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The Future of TV Commercial Load: Overload Is Not the Answer

June 10th, 2019   ||    by John R. Osborn

Last year, MediaPost reported that NBC and Fox announced plans to test reductions in TV commercial load—creating premium-priced inventory in shorter “pods.”

These two networks are the exception. Across all major cable groups, commercial clutter is at an all-time high, according to MediaPost. Many networks have increased commercial minutes to make up for fewer viewers. There are no early indications that these networks will reduce commercial loads at this time.

On the ad-supported video on demand (VOD) and digital streaming video side, however, Hulu announced it will substantially reduce TV commercial load while also decreasing ad-supported subscription prices, noted The Streamable.

Though clearly in flux today, it is reasonable to assume that reduced TV commercial load is the future of linear and streaming television.

Where and When Is the Tipping Point?

In the coming years, there will be less in-program TV commercial load as TV becomes T/V (Television/Video), as automation and technologies like ATSC 3.0 arrive, and as ads and content are consumed in new and different ways. TV stations will have more opportunities to deliver ad-supported content via new distribution platforms, including live broadcast, VOD, and streaming digital technologies.

Advertisers already know that consumers find ways to avoid ads by switching channels, fast-forwarding on DVR and VOD, and shifting focus to other devices during ad breaks. Commercial clutter feeds ad avoidance. As Hulu is finding out, reduced ad loads deliver a better viewer experience with premium pricing opportunities. Disabling fast-forwarding for VOD is not a positive viewer experience and thus not a solution, according to MediaPost.

As second-by-second, screen-level viewing measurement arrives through automated content recognition, dynamic ad insertion, and addressable TV, the value of ads actually viewed will be calculated in new ways. Marketplace currencies like Cost per Completed View (CPCV) will shift the denominator from the long-standing Cost per Point (CPP) and Cost per Thousand Impressions (CPM) model.

What Can Buyers and Sellers Do?

Buyers and sellers of local TV can prepare for a future where local TV is part of a larger and more dynamic marketplace by taking the following actions:

  • Be open to change management.
  • Gain firsthand knowledge of automated TV.
  • On the sell side, add new data analytics tools to price ad buys for different targets.
  • For buyers, reach beyond CPP and CPM.

Reduction of TV commercial load is a positive for buyers and sellers, as ad value becomes based on actual rather than opportunity viewing. Driven by technology, historic TV supply and demand forces will evolve into a marketplace from which both sides can benefit.

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