Wednesday, January 28, 2015

Networks Quickening Their Demise

With viewership erosion due to streaming video, network ratings and consequently ad revenue are suffering.  But rather than seek ways to grow eyeballs, networks would rather add more ad minutes to stabilize and try and grow revenues.  But according to two different research studies, as mentioned by Deadline Hollywood, "Major TV network owners led by Viacom, A+E, and Discovery significantly increased the amount of prime time commercial minutes in their shows in Q4, helping to compensate for a decline in viewing."  It seems adding ad minutes is both short-sighted as well as likely to drive viewers to flee networks faster. 

Advertising is necessary to support content creation and cable networks in particular have enjoyed a two stream revenue model of subscription and advertising dollars.  But adding more ad minutes that interrupts content is what has driven users of TiVo and DVRs to embrace their trick features and fast forward through ads. And millennials have discovered the joy of subscription services like Netflix to enjoy content without any ad interruptions.  It is that next generation that is leaving traditional viewing patterns.

For now, networks are seeking short term results but it is leading to long term losses.  According to the research, "the most aggressive network owners were those with the worst ratings trends".  That is to say, more ads lead to lower ratings.  Perhaps it is time for TV networks to become more innovative with their advertising issues.  It is time to break away from the notion of ad breaks and think more outside the box; otherwise, sticking with the current approach is hurting your long term outlook. 

Is it time to consider again network sponsorship of shows, ad integration inside programs, and other ad efforts.  Less ad breaks insure viewers stay on the channel and deliver a higher attention span.  The longer the break, the easier it is to switch channels.  Less clutter, more impact.  It is time for networks to reassess their ad strategy.  What has worked in the past is now not working at all.  The model is broken and needs to be fixed. 

No comments:

Post a Comment