Download Futurre of Advertising Spots 2016

Media
TV Networks Recast the Role of
Commercials
By SYDNEY EMBERFEB. 26, 2016
Inside
Photo
“Late Night With Seth Meyers” will include an extra sketch on Monday night, as part of a
sponsorship deal between NBCUniversal and American Express. Credit Lloyd Bishop/NBC
Monday’s season premiere of the NBC reality singing competition “The Voice” will include a
bonus interview with last season’s winner. During “Blindspot,” the hit hour long drama about a
mysterious tattooed woman, there will be interviews with the show’s creator and two of its stars.
The “Today” show will feature an extended segment with Kathie Lee Gifford and Hoda Kotb,
and “Late Night with Seth Meyers” will have an additional comedy sketch.
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The extra programming will eat into time typically occupied by commercials. But those
additional segments will actually be ads in their own right, brought to you by American Express.
The move by NBC may be a bit of a gimmick — after all, the extra programming on leap day,
Feb. 29, will add only 11 more minutes of content over all. But it could also provide a glimpse
into the future of television advertising. Long dependent on conventional commercials, television
networks are now re-evaluating their advertising strategies as fears about cord-cutting and steep
ratings declines intensify.
Photo
Jordan Smith, last season’s winner on “The Voice.” Credit Doug Strickland/Chattanooga Times
Free Press, via Associated Press
“We see a great challenge but also a great opportunity to reinvent what the advertising
experience can look like in different shows and in different environments,” said Alison Tarrant,
executive vice president for client partnerships at NBCUniversal.
In recent months, Turner, which is part of Time Warner, and Viacom, which owns MTV,
Comedy Central and Nickelodeon, have said they were looking to reduce the amount of
advertising on their cable networks. Vice Media, which will introduce its new cable channel,
Viceland, on Monday, has adopted an advertising strategy that involves more programming
sponsored by brands — as it already has online — and fewer traditional 30-second commercials.
The shift in TV advertising is likely to happen gradually, but it has also been a long time coming.
For years, networks crammed in more ads, in part to offset lower ratings, said Brian Wieser, a
media analyst at Pivotal Research. Commercials on broadcast networks accounted for 17.3
percent of programming time last year, from 16.8 percent in 2012 according to Mr. Wieser’s
analysis of Nielsen data. On cable networks, commercials accounted for 20.6 percent of program
time, from 19.3 percent in 2012.
That strategy, however, may have pushed away more viewers and lowered ratings further.
“You never know that the ratings fell because of it, but your intuition and every bone in your
being says it must have had some effect,” Mr. Wieser said.
The proliferation of on-demand and ad-free streaming options has given viewers a more
palatable television experience and further prompted networks to rethink advertising, whether by
reducing the volume of traditional commercials or coming up with new ways to advertise.
“Now I think is the time that we really need to take a look at where we are with what the
consumers are looking for and what their behavior is,” said Donna Speciale, president of ad sales
at Turner. “The experience right now on television across the board is just not what it should be
— it’s not ideal.”
Ms. Speciale says Turner is in the process of testing different options to limit commercial time
— including reducing the number of commercial breaks and presenting some shows entirely adfree — with the goal of running eight to 10 more minutes of programming per hour during
certain shows on truTV and TNT. The company aims to cut truTV’s ad load in half during
original prime-time shows, starting in the fourth quarter.
But the ad-reduction strategy carries a risk. While advertisers may pay a higher price for
commercial time that is in more limited supply, the price may not be enough to offset the
decrease in commercial time.
During an earnings call on Feb. 9, Philippe P. Dauman, