Addicted to Commercials

Feb 6 2014, 3:42pm CST | by

Suspense took a holiday after the first quarter of the Super Bowl.  About 112 million viewers knew who was going to win, so why did they stick around?

They hung in for Bruno Mars, the Red Hot Chili Peppers and the commercials.

Some audience estimates indicate that there were more people watching the Bruno Mars and Red Hot Chili Peppers half-time extravaganza than to any other part of the game.

Concerning commercials, Wayne Friedman wrote in Media Daily News,  “According to TiVo’s estimates on viewing data, four of the top 10 commercials in the game aired in the fourth quarter.  The top viewing commercial/promotion: Crackle’s online show ‘Comedian in Cars Getting Coffee’ aired during half-time; Budweiser’s ‘Puppy Love’ (4th quarter); GoDaddy’s ‘Bodybuilder’ (4th quarter); Doritos’ ‘Cowboy Kid’ (4th quarter); and Toyota Highlander’s ‘Terry Crews & the Muppets’ (2nd quarter) were the top five Super Bowl commercials [in terms of ratings].”

Friedman also writes, “Tara Maitra, senior vice president/general manager, content and media sales at TiVo, believes — as many do — that a dull game drove TV viewers to hang around and watch some of the commercials, perhaps more than in the past.  All this was especially good news, she says, in light of the fact that ‘the majority of the ads could be previewed online.’”

So, it seems that commercials are valued content.  CBS’s program, “Super Bowl Great Commercials” that aired the week before the big game ranked 18ththat week in total viewers.  Over 9 million people watched a program about old Super Bowl commercials — it wasn’t about sports, it was about commercials.

Broadcast TV is a bargain (some say you get what you pay for).  About nine percent of the U.S. gets their broadcast TV free by using roof or rabbit-ear antennas. The rest of the country gets broadcast TV (networks via local stations) from cable or satellite TV companies such as Comcast and Direct TV for which they pay an average of around $40 a month for a basic tier, which includes the advertising-dependent local TV stations and other advertising-supported networks such as ESPN, AMC, CNN and MTV

The cable and satellite companies pay local TV stations a retransmission fee to carry their programming.  We, as viewers, pay the TV stations with our attention to their commercials.  So, we really infuriate the broadcast TV networks and stations when we DVR or TiVo programs, time shift, watch them later and fast forward through the commercials.  We’re not carrying out our part of the free broadcast TV contract.

DVRs that time shift and allow commercial skipping are sold by cable and satellite companies, which is one of the many reasons the broadcast TV networks hate the cable and satellite TV companies.  NBC is owned by cable giant Comcast, so it has to be passive-aggressive about its hate for cable.

AREO stores local TV station programming in the cloud and allows subscribers to time shift programming like a DVR or TiVo does, and AEREO doesn’t pay retransmission fees like cable MSOs do.  Therefore, the broadcast networks and their owned and affiliated local TV stations really hate AEREO and throw law suits at them like Peyton Manning threw passes in the Super Bowl (a record number in a losing cause).

Therefore, cable and satellite TV companies and AEREO are empowering us to breech our broadcast TV commercial viewing contract by time shifting and fast forwarding, if we want to.

But we don’t seem to want to.   We are addicted to commercials and are getting lazier about fast forwarding.  A report from TiVo showed that in 2007/2008 52.8 percent of commercials were skipped.  In 2011/2012 46 percent were skipped. By the 2014 Super Bowl, at the rate of a 1.2 percent a year drop, that means that about 45 percent of commercials are skipped for the average TV show.  Considering DVR (including TiVo) penetration in cable homes is estimated to be about 47 percent or a little more, that means that only about 21 percent of commercials are skipped on average.

Thus, we are skipping fewer commercials and, apparently, paying more attention to them.  If so, how much is our attention worth?  To make the math easy, let’s say the average audience for the Super Bowl was 100 million people and that the average price paid for a 30-second commercial was $4 million.  Thus, an advertiser paid $25 per person per commercial (for media mavens, that means the CPM for a Super Bowl commercial is $25,000 – a little high when you consider the average CPM for a prime-time broadcast network TV commercial is just under $20).

Therefore, if you watched the whole game and all 48 commercials, that would mean your time was theoretically worth $1,200, which does not count the 28 program promotion spots FOX ran, by the way, which was a lot less clutter than the 48 promos NBC pushed on us last year.  Thank you, FOX.

Would you rather invest $1,200 of your time (valued by advertisers) and watch the game and the commercials than travel to Met Life Stadium in New Jersey, fight the traffic and crowds, pay $500 – $2,600 for a ticket and see the game live but without the commercials?  About 112 million people said, “No;” 77,500 said, “Yes,” and went to the game.

FOX, which carried this year’s Super Bowl, and CBS have threatened to take their programming, including the Super Bowl and all those $4-million commercials to cable if AEREO wins the case the broadcast networks have brought against AREO in the Supreme Court.  The networks want to get paid for their programming, which AEREO doesn’t bother to do.

But are the broadcast networks and their stations playing a losing game like the Broncos did.  Cable penetration has gone steadily down because of so-called chord cutting (down five percentage points in the last three years).   If the broadcast networks think that cable companies will pay them more for their programming if AEREO wins and the networks move to cable, they are going to be intercepted like Manning was.

The cable companies might well develop small antenna technology like AEREO’s or form a consortium (which John Malone of Liberty Media is attempting to do) and try to buy AEREO.

Also, the broadcast networks and stations may form a consortium and try to buy AERO, bypassing the cable companies and alternate delivery systems (ADS), consisting of direct broadcast satellite (DBS) and satellite master antenna systems (SAMTV), and go direct to viewers, bypassing cable and ADS.

Can’t you see that crafty old fox, Barry Diller, who has backed AEREO, licking his lips over the prospect of a bidding war.

But no matter who wins in the Supreme Court, we’ll still get our TV programming and commercials for a couple of reasons:  1) The networks are not in the content business, they are in the advertising-delivery business, so they’ll do anything necessary to keep up the delivery.  2) The politicians won’t allow the Super Bowl to be taken off of “free” TV because voters want to see the game and the commercials and don’t want to pay extra to do so.

“Free” TV is free because we pay for it with our attention to commercials, and we‘re addicted to our beloved commercials – we watched a blowout game in which the outcome was not in doubt in order to see commercials…oh, and some great football players hammering each other expertly.

If AEREO wins – and many knowledgeable people thank they will – it will almost certainly disrupt the cable and ADS business.   If AERO can serve broadcast network programming directly to consumers’ devises for $8-$12 a month, bypassing the cable networks and ADS companies, will the cable companies have to respond with wireless direct-to-consumer technology? And, if so, will the cable and ADS companies have to offer a la carte pricing, which would destroy the 800-cable-network ecosystem as we know it.

Also, if we pay $8 a month to Netflix to get programming without commercials, will we pay $8 – $12 a month to AEREO to get programming with commercials?  Probably, because we’re addicted to commercials, live sports programming, excellent crime drama and trashy reality shows.

So, our programming bills are going up; it’s as inevitable as death and taxes. Perhaps we’ll be able to have a bundle via AERO or a cable company where we could pay a premium, say $29 a month, for broadcast TV programming without commercials.  Or offer a pay-per-view Super Bowl without commercials for, say, $299.

Few would buy it because…wellwe’re addicted to commercials.

The Media Curmudgeon (Charles Warner) teaches in the graduate Media Management Program at The New School and is the author of Media Selling, 4th Edition.

Source: Forbes Auto

 
 

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