"As commercials whiz by at 60 times regular

"As commercials whiz by at 60 times regular speed, I'll often see something or someone that catches my attention," a TiVo enthusiast confesses in an 11:56 p.m. Web posting in late August. The Santa Rosa, Calif., resident—who goes by the screen name "heyitscory"—then asks the TiVo online community forum, What was the last commercial that made you go back and watch it?""The Starbucks ad with Survivor singing a new version of 'Eye of the Tiger.'" answers one, known to community members as "islander.""I had TiVo'ed a preseason football game and saw the Coors Lite sexy-twins commercial flash by when I was 30-second skipping. Naturally, I had to go back to see the twins," relays someone nicknamed "Rkkeller," telling the virtual group that it was the first spot he had seen in weeks."Suuuussssshhhhh!," reprimands "Rcrew." "Please don't talk about commercials that catch your eye quickly enough to get you to stop and watch. They are reading this forum, and you're giving them exactly what they are looking for! If you keep it up, we'll never successfully skip again."The Big Brother-esque paranoia is not unfounded. They—i.e., all those with a stake in keeping television advertising alive and well, from advertisers and agencies to TV networks and cable and satellite operators—are watching as TiVo and other personal video recorders, or PVRs, gain ground.Just as consumers are taking control of their TV-viewing experience with devices that let them record, play back, fast forward, rewind and pause programming, so too are some in the ad and media industry in shaping the future of television advertising.Even though PVRs, also referred to as digital video recorders or DVRs, were in only 2.9 million, or 2.7 percent, of U.S. households at the close of 2003, according to Carmel, Calif.-based Kagan Research, they are expected to reach critical mass in a decade's time, thanks to cable operators bundling DVR software into their set-top boxes and the falling price of stand-alone devices.By the end of this year, Kagan predicts that 6.6 million, or 6 percent, of U.S. households will own PVRs, and by 2009, those figures will reach 37.9 million, or 32.2 percent. By 2014, DVR penetration is expected to close in on cable's reach, at 62 million, or 49.2 percent of homes. Forecasts like that have advertisers such as Pfizer, Chrysler and Coca-Cola experimenting with options outside of the traditional 30- or 60-second spots. Alternatives range from sponsorships and product placement and integration to long-form commercials, interactive advertising and ad-supported video-on-demand."We're paying deference to the fact that the [PVR] is going to be something that's here to stay," explains Scott Grenz, director of media at Pfizer Consumer Healthcare in Morris Plains, N.J. The over-the-counter healthcare division of Pfizer put $320 million of its $375 million media budget behind TV last year, according to Nielsen Monitor-Plus, and "it's a very effective medium for us," acknowledges Grenz. "But anytime that changes take place in any medium that we communicate to our consumers in, we have to allow for those changes, and we have to try to be on the forefront in terms of what's out there in new technologies, new options, new venues."With good reason. TiVo reports that its 1.9 million subscribers (more than 1 million of which come from the company's joint venture with DirecTV) tend to skip three-quarters of the commercials in pre-recorded programs and half during prime time. "Our audience, if they're skipping, they're skipping the entire pod for the most part. They are not selectively choosing what commercial to watch," reports TiVo director of advertising and research sales Kimber Sterling. In other words, says Sterling, even an entertaining commercial is likely to get zapped when it shares company with what consumers expect to be mediocre or bad ads. The days of denial, when it was common to hear a media executive say, "I hope to retire before these changes take place," or a delusional creative director say, "I don't think consumers are skipping TV spots," are slowly being replaced by the age of acceptance, characterized by glass-half-full optimists who view PVRs as "opportunities" rather than "threats.""It's a change to the way people are going to consume media, and anytime there's a change, there's an opportunity, if you're willing to be flexible and take advantage of it," says David Rooney, director of media operations and cross-brand marketing at Chrysler Group.The Auburn Hills, Mich.