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The Sad State of Commercials



Sham-wowCommercials are a distant thing of the past.  With website like Hulu, Sling, and IMDB, fans of different shows can watch their programs with limited commercial interruption, cutting down viewing time (for a normal drama) from an hour to about 46-47 minutes.  In TV business, this lost 13-14 minutes of paid ad times is huge.  And now, with TiVo and DVRs, you can blaze through them in a thirtieth of the time it takes to watch a commercial on Hulu.  I’m one of those viewers who has become spoiled, who loves watching a program straight through without interruption.  But we also have to think about the trickle-down effect that this has had.

First, the channels sell the commercial airtime to different companies.  They are usually relevant to the program that’s on.  Let’s say you’re watching 24…odds are there will be a Ford commercial as well as Allstate.  That paid airtime for the companies then gets dispersed throughout the cable company.  In this case, it goes to Fox, which then pays the actors, producers, set people, and on and on.  Sure by the time it gets down to the mailroom worker it’s pretty diluted, but they also see profit in their own way.  The lower the cost/minute ad is the less everyone gets paid.

Advertising and marketing agencies have had to diversify the way they sell their product.  Not only do they have to make ads for TV but also for the internet now—not only 30 second clips, but also banners and clickable ads.  The onset of how easily information can be reached has been both a blessing and a bane to them.  Recent studies have shown that the cost-benefit analysis of the difference between internet and TV advertising is 3:1.  That is for ever $3 it takes to produce an ad for TV, it takes $1 to do the same for the internet.

Nielsen, the leading company that provides information on viewers and demographics has had to change.  Not only do their traditional TV ratings, but they also include internet statistics.  In July 2009, there were almost 383 million videos streamed on Hulu.  Nine million people tuned into last week’s MTV VMAs, and if you used that as a barometer for a weekly show that everyone watches (like CSI or 24), that would roughly come out to 36 million viewers in a month.  383 million vs. 36 million is a huge discrepancy.  If I were in marketing, I would pretty much abandon any TV commercial production and shift it all into internet advertising.

With more people watching videos online, it behooves execs to shift financing from TV to the internet.  Compound that with the fact of reaching ten times more people in 30 seconds than it would in a 60-second ad AND that the dollar expensed would go three times as far, you’d be nuts to keep shooting for TV.  Now this isn’t to say that we’re going to be watching commercial-free episodes of 24 or Lost on Fox or ABC.  Someone will still be willing to shell out money to have their product featured during breaks.  So alas, we will still probably have to live with seeing Sham-wows and Magic Bullet ads during shows.

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