Report: Ad Execs Stymied by DVR Ad Skipping

A new study issued by the DVR Research Institute suggests that advertising executives have a keen understanding of the threat posed by time-shifting devices yet are uncertain about what they can do to counteract ad-skipping.
The four-part report, “Advertising in the DVR Age,” reveals that 83 percent of marketers surveyed believe the increased adoption of DVRs will negatively impact the effectiveness of TV advertising in the course of the next three years. That assertion was echoed by ad agency executives. Per the study, 77 percent of agency higher-ups said that DVR usage will prove to be the greatest challenge to the current ad model.
As DVR penetration picks up steam––approximately 26 percent of US TV households subscribe to a digital video recording service, up from 17 percent two years ago––the potential for commercial avoidance rises along with it. But according to Tom Schultz, managing director of the DVR Research Institute, the fear engendered by time-shifting may be disproportionately elevated.

“So far the impact time-shifting has had on commercial viewing has been limited,” Schultz said. “According to our calculations, on average, a mere 5-6 percent of ads are being skipped.” That said, an exponential uptick in commercial avoidance will coincide with increased adoption of the technology. “Within two years, we forecast that ad-skipping will be closer to 16-18 percent,” Schultz said.

According to Schultz, the impact of DVR technology is not identical across all programming genres and dayparts. “It’s going to get much worse for prime-time, and dramas particularly are going to be hit hard,” Schultz said. “By 2012, anywhere from one-quarter to one-third of ads will be skipped in prime-time drama series.”

Horizon Media’s 2009-10 upfront report bears Schultz’ assertion out. Besides Fox’ American Idol, which was the most time-shifted program on TV last season, ABC’s Lost and Grey’s Anatomy drew some of the highest playback numbers, each adding 3.3 million DVR viewers per week. Fox’ House averaged 3.3 million playback views as well, while 24 averaged 3.1 million on-demand viewers.
While media executives have a number of DVR data streams available to them (via Nielsen, TNS Media Research and TiVo, among others), 75 percent of those surveyed by Schultz’ team reported that they felt ill-equipped to make the tactical adjustments necessary to minimize DVR’s impact.
“There’s no magic bullet. What works for one segment, say teenagers, will not work for seniors,” Schultz said. “You can’t bring MTV metrics to bear on the Hallmark Channel. So everyone who has a vested interest in developing best practices will need to constantly review their strategies.”

Since DVR penetration crept into the double-digit percentile, many networks have been particularly proactive in terms of how they’re structuring their commercial pods. And several cable outlets have swapped baggy four- and five-minute commercial pods for shorter, less cluttered breaks.

“DVR is not a death sentence,” Schultz said. “There are plenty of things an advertiser can do with its creative and a network can do with its commercial pods that can increase their chance of success.”