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"With pressure from [digital video recorders], advertisers and ad agencies searching for something to replace the 30-second commercial are utilizing placement with a vengeance, especially in game, reality, and lifestyle programs."

TELEVISION soon will confront a dramatic dilemma--its advertising must change or networks will be forced to develop new sources of revenue. Television income derives almost entirely from advertising sales--especially the 30-second spot. However, they frequently exasperate audiences. Exercising their options, viewers have turned down the volume, flipped channels, or turned off the set during commercials. Now, individuals owning digital video recorders (DVRs) or personal video recorders (PVRs) automatically can delete all (or some) of the many commercials simply by touching a button, or they can last forward through commercials with ease--thanks to Sonic/Blue's ReplayTV with a delete button and TiVo with its fast forward button.

Unlike VCRs, which rely on the hassle of videotape, Sonic/Blue's boxes feature hard disks. Model 5160 features 160-hour capability, and recording a TV show is simple--hit a button once on the remote control and the show records digitally, hit it twice and every episode of that program is captured automatically. With Live TV Control, a person can elect to pause, show instant replay, or view in slow motion or frame-by-frame. The Theme Record feature categorizes by the film's star, theme, or key word. Sonic/Blue's 5000 model, compatible with cable, satellite, and antenna program feeds, connects easily to a home computer network through a built-in Ethernet port. This provides the ability to view digital photo slideshows on a TV set, and with broadband and Internet access, recorded shows can be sent to other locations. By using the ReplayTV's Commercial Advance button (the box recognizes signaled commercial breaks and deletes them), it is possible to play back recorded shows without commercials. With the QuickSkip button, specific commercials or certain parts of a film can be by-passed.

Launched in 1999, TiVo's Digital Video Recorder produces high-definition picture quality and has pause, rewind, slow motion, and instant replay "live" TV, with up to 60 hours of recording capacity. TiVo's DVR could produce 1,000,000 sales within a year. Forrester Research Group predicts that 16% of American homes will have a DVR by the end of 2005. TiVo's Season Pass feature will trace throughout a season every episode of a series, regardless of date and/or time changes. The WishList feature sorts programs by actor, director, team, or topic, and it skips reruns.

According to CBS research, 50% of viewers with TiVo watch prime-time shows by playback and avoid 70% of commercials. The fast-forward button features fast, faster, and very fast speeds to use to skip commercials. In a NextResearch study of 1,027 PVR users. 72% indicated that when they play back recorded shows, they watch ads only occasionally; 23% said they pass over all ads.

TiVo connects to an existing phone line without interfering with service; it works with antenna, cable, digital cable, satellite, or combinations thereof; and its website provides information for self-installation. It has an onscreen menu as easy to use as an Internet site. Having generated interest in many parts of the country, especially in California's Hollywood and Silicon Valley, TiVo appears to have a loyal and steadfast subscriber base. Federal Communications Commission Chairman Michael Powell, who admits to being a gadget freak, recently stated. "TiVo is God in my household. I can't wait ... each day to see what it has recorded for me."

America Online (AOL) members now can program their TiVo Series 2 personal video recorders through the AOL service free of charge. Using a button labeled "Record to my TiVo DVR," subscribers will be able to direct their own recording preferences. According to AOL, the service soon will be available via cell phones, pagers, and personal digital assistants (PDAs). TiVo also has developed a new audience--measurement tool that it claims will provide broadcasters and advertisers with the ability to analyze second-by-second specific viewing patterns within TV programs. The company is offering the TiVo Commercial Viewing Report, a quarterly subscription on viewing patterns within prime-time programs. Although TiVo will continue to sell its subscription service, it recently has concentrated on licensing its technology to hardware manufacturers and pay-TV operators. DirecTV and EchoStar are providing dual-purpose DVR set-top boxes. EchoStar currently has combined DVR set-top boxes in more than 500,000 homes.

Thompson Multimedia's Scenium Digital Media recorders can record up to 30 hours of programming, play DVDs, copy digital photographs, and transfer MP3 music files from a DVD or CD to a hard disk. Copyright infringement regulations preclude its copying a DVD movie to hard disk. Cable TV operators have begun viewing-on-demand (VOD) service to approximately 10,000,000 homes. The industry hopes to double the number of homes with VOD before 2004. Cable's digital recording function allows viewers to pause, record, and rewind films and TV shows and to fast forward through unwanted pitches. Cable operators and satellite companies expect to add high-speed Internet connections to TV set-tops and, with broadband, the capability to download a film from a directory of thousands.

