Tuesday, December 21,
INVESTOR'S BUSINESS DAILY
BUSINESS & THE ECONOMY
TV ADVERTISING HITS SNAGS AS
CABLE, TECHNOLOGY TAKE TOLL
These are shaky days for broadcast
television advertising. Ratings are slipping. In 1987, the
highest rated show, " The Cosby Show" averaged a
35 rating, which means it got slightly more than a third of
the viewing audience. By 1997, that number shrank to 21 for
top-ranked "E.R." Now, an 18 rating means a higher
There are a number of culprits.
Tops on the list has to be cable, which outpaced broadcast
in number of viewers for the first time last year. Cable networks
also saw their ad revenue double to $8 billion from 1992 to
And now technology vows to
make more trouble for broadcast networks. New devices such
as personal video recorders can record TV programs on a hard
disk. These allow viewers to create their own schedule by
recording and watching only the shows in which they're interested.
They also can skip over commercials. Two devices - TiVo and
Replay - are on the market.
"These devices will undermine
the business model for free television," said John Bernoff,
analyst with Forrester Research. Bernoff, who has been using
the recorders, admits he skips most of the ads. He estimates
that within 10 years, four out of five homes will have them,
which will cut commercial viewing in half.
Leaning On Rivals
The rise of another technology,
interactive TV, may mean broadcast will have to lean on the
cable networks if it wants to join the party. With interactive
TV, commercials are linked to web sites, which can be delivered
through only cable satellite boxes. That means broadcasters
have to team up with cable if they don't want to be left out.
The Big Four networks can blame
themselves in part for this mess. Fox, CBS, ABC, and NBC all
participated in the development of personal video recorders.
Now they've had to do an about-face and have allied to fight
To keep as revenue coming,
networks have offset the slipping ratings with higher rates.
It costs up to $3 million a minute for the Super Bowl. On
top of that, more ads are crowded into each program.
Since 1989, two minutes of
commercials have been added to each hour of programming, bringing
the hourly total to nearly 16 minutes in prime time. In daytime,
three minutes have been added bringing the hourly total to
20 minutes, the American Association of Advertising Agencies
Cause For Concern
Experts worry about the effect
networks are having on viewers by bringing more commercials
into the picture. The abundance of commercials can annoy as
well as destroy the ad message itself, says John Forde, creator
and host of " Mental Engineering." A PBS talk show
that focuses on TV advertising.
"People grade the message,
comparing it to other ads, rather than listening to it,"
Howard Hass, senior vice president
and executive director of local broadcast at ad agency TN
Media, thinks that may be a bit alarmist, He points out television
still trails print media. Advertising comprises 85% of all
newspaper pages and 50% of magazines. Radio is roughly the
same as television with 24-30%.