials. These people MUST be chained down and forced to watch EVERY commercial or its like they are stealing TV.
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