Are TV networks and advertisers concerned? Indeed, they are. Although some speculate that the small number of homes having PVRs indicates commercials will remain unchanged for years to come, most advertisers are more realistic. Media moguls have discussed the threat of PVRs to the traditional 30-second advertisement at most conferences since 1999, when TiVo hit the market. At the Consumer Electronics Show in Las Vegas, Nev., in January, several presenters emphasized that the more than 2,000,000 DVRs in use indicate fast-growing popularity among the country's TV viewers: research shows that 70-80% of DVR users regularly bypass commercials. The ad industry is just beginning to realize that there soon may be a need for alternatives to the 30-second spot. Turner Broadcasting CEO Jamie Kellner has been warning consumers that TV households may have to start paying for broadcast programming. Viacom President Mel Karmasin forewarns that "we give you all this great content for free, and all we ask is that you watch our commercials. If the time comes when you do not watch our commercials, then we will have to make our money some other way." That "some other way" means the public will be expected to pay for watching "free" TV. However, that is highly unlikely--the FCC would interfere and the general public would rebel.

DVRs will not cause commercials to disappear from the airwaves--commercials of tomorrow will be integrated better and will become more relevant. TiVo's research department found that people do not reject advertisements per se, but rather the excessive number of commercials and subject matter that is dull, indiscreet, or just plain awful. Viewers watch tasteful, clever, humorous, and above all, meaningful ads. For example, commercials used on "Hallmark Hall of Fame" are so subtle and thoroughly integrated that viewers very well may believe the ads are part of the program. The 2003 Super Bowl, the second-most-watched game in football history (137,600,000 tuned in at various times, with an average of 88,600,000 viewers throughout the game), presented upbeat spots such as the Pepsi Twist ad with pop stars Ozzy Osbourne and the Osmonds, FedEx with its "Castaway" spoof, and Visa with National Football League twin brothers Tiki and Ronde Barber at a flower shop. TiVo monitoring indicates that more viewers watched the best commercials than watched the game itself. Although the Reebok pitch fell low on the list of favorite ads, many people actually remembered it more than the highlights of the game. ABC's Academy Awards telecast, which drew 2003's second largest female audience, included effective spots that followed Academy restrictions and maintained a sense of class and elegance. The tradition is for advertisers to show new ads, and for producers of commercials to try to outdo each other.

DVR companies and advertisers are working together to design expressly for the internet and TiVo's systems. For example, BMW has produced several short films attracting the attention of viewers and other businesses. One such series involved the talents of director Ridley Scott and actor Gary Oldman. Another short BMW film directed by John Woo and starring British film idol Clive Owen included one of the most exciting car chases in memory. BMW promoted the short films on its own "advertainment" site, BMWFilms.com, from which TiVo downloaded for its systems. The films also have appeared on several popular TV programs.

Taking a page from BMW's highly respected "moviemercials," Omnicom's DDB Worldwide has produced an extremely humorous 7 1/2-minute commercial, a favorite with viewers who have seen it and who are telling their friends to be sure to catch it. The ad is a continuation of Anheuser's Busch's "Wassup/True/That Is Correct" commercials. The lengthy ad--entitled "The Best Man"--premiered on the Internet on actor Kevin Spacey's TriggerStreet.com website. "The Best Man" had its TV premiere on FX's "Deuce Bigalow: Male Gigolo," starring Rob Schneider and Eddie Griffin. Most importantly, it was the only commercial to appear; it also was on Comedy Central following an episode of "Absolutely Fabulous," as well as on Turner Broadcasting's TNT and TBS Super Station.

For many years, advertisers paid to have their products "placed" into movies and onto television shows in such a way that characters use or consume them. With pressure from DVRs, advertisers and ad agencies searching for something to replace the 30-second commercial are utilizing placement with a vengeance, especially in game, reality, and lifestyle programs.

Game shows long have been an obvious showcase for advertisers because the programs mention, display, and list prices. The Game Show Network is taking the idea one step forward as it offers advertisers new opportunities to have their products placed on shows, not as prizes, but integral to the program. According to ad-sales head Michael Sakine, two of the Game Show Network's most popular programs, "Cram" and "Greed," are weaving "products into the programming when it makes sense. The key to good placement is using the product in the game play so viewers aren't overwhelmed." The network uses General Motors' Saturn Ion in "Cram," as players travel around Los Angeles, Calif., after an all-night "cramming" session, in an automobile decorated with the network's name and logo. The Saturn appears for about 15 seconds on each show, and writers work the name into some of the questions asked on the program.

The new 10-episode "Cram" season uses wireless headphones, high-tech binoculars, and other Radio Shack equipment; this is Radio Shack's first placement on a game show. Contestants who answer questions correctly will receive Sara Lee's microwavable sandwiches as a reward. This also is Sara Lee's first use of product placement. "Cram" host Graham Elwood and his sidekick Icey play with ZipZaps minicars before and after commercial breaks.

