Ad Execs Scrambling to Reverse Diminishing Effects of Broadcast Advertising Reports In-Stat/MDR

Business Wire, Nov 15, 2004

SCOTTSDALE, Ariz. -- The 30-second commercial is dying, according to In-Stat/MDR (http://www.instat.com). And while its death is not imminent, the high-tech market research firm believes that both broadcast networks and the advertising community are faced with the stark reality of a future without it, or at least a world where its effectiveness is continually diminishing.

In-Stat/MDR's Mike Wolf cites that the diminishing effectiveness of broadcast advertising can be attributed to two major irreversible trends. The first is the continued erosion of the broadcast TV audience to other forms of electronic entertainment like cable television, DVDs, the Internet and electronic gaming. Second is an increasingly empowered consumer through new technologies like the Personal Video Recorder (PVR) that allows users to skip ads. In addition, the consumer will continue to be empowered through new distribution channels for content, such as DVD by mail and downloadable premium content through services such as CinemaNow and MovieLink.

"PVRs have turned the broadcast TV ad business on its head. In-Stat/MDR's research shows that over two-thirds of those with a PVR skip ads, with 75% of those individuals skipping over 50% of ads shown," said Wolf. "Some of the ways broadcast TV execs and advertisers are combating the rise of ad-skipping technologies is through the increased use of product placement. The recent $7.7 million giveaway of Pontiac cars on Oprah to create a marketing 'event' is an example of what is being done today outside of the 30-second commercial."

In-Stat/MDR has also found that:

--In addition to looking for ways to best utilize broadcast TV space in the world of PVRs, ad executives are reallocating their ad budgets. The increasingly powerful methods of paid search and broadband video advertising have created highly targeted ways to reach consumers.

--The total U.S. electronic advertising market will see an average growth rate of 2.8% from 2005 through 2009. The growth will largely be driven by Internet advertising, and to a lesser extent cable TV and video game advertising.

--Video game advertising is a rapidly growing category. Soon, online gaming audiences will be tracked much in the way TV audiences are tracked today. The total market for video game-based advertising will reach $2.8 billion by 2009.

The report, "Television Advertising 2004-2009: The Slow Death of the 30-Second Commercial" (#IN0401555CM), looks at how TV advertising is changing in the face of increased competition from the Internet, video games and prepackaged content, as well as new technologies such as personal video recorders. The report includes forecasts of new advertising methods such as video game advertising and product placement, as well as TV, cable, Internet and radio advertising.

The report features two surveys: One is a survey of TV, cable and advertising professionals, giving their perspective on new technologies and the impact on TV advertising. The other is of media savvy consumers and how they are changing their viewing habits, as well as consumption of advertising. For more information on this report, please visit: http://www.instat.com/catalog/Ccatalogue.asp?id=212 or contact Erin McKeighan; emckeighan@reedbusiness.com or 480-609-4551. The report price is $2,995.

About In-Stat/MDR

In-Stat/MDR (http://www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals, and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products. This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information provider. With more than 38,000 employees worldwide, Reed Elsevier operates in the science & medical, legal, education and business-to-business industry sectors, providing high value and flexible information solutions to professional end users, with increasing emphasis on the Internet.