The battle for channel surfers
Programmers are figuring out how to save television advertising from TiVo: Make commercials seem like content.
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| AMC's hit drama Mad Men is experimenting with a new kind of commercial. |
(Fortune Magazine) -- If you tuned into the season premiere of AMC's hit show Mad Men as I did, you were probably thrilled - giddy, even - to discover that you would be watching an hour of virtually uninterrupted television. Instead of the usual hash of commercials, BMW, the episode's sole sponsor, ran a single 60-second spot tailored to the show about 1960s Madison Avenue pitchmen. The ad featured a documentary-style interview with advertising legend Martin Puris, co-founder of the Ammirati & Puris agency, describing how he came up with the slogan "Ultimate driving machine."
As broadcasters stuff more commercials into their programming (the average hourlong show has 40 minutes of programming, down from 46 minutes just a few years ago) and viewers are finding newfangled ways to fast-forward through them, the innovative BMW ad struck a chord. On blogs, viewers used words not normally associated with advertising - they were "thankful" BMW stayed on the sidelines and let them enjoy their show in peace, and described the ad as "brilliant." The overwhelmingly positive reaction got me wondering why we don't see more of this. Turns out we will.
As long as there has been television, there has been channel surfing. The advent of DVRs, which are now in one of four homes, has heightened the rate at which we reach for the remote. But it's only recently that any true measure of our itchy fingers has emerged. Last year, Nielsen rolled out a service that advertisers have long been hankering for: the ability to count how many viewers actually stay tuned during commercials. Now the pricing of airtime depends not only on how many eyeballs a show attracts but also on how many stay glued to the set during breaks. The difference can be sizable: According to Nielsen, the average show loses 6% of its viewers during commercials, but when viewers watch the shows on their DVRs, the loss can be as much as 20%. "All the program providers are looking at how to position commercials differently to keep viewers tuned in," says Patricia McDonough, Nielsen's senior vice president of insights, analysis, and policy.
MTV, which took one of the biggest blows following the introduction of the new commercial measurement, has already aggressively reformatted its ads. Last spring, during episodes of its hit reality show The Hills, about a Laguna Beach high school grad who interns at Teen Vogue, MTV ran a series of commercials created by Unilever to plug a new Dove body wash. Starring Alicia Keys, the spots had a story line of their own about the lives of three roommates in their mid-20s living in New York City. The micro-series, as MTV calls the ads, retained 93% to 100% of the show's audience, compared with the network's overall 85% retention rate during commercials. "We are trying to think of the programming and the advertisements as one total experience," says John Shea, MTV's executive vice president of integrated marketing. "It's no longer us against them."
Cable and broadcast networks are also experimenting with more frequent - but shorter - commercial breaks. Fox is going one step further. During the Sept. 9 season premiere of Fringe, a new show about FBI agents battling unexplained phenomena, the network plans to air half the usual number of commercials during national breaks. According to industry executives, advertisers are willing to pay a premium for the remaining available spots, betting that fewer ads will give them a stronger chance of connecting with viewers.
That clutter-free effect certainly helped in BMW's case. The Mad Men spot was memorable for its content but also because it wasn't sandwiched between lots of other ads. The format, which costs about four times as much as a single 30-second spot, was so successful that AMC has lined up Heineken as the sponsor of the season finale. It's almost as if programming execs are channeling Don Draper, the show's lead character and Madison Avenue wunderkind: As he says in the debut episode of season one, "Advertising is based on one thing: happiness. And you know what happiness is? Happiness is the smell of a new car. It's freedom from fear." As the networks are learning, it's also fewer commercials. 
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