IS TV “ADVERTISING” DEAD?May 2009

Is TV “advertising” dead? Or has it just morphed?

My favorite 2009 Super Bowl commercial was for the online video website Hulu: “Hulu, an evil plot to destroy the world.” This commercial, starring Alec Baldwin, was a wonderful 30-second mini-film that not only delivered a large audience to the Hulu website, but also acted as a harbinger of the future of TV and Internet video.

According to Hulu, website traffic surged by 55% during February, 2009 as a result of the ad. The success was enough to drive Hulu up to 7.8 million unique visitors for the month and make the site the second-fastest growing property in ComScore’s monthly analysis.

To dial this up a bit more, the commercial has been viewed over 696,000 additional times on YouTube since the spot aired.

So, let’s analyze this information:

1. People continue to watch TV.

The perception that television viewership is history is incorrect. Viewership may be morphing, but it does not appear to be in decline.

Here is a quote from the February 7, 2009 edition of the New York Times on a recent Nielsen report:

“Consider that the average American household consists of 2.7 persons and contains 2.9 television sets, in front of which we sit for record-setting spells, according to Nielsen figures. In the quarter ended September 30, the typical American watched 142 hours of television monthly, up about five hours from the same quarter the previous year.”

Where we are seeing change is in the rate of use of television by different age groups. Not surprisingly, younger age groups watch less television than their parents and grandparents.

According to Nielsen’s 1st Quarter 2009 report:

If you are approaching 65+, settle into that Barcalounger. The 65+ crowd watches a whopping 211 hours of television per month.

2. Television advertising works.

Citrus employs virtually all analog and digital media to help our clients reach their B-to-C and B-to-B audiences. However, no single medium generates awareness like television. While online advertising is efficient and its effect can be tracked to conversion, it does not deliver high-volume awareness as quickly as television.

Additional benefits of TV advertising include:

Even with this good news, advertisers have concerns. One fear is generated by the constant drumbeat that targeted interactive advertising is more effective than the ambush nature of TV commercials. Another is that people “hate” TV advertising. Well, they might hate it (any more than pop-up ads?), but they still respond to smart messaging, as evidenced on the Hulu comercial.

Advertisers are also concerned that Digital Video Recorders (DVRs) and their dreaded fast-forward buttons are killing the benefits of day-part viewing. This killer may be coming, but according to research, it hasn’t arrived yet.

While 25% of American homes have DVRs, slightly less than 5% of viewers are time-shifting (watching shows when they want vs. when the networks want). No, this low number does not make sense given the obvious benefits of DVRs. However, this is what Nielsen reports.

Despite today’s relatively low time-shift numbers, the trend indicates that time-shifting will increase. Time-shifted television grew 40% from 5 hours 52 minutes to 8 hours 13 minutes per month. This will be compounded as DVR penetration reach grows to over 50% of households by the end of 2010, according to the Carmel Group.

1979 Coca-Cola - Superbowl ad 2009 Hulu - Superbowl ad

3. Television commercials have an afterlife.

The Hulu commercial blew past its Super Bowl debut to continue its reign on the Internet. There are over 100,000 Google results for that particular spot. Add these numbers to the audience of the original television commercial, and you have a fairly dramatic winner. From the old days of CBS, NBC and ABC, distribution has become exponential.

We produce television commercials, long-format commercials and corporate videos. In all cases, we are excited by the seemingly limitless distribution options.

Consider just some of the options available today for efficient distribution of a TV commercial.

The largest growth will clearly come from video on the computer monitor and mobile phones.

Internet video viewership is no longer a novelty. Nielsen reports that 131 million Americans watched 3 hours of internet video per month in Q1 2009. I initially missed Jon Stewart’s roasting of Mad Money’s Jim Cramer. However, I watched the show a couple of days later on both YouTube and the Comedy Central website.

It’s not just TV shows that are being watched online. Burger King’s “Whopper Freakout” commercial has been viewed over 360,000 times on YouTube.

Not surprisingly, teens and Gen Y are more likely to watch videos online than older

72% of Gen Y (18-32), 57% of Gen X (33-44) and 49% of younger boomers (45-54) watch videos online.

If you are a marketer targeting younger age groups, this is significant and will dramatically affect your media selection. However, we strongly believe that older age groups will increase their online video usage rapidly as online video becomes ever more prevalent. (It’s hard to miss, right?) In fact, the 55+ group is the fastest growing social media demographic.

Video is moving to the mobile phone. Yes, slowly. But surely.

American mobile phone subscribers watched on average 3 hours and 37 minutes of video on their mobile phones in 2008. These numbers will grow as a result of the increase in video-capable phones (now 36% of all phones), powerful smart phone

carriers are also helping with free trial video services and lower pricing.

If you are wondering what the future of mobile video looks like, look to Japan. A recent survey of Japanese mobile phone users by the research firm Net Asia indicated that 57.6% of mobile phone users watched videos on their mobile phones in 2008 (up an impressive 13 points from the last survey in April 2007). Mobile video is omnipresent in Japan.

Where do we go from here?

First, the obvious: Not all TV commercials (and videos) are created equal.

Some are downright embarrassing as they deliver neither a clear, motivating message nor the benefits of entertainment that comes from a great concept, smart copywriting and professional production. The success of the Hulu spot is directly related to the power of its creativity and excellent execution. The takeaway is that in order to benefit from the inherent power of TV and extended distribution, the commercial itself better be darn interesting in the first place. Unless you want to go viral for the wrong reasons (because your advertising is so lame it is worth sharing), make sure the creative is powerful.

A second point is that not all distribution is created equal. Some distribution will happen organically, a là “Wow, I want to pass on that new Nike spot via email.” However, some viral opportunities will require that you first consider your audience (demographics and viewing mind-set) and then the technical attributes of the new distribution channel. Whether it’s the original 30-second format or a new edit, just slapping your commercial into an interstitial unit at the beginning of a CNN video might not cut it. Simply broadcasting something produced for 50 inches on a 2-inch mobile phone screen won’t work, either.

Rumors of television’s demise are greatly exaggerated. The truth is, TV advertising still works. It may even work harder than ever before. But, yes folks, you will need to work even harder, as well, to extract and leverage the TV commercial’s new-found power and incremental reach.

TV and videos” at the top of your to-do list. Followed by my phone number. Then call me. We can discuss how you can leverage our TV expertise to meet your objectives, this white paper, how great “30 Rock” is. Anything really.

To read more great Citrus white papers, visit citrusbegin.com/whitepapers

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