TV Commercials Are Dead! Long Live the TV Commercial!

PUBLISHED: August 21, 2008

By Bill McCabe
Senior VP
A.Eicoff & Co.

Ten years from now, television commercials will cease to exist. 

This prediction is being whispered in the corridors of ad agencies, in television network hallways and in the meeting rooms of blue chip advertisers.  

It is a prediction based on certain statistics and trends.  For instance, an Advertising Age study found that the top 100 advertisers shifted $1 billion last year from television and newspapers to the web.  In addition, experts estimate that 40% of households will have DVR capabilities by 2012, making it easy for viewers to watch programs without having to watch commercials.  And market research firm Outsell Inc. recently reported that online advertising this year is expected to increase 12.3% and reach $105.3 billion, exceeding the combined amount spent on radio and television advertising for the first time.

So is the television commercial doomed?  Not at all.  Contrary to these statistics, certain types of commercials are healthier than they’ve ever been.  Ten years from now, traditional 30-second, brand-building network spots may be scarce, but we’re going to see a new breed of commercial—a breed that is more measurable, flexible and targeted than what we’re used to.

Yet media pundits are quick to tar all television commercials with the same brush.  They envision a time in the not-too-distant future where all stations will be similar to HBO and programming will be supported solely by subscribers and other ancillary income sources.  

The problem is that these pundits are mistaking an evolution in viewer advertising attitudes for a revolution.  People have always complained about commercials and sometimes muted the television when they air.  But they have also accepted them as the price they pay for their favorite programming.  There’s no evidence that this is changing.   Huge numbers of people are still watching their favorite network programs, sporting events and talk shows in “real” time and sitting through the commercials.  An unwritten pact exists between viewers and advertisers: You give us good programs and we’ll accept a certain amount of advertising.  

This pact will remain in place in the future, though with modifications.  Viewers have more leverage than ever before; they can watch commercial-free cable stations; they can zap commercials; they can download their programs commercial-free to various hand-held electronic devices.

As the balance of power shifts, so too will the type of commercials that air.  As television becomes a much more individualized, responsive medium, commercials will follow suit.  30-second network “glamour” spots were perfect for a mass medium.  As the medium becomes more specialized and as the individual viewers exercise greater power over what is viewed, we’re going to see more direct response commercials, more spots designed to lead viewers to web sites and more viewer-controlled advertising.

If you look closely at emerging trends in television advertising, you’ll see that many of these the predictions are already taking shape.  Even an casual observer will notice that a much greater variety of spots exist now than ten years ago: longer-length spots for packaged goods products, a continuing expansion  of direct-to-consumer pharmaceutical commercials,  a boom in direct response high ticket offers for cars and travel and a growing number of not-for-profits taking advantage of television’s fundraising power.  If you look a bit more closely, you’ll also notice that more commercials are including web site addresses that, when viewers click on their sites, offer them various options: watching infomercials, finding tech specs, requesting a sales call.

Convergence technology will increase viewer control to the point that people may be given commercial options: choose between ten commercials, each for a different type of car; or the choice may be  between a car commercial, a spot for a piece of athletic equipment and one for an airline.  

If you still believe that television advertising is on the verge of extinction, consider three key advantages it has over web sites and other new media.

First, it partners well telemarketers.  Viewers are accustomed to calling an 800 number after seeing a direct response commercial.  They want to talk to a knowledgeable human being.  It is a well-conditioned reflex, one that doesn’t work nearly as effectively on web sites.  Browsing is an internet term, and that is exactly what people do when they visit a web site.  Sites have not yet developed a similarly effective response mechanism.

Second, commercials on television are more impactful than commercials that run in the new media.  A larger screen and a superior sound system allow commercials to have a much greater impact on viewers than the smaller screens and poorer sound of many computers, smart phones, etc.  

Third, people don’t zap most commercials. DVRs are primarily used for top-rated network programs.  The vast majority of television programming—reruns, older movies, talk shows and so on—aren’t recorded.  On top of that, the majority of viewers don’t use DVRs frequently or at all.  Television remains a passive medium.  Most people prefer to sit there and watch rather than “do” anything, even if technology makes it simple to do away with commercials.

Rather than make the argument that television advertising is dying, a better argument is that television advertising is changing.  It is morphing into a much more specialized, responsive strategy than in the  past, and for advertisers that pick up on this trend, it will be an even more effective strategy than ever before.