July 2006 - Marketing Methods

TV Viewing Trends in the Age of TiVo

By Peter Koeppel

There’s been a great deal of speculation regarding the effect of TiVo on TV viewing. I recently came across a ranking of the shows that have the highest percentage of their audience watching on DVRs. Among the top 40 programs on TV, the Fox show “24″ has the highest percentage of viewers who “TiVo” the show, according to a May 17 article in the New York Times. A total of 4.8 percent of the show’s viewers or 606,000 are DVR viewers, according to Nielsen. “American Idol” has the highest number of DVR viewers with 821,000, but the percentage of people who TiVo the show is only 2.8 percent. This makes sense since most viewers of this type of programming want to find out the winner right away-rather than waiting to view it later on their DVR device.

The percentage of viewers who TiVo top-rated shows still seems low at this point, but those percentages should grow, since “by 2008, more than one in four households will own a DVR, up from one in eight now,” according to Forrester Research in the NY Times. After reviewing the NY Times list of shows with the most viewers who did not watch the shows live, I was struck by the fact that all of the programs aired during primetime on the major broadcast networks. Primetime network broadcast shows are not where most DRTV advertisers typically run their ads, since these shows are too expensive to pay out for a direct response advertiser. Most of the DRTV advertising occurs in cable, satellite or syndicated programming and not during primetime. So this is good news for DRTV marketers.

Since Nielsen is now measuring DVR viewing patterns at the “upfront” market this year, for the first time, the major brand advertisers and their agencies are saying that they are not going to pay for people who don’t end up viewing a particular show. If the advertisers and their agencies take a firm stand on this, it could end up reducing media rates, which could trickle down to DR marketers. On the other hand, if more general advertisers wait until the “scatter” market to purchase media, it could impact DR inventory for certain types of programming, such as syndication. Typically if more general advertisers buy syndicated programming in the “scatter” market, DR advertisers end up losing their inventory to the general advertisers, because it was purchased at a lower rate.

The current economic model that TV is operating under, where you can avoid commercials and watch a show for free, is not sustainable.

“Television these days seems to be about where the Internet was five years ago. People are getting an amazing variety of entertainment essentially free…” according to David Leonhardt in his NY Times article. Web sites couldn’t sustain this model, so now many charge you for full access to their sites. At some point in the future, if you want to watch TV and avoid commercials, it’s inevitable that you are going to have to pay for it or perhaps technology will intervene and commercials that can’t be TiVo’ed will be created.

Peter Koeppel is president of Koeppel Direct Inc., a full service media buying agency based in Dallas. He can be reached at (972) 732-6110, or via e-mail at [email protected].


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