Hard times ahead for TV ads: survey

Mar 23, 2006 - Reuters

Apr 3, 2006 - B2B

TV advertising is less effective than it was two years ago, and the medium might take some hard knocks within the next two years in a market correction, according to a survey made public Wednesday at the annual Association of National Advertisers gathering here.

The ANA-Forrester Research study of 133 national advertisers found that 78% think TV advertising is less effective than it was two years ago. One major reason, according to Forrester vp Josh Bernoff, is digital video recorders, which allow users to skip commercials.

Despite a recent push by the Big Four networks to present research minimizing the impact of DVRs, Bernoff said the ANA-Forrester study finds that advertisers don't believe it. Sixty percent of respondents said that with a DVR "tipping point" of 30 million homes, they would spend less on conventional TV ads than they do today. Nearly a quarter of them will slice their spending 25% when that happens.

That's bad news for the television industry, which Bernoff predicts will see ad spending decline 5%-10% beginning in the 2007 season. But he said that it will not be a fatal blow to television or the tip of the iceberg to future declines: TV will adapt.

Advertisers are looking to find alternatives to the traditional TV spots, with the survey finding 61% interested in branded entertainment within shows, 55% looking at TV program sponsorships, 45% looking at online video ads and 44% for product placement.

"There's a gut feeling among advertisers that the 30-second spot is losing potency," Bernoff said. "Research aside, they're looking for alternatives."