-based automaker, which spent $850 million on TV ads last year, per Nielsen, concentrates much of its nontraditional broadcast efforts on product placement and integration and content development. The Chrysler 300 C will return in NBC's season premiere of ER this Thursday, after playing a pivotal role in May's finale cliffhanger. The car maker has also worked closely with NBC to integrate its Jeep brand into Fear Factor and to develop Jeep World of Adventure Sports, a Saturday-afternoon program that focuses on extreme sports; both shows befit the brand's "go anywhere, do anything" mantra. And this December, Dodge will be incorporated into a Tim McGraw special, also on NBC."Viewers have a certain tolerance for product placement, [but] if you go beyond a level that they feel comfortable with, either with blatant misuse of their relationship with the programmer or an over- commercialization of the show, you can actually cause harm to the brand," notes David Ernst, evp, director of futures and technologies at Interpublic Group's Initiative in New York. "But if done right, product placement can be a very effective way of reinforcing brand messaging." With companies such as Coke, Home Depot and America Online inserting their brands into programming like American Idol, Trading Spaces and the World Series, it's not hard to fathom that 51 percent of 55 marketers surveyed by Cambridge, Mass.-based Forrester Research said they would put more money behind product placement if large numbers of consumers could skip commercials while watching TV. And 53 percent said they would spend more on sponsorship of TV content and 45 percent on interactive advertising during programs.Therein lies the great potential of these new technologies—interactivity. Today, viewers typically interact with TV programs or advertising via the Web or their mobile phones, whereas tomorrow, audience participation could shift to the remote."When you're watching American Idol, there's no reason you shouldn't be voting from your remote. It shouldn't be from a cell phone; it should be from your television," says Sterling.TiVo has been courting marketers with the promise of interactivity, measurability and long-form advertising since 2001, when Lexus ran the inaugural campaign on the DVR provider's promotional platform. (For more on the potential for viewership data, see story, page 33.)Called Showcase, TiVo's ad package lets advertisers augment their TV commercials with long-form content and lead-generation capabilities. In June, Charles Schwab & Co. became the first financial-services company to use TiVo's technology. A 30-second spot starring golfer Phil Mickelson was made interactive, allowing TiVo subscribers to move from the commercial into a four-minute video and to watch three segments hosted by the golf pro. Viewers of the Showcase could also order information on Schwab's golf-rewards program."It's the TV-plus approach," says Jason Kuperman, director of operations at Tequila in Los Angeles, who oversees branded content for the marketing service unit and its sibling, TBWA\Chiat\Day. "It allows us to do stuff that's longer form. It gives us more freedom with the format." The Omnicom Group shops crafted a campaign for the Nissan Z for Showcase last November and is considering another for the Gardena, Calif.-based automaker this fall. "It gave us great results from the hand raisers, as far as a direct-response medium," adds Kuperman.At seven years old, Alviso, Calif.-based TiVo continues to shed its reputation as the grim reaper of TV advertising by making marketer-friendly upgrades. Its next software release—due out in a few months—will feature a fast-forward billboard, which will enable advertisers to insert graphics and text to grab the attention of fans of the fast-forward function. "It will be an opportunity for the advertiser to create a speed bump to get another chance to bring the person back into the commercial," says Sterling. During the past year, EchoStar Communications Corp.'s Dish Network, an Englewood, Colo.-based satellite-TV and DVR provider, has started to offer packages similar to TiVo's through Turner Media Group. Advertisers like Meineke and Stihl have embedded triggers in their TV spots to enable more than 9 million of Dish's 10.1 million subscribers to go to virtual pages or long-form programs about their products or services, explains David Rudnick, chief operating officer at Turner Media Group in Denver.But the question remains: Unless it's a movie trailer, what would possess a serial skipper to watch advertising that ranges from two minutes to 30? All agree that it has to be entertaining, informative and above all, relevant, to draw that consumer in and keep him or her captivated.One would think advertisers and agencies would jump at the chance to break free from the 30-second shackles that have confined their storytelling, just as BMW did with its Web films and American Express with The Adventures of Seinfeld & Superman. In good conscience, though, many can't justify throwing big money toward producing original content for these platforms when the penetration levels are still fractional."To date, because the footprint has been smaller, most of the content that we're getting on TiVo is either already existing or being re-purposed for the TiVo environment," reports Sterling. He predicts that will change, however, as PVRs become more mainstream. After all, "there really is no marketer that wouldn't rather engage their target audience for three minutes or five minutes versus 30 seconds," he reasons. "When you get a consumer to make that commitment to your brand, they've got to be a lot further along the purchase cycle by the end of that engagement."In the meantime, advertisers are marrying their existing assets with new television technologies in an attempt to reach