Changes in media technology and format have also gradually but fundamentally changed individuals’ expectations of advertising, along with their behavior as consumers. In studies by Yankelovich Marketing and Forrester Research, 70 percent of consumers say they like products that block advertising, especially TiVo and other digital video recorders (DVRs). Owners of these devices say they fast-forward through 92 percent of the commercials they receive. But relevance renders advertising worthy: Fifty-five percent of the respondents in one Yankelovich study said they would pay extra to receive more personalized marketing. In a Washington Post survey of working women conducted by Nielsen Media Research, 44 percent of the respondents (all of whom conduct at least part of their work online) rated the Internet a “very important” medium for prepurchase research on health-care products. That was more than twice the percentage saying they considered magazines, the next most significant research medium, “very important.” These results paint a bleak picture for companies whose marketing models depend on one-way “push” delivery of advertising impressions.
Meanwhile, the most successful media companies are building a presence in digital media (including Web sites, mobile platforms, social networking sites, and interactive gaming sites) and explicitly using that presence to develop deeper, more direct relationships with consumers. Broadcast and cable networks, for example, are making more of their high-quality content available to consumers online. Within just a few months of Apple Computer’s October 2005 introduction of its video iPod, ABC, NBC, ESPN, MTV, the SciFi Channel, and USA Network were among the television networks that were making shows available for download. In April 2006, ABC announced it would make four of its most popular prime-time shows available free on the Web. Dedicated online channels, such as ESPN Motion and MTV Overdrive, are selling out their ad inventory, at costs per thousand impressions (CPMs) that equal or exceed what they get on TV. Some mainstream programmers, including ABC News and CBS Sports, are putting content online or converting their programming into Web-only video formats, as Trio, the arts network, did at the end of 2005.
These experiments are only a harbinger. Because broadband delivery accommodates previously unwieldy video files, it will increasingly acclimate consumers to use of the Internet as an integrated information and entertainment medium. There will be vast new media inventories and new opportunities for advertisers to reach consumers who are no longer tethered to their living rooms or the network programmer’s schedule. As Apprentice and Survivor producer Mark Burnett remarked in February 2006: “To me, the new prime time is 9 a.m. to 5 p.m., because more people have access to a computer then.” Mobile devices will create additional opportunities to reach consumers outside their homes. With these developments accelerating each day, big-brand advertisers are poised to significantly increase their online advertising budgets, clustering around outstanding online communities and high-quality digital venues. In March 2006, for example, Heineken announced that it would launch its $50 million “Premium Light” beer campaign with ads on Yahoo, MSN, and ESPN.com, among other Web sites.
Conventional wisdom in the television industry has not yet fully grasped this change. Even with the tremendous publicity accorded Apple’s video iPod, the prevailing view is that digital video will create a new direct-to-consumer retail model — a pay-per-download revenue stream that will replace fragmenting advertising revenues. But it’s much more likely that digital video will embrace a variety of business models, including a great deal of free, ad-supported entertainment, offered to specified audiences who watch it when it is convenient for them and whose responses are tracked in detail. Although user attention is fragmenting, successful video deployment over multiple platforms will allow advertisers to deliver a much more targeted, productive, and measurable advertisement, and enable media networks and programmers to halt the advertising-revenue outflow and even capture new revenue.