Report: TV networks, cutting back ad loads, see falling revenue
- TV networks including Viacom, Turner and Fox Network Groups are experimenting with cutting ad loads around their programming. The idea is that, even though fewer ads will air, they will be able to charge advertisers more for more limited and premium real estate. While Fox said late last week that the move is seeing some success, driving revenue around broadcasts like the Teen Choice Awards, Viacom reported a 2% drop in domestic ad sales in June and expects declines will continue through the September quarter, according to The Wall Street Journal.
- Viacom is cutting ad loads on MTV and BET, with MTV dropping ad time from 1,436 minutes in February 2016 to 1,284 minutes in February 2017, according to Nielsen data cited by the Journal. However, the channel has also faced an 18.5% drop in adult viewership in the 18 to 49 demographic over the same period. Turner cut ads on TruTV by 50% on three of its original shows, but also sought a premium of up to 30% for the reduced spots. President of Turner Ad Sales Donna Speciale confirmed to the Journal that the premium rates aren't enough to offset the losses from the trimmer inventory.
- The Journal noted that advertisers are still wary of the strategy, and still ultimately care about ratings above other factors. Ad buyers cited by the publication called the results of reduced ad loads "inconclusive" but noted brands might later be convinced to pay more premium rates.
The goal of reducing ad loads on TV is two-fold for networks: It's designed to create a less interruptive viewing experience, keeping people glued to the screen and off other devices like their mobile phone, and theoretically make those ads that do air more impactful and more valuable for brands. However, as the Journal report highlights, much of TV advertising is largely a numbers game, and the trimmer ad loads do little to address a continued dip in ratings that shrinks the audience marketers want to reach.
Networks charging premiums for more limited TV air time, combined with slipping viewership, has been met with some frustration from ad buyers. More viewers and younger viewers, in particular, are opting for over-the-top (OTT) streaming services like Netflix or Amazon Prime Video, which offer an entirely ad-free experience and are based on a paid subscription model.
Trimmer ad loads inch TV programming closer to an OTT model, but don't address another area where networks appear to be scrambling to catch up: quality programming that hooks in viewers. Shonda Rhimes, one of the biggest showrunners in the business, recently signed a multi-year deal to produce new series for Netflix over her long-time home of ABC, which will still air programs like "Scandal." Ad Age noted that the news will likely concern advertisers that are seeing big-draw entertainment names like Rhimes more often opt for producing their content for ad-free platforms.
- The Wall Street Journal Some TV Networks Take a Hit from Cutting Ad Time, Benefits Yet to Materialize
- Marketing Dive FX serves up premium ad-free option via Comcast
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