remote-control-happy consumers. One short-term solution is targeted or addressable ads, notes Forrester senior analyst Eric Schmitt, because "it doesn't require consumers to change behavior."Comcast Spotlight, the advertising-sales division of Comcast Cable, for one, offers segmentation products that enable advertisers to customize ads with messages that are relevant to geographic, demographic or psychographic subsections of markets. (The technology is provided by New York-based Visible World.)"You don't need to speak to the masses if you can speak to those few and you have the content that is relevant to that person," explains Hank Oster, vp and managing director at New York-based Comcast Spotlight. The products, called Adtag and Adcopy, are now available in the Top 25 DMAs and are being rolled out to the rest of the cable company's 70-plus markets. Publicis Groupe's Fallon used the segmentation tools about six months ago to speak to specific Chicago neighborhoods on behalf of United Airlines' low-cost carrier, TED. "If you're going to skip an ad, you're going to skip an ad," concedes Stuart D'Rozario, group creative director at Fallon in Minneapolis. Targeted ads, however, make what has historically been an impersonal mass medium personal, he says. "It allows you to connect at a more specific level and a more personal level with people."Another alternative under consideration by marketers such as Pfizer, Remax and Chase Card Services is ad-supported video-on-demand. Last week, Chase and four other advertisers began running spots supporting Discovery Networks' VOD content in the Philadelphia market; working in the same way as the PBS model, a sponsorship message and commercial appears at the beginning and the end of the program. The financial-services company, which spent nearly $75 million on TV in 2003, according to Nielsen, will gauge consumer response through tracking mechanisms built into the spots. "No one's going to make their number based on the test," admits Manning Field, first vp of brand management at Chase Card Services in Wilmington, Del. "But getting access to learning on us, as well as aggregate learning on the other advertisers—in terms of how many people viewed it, did they fast forward, when did they tune out—is very important to us."The knowledge to be gained from these efforts is what's in it for most advertisers who are taking part in these early experiments. Many see their participation as "low risk," which often translates to low cost. It only stands to reason that the sellers of such infant ad models would cut the pioneers a break; after all, big-brand-name dropping can't hurt."I think the partners we're dealing with are eager to have some credible brands in their space, and I think it's something they want to induce advertisers to get comfortable with," explains Pfizer's Grenz. Product placement or integration deals, on the other hand, are another story, with several carrying price tags well into the millions, depending on the terms. "There are so many apples and oranges on the table here," says Forrester's Schmitt. "It's overwhelming and I think that the [industry] collectively doesn't know what to do. You're not going to have all of these 25 permutations of things 10 years down the road. I think the industry is going to want simplicity."It's a shock to an established system that is accustomed to buying time in 30-second increments to air primarily during a 8-11 p.m. prime-time window. As time-shifted viewing increases, "Suddenly dayparts become irrelevant," observes Chrysler's Rooney. "We go from fighting across three hours to fighting across 24 hours."Such uncertainty and flux have some calling for standardization, so that television avoids the creative and media Wild West that reigned during the early days of the Internet. But others say that's premature."I'm against it because I think you should date someone before you marry them," comments Mitch Oscar, executive vice president at Carat Digital, a New York-based division of Aegis Group's Carat that was formed seven months ago to investigate new forms of technology affecting TV. "Let's get a sense of it before we try to lock in standards that preclude people from participating. Eventually we'll have to, but we can't do it now because it would be too limiting."Until then, Schmitt says, advertisers will have to vote with their dollars. "Nobody likes change. It's a mess, and there are risks," he says. "You're going to make mistakes. … When you look for alternative outlets, there are no safe bets."Last year, Chrysler gambled on NBC's first season of The Apprentice and won. As the exclusive car sponsor of the Donald Trump reality series, the brand was integrated into the show's content and was reinforced during commercial breaks. Now a gaggle of companies, including Mattel, Procter & Gamble and Levi Strauss & Co., have signed on to be incorporated into season two, and Chrysler is looking to place its next wager. "We took the risk; we think we won," says Rooney. "And we want to keep moving on. Maybe there's another envelope we can push a bit."Ann M. Mack is interactive editor at Adweek.

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