For decades, the only option to avoiding television commercials was to get up from your chair and get a snack. With the onslaught of Tivo and other Digital Video Recorder (DVR) options, viewers can now quickly skip through ads on programs they have recorded or paused for any length of time. In recent years, many questions have arisen about the effect of Tivo on advertisers.
Decreased Product Sales
A recent three-year study of the so-called Tivo Effect by Information Resources Inc. (IRI) showed that purchase of new packaged-goods products in homes with Tivo or other DVRs was almost five percent less than in homes without DVRs. This is based on tracking of several bestselling brands called "Pacesetters" by IRI. In this study almost 20 percent of all brands lost sales in DVR homes.
Shifting Television Budgets
As a result of the Tivo Effect, many advertisers have found that they can improve their television results by shifting their advertising to different day parts. Advertisers with less than 25 percent of their rating points in daytime television or more than 45 percent in cable television had better results in DVR households.
Diversified Media Budgets
As a result of decreased sales from television advertising, many advertisers are diversifying their advertising budgets. This includes spreading those television dollars to other media like magazines, outdoor and online resources. Based on the IRI study, companies that responded to the Tivo Effect by spending at least 20 percent more of their media budget outside television saw no less sales in DVR homes than those without DVRs.
New Technologies
Tivo has begun to offer advertisers TV-flashing ads that pop up whenever a user presses pause on their television. This allows advertisers to get around the avoidance factor inherent in DVR usage. Tivo plans to introduce other new technologies to provide more interactive advertising solutions aimed at DVR users.
Increased Product Placement
Advertisers have begun to establish relationships with the networks and producers of the programs during which their advertisements air. Product placement is the process by which advertisers pay to have their products mentioned, seen or used in the course of a television program. For example, Coca-Cola, one of the largest users of product placement, paid for 3,355 product placements in 2006.
Increased Stealth Advertising
One study from the University of Oregon says that small-market news programs have more commercially influenced material in the course of their programs. This information may or may not be connected with paid advertising but may be used to entice advertisers considering their stations.
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