Living With TiVo

We are about to see the TV industry turned on its ear. It won’t happen this season, but it’s inevitable. With viewers able to create channel schedules and control commercial viewing in a TiVo world, virtually every tool the networks use today will soon be obsolete.

It’s time to start experimenting and learning. Advertisers will not be able to create self-selective rather than intrusive messaging overnight. The question is, How do we adapt to this next wave before it hits us hard?

We let hours of TV into our homes each day and let pitchmen into the process at least 28 times per hour. With the PVR, this is about to change. Program-scheduling patterns—lead-in, lead-out, hammock position—will become meaningless if viewers can bypass them. Advertisers must find new ways to connect. Consumers will have to want to see the spots! The Age of the PVR will require a shift in the direction of viewer reward—without losing the selling message.

There will be a move back to program sponsorships. During the last three decades, scatter plans have been the rule, and sponsorship no longer means content that the audience applauds and rewards the advertiser for bringing to them. Today it’s mere signage, or a few extra commercials. PVRs are the bad news that will provoke us to get back to this good news: that consumers will again identify sponsors with program content.

What will the networks have to sell in the upfront? Plenty: adver tiser-supplied programs, sponsorships, varying commercial lengths, product placement, interactive formats, perhaps even complete channels programmed by advertisers.

The networks will also be well positioned to capture a “video catalog” opportunity, leveraging program schedules to funnel viewers through short, intrusive-but-enjoyable “invitation” messages to look at specific brands by clicking “Go there now” or “Bookmark for later viewing.”

Today, fewer than 1 million homes in the U.S. have PVRs. But DirecTV and EchoStar now offer PVR service without a hefty upfront charge, and some cable operators are marketing it for as little as $10 per month. And by 2005, cable’s conversion to set-top boxes with hard drives (and PVR capability) should begin in earnest.

On the upside, PVRs offer enormous opportunity for marketers that enjoy being leaders in the creative use of environmental changes. Consider the following ideas:

—Have the PVR track which ads are not switched out of by specific viewers, and send more of those types of messages to those viewers.

—Offer viewers info on the types of products and services they are in the market for, then record short-form and long-form commercials in those categories for those viewers.

—Since PVRs are digital, they are interactive. When viewers find a product or service they like, they can respond upstream and have a direct relationship with the advertiser.

—Long-form “programmercials” might be created that have sales effects but are not hard-sell.

—Some consumers could “opt in” and let personal data be measured.

A major challenge to harness the potential of the PVR lies ahead. The race will go to the swift.