The network has come up with "Games Across America," a Saturday night block of time that includes subtle placement of merchandise. Programs include short segments featuring a traveling correspondent driving a car for a company that paid for the opportunity to attend various way-out and unusual "games." The marketing segments appear between commercial breaks from 9 p.m. to midnight.

July marked the debut of CBS's new reality show "Cupid," sponsored by AT&T and an online dating service Match.com with category exclusivity. The format includes two phone features with viewers calling in to vote in order der to help a woman select a possible mate. The Match.com portion of the program is an online contest among viewers vying for a date with one of the finalists who did not win the young lady's favor.

The Warner Bros. cable network and Pepsi have arrived at several placement deals, including "Pepsi Smash," a live music show sponsored primarily by the soft drink company, on which performers, naturally, consume the beverage. The network and Pepsi are cooperating on the program "Play for a Billion," from producer Michael Davies of "Who Wants to Be a Millionaire" fame. Pepsi again is the main sponsor. ABC's "Millionaire" game show was one of the first to feature AT&T as a main product placement. Pepsi and the WB Network have taken the next step in presenting programming without any 30-second commercials. An hour-long variety show pitching products from sponsors will be the first to appear. Pepsi and other advertisers also are part of "Live From Tomorrow," another of the network's new releases. Think of it--a TV show with no commercial breaks. This may be the beginning of the end for the standard ad spot.

Fox's "American Idol" has had successful product placement with the show's personalities never far from a Coca-Cola. "Idol" and CBS's "Survivor" have been among the most successful shows using the technique. Fox Sports Network is pursuing product placement on its "Best Damn Sports Show": Mike's Hard Lemonade logo appears on the bar front and Home Depot's logo on the back bar, and Labatt's Blue Bear mascot will make frequent appearances. In addition, USA Network worked with Chevrolet and McDonald's to place products in "Nashville Star," its talent series. A Chevrolet Silverado is the official transportation on the series, mad contestants looking for a place to eat head over to the fast food chain.

Feature-lengths are a venue for marketing as well. Toyota Motor Sales' T3 Tundra Special Edition pickup truck was driven by Arnold Schwarzenegger in Warner Bros.' "Terminator 3: The Rise of the Machines." Using films in another manner, Coors Brewing Company, in a multiyear promotional deal, will have the beer's logo displayed at major Miramax openings.

On the Internet

TiVo has added its showcase to other available services. They come in four-minute segments and allow advertisers to try various methods to reach the public. A company with a new product electronically can tag a 30-second spot allowing TiVo subscribers to see an icon indicating there is more product information available for TiVo subscribers who pause the live broadcast to see a branded showcase. In partnership with Chrysler, TiVo will promote the automaker's Crossfire by using several interactive entry points for viewers to see video clips, schedule a Speed-vision show featuring the car, and request a CD-ROM providing its specs. Porsche and Acura both participated in long-form ads on TiVo's personal-TV service. The showcase had separate two-week time slots: in March, the Porsche segment promoted the Cayenne, the brand's first sport utility vehicle; American Honda Motor Company's Acura appeared in April.

In June, Belo interactive began to target advertisers on its 34 Internet sites to demographically profile audiences and their online behavior. Eric Christensen, Belo's interactive vice president and general manager, explains, "If a consumer has shown interest in buying a car, finding a job, or moving into a new home by visiting related content areas on any site, a targeted ad can be delivered in real time to that consumer."

Smugly confident in their status quo philosophy, some television executives still believe the 30-second commercial is not in danger. David Poltrack, CBS executive vice president for research and planning, maintains "the 30-second spot is here to stay." Stanley Hubbard, CEO of Hubbard Broadcasting, believes that "people like commercials." Tim Brooks, executive vice president of Lifetime, declares that "most people just do not care enough to take action to zap the spots."

A reality check, however, indicates increasing numbers of ad agencies and advertisers are seeking alternatives to the 30-second spot--mainly product placement and brand integration in movies and sports, game and reality shows, websites, and anywhere else a logo and product will work in a script. Producers and writers steadily are improving methods for subtly sublimating ads and promotions within programs. The importance given to ad placement and brand integration at the PROMAX/BDA--an international association of promotion and marketing professionals and broadcast graphic designers--conference in Los Angeles in June indicates the industry's concern about ads. Aware that PVRs that skip ads have produced audience erosion, advertisers increasingly trust research showing viewers do remember product placement and tie-ins with sponsors.

Just think of watching a show without commercial breaks--no more interruptions. Advertisers will continue to pay for programs, but viewing their promotions will be painless, even pleasant.

Raymond L. Fischer, Mass Media Editor of USA Today, is Professor Emeritus of' Communication, University of North Dakota, Grand Forks.

COPYRIGHT 2003 Society for the Advancement of Education
COPYRIGHT 2003 Gale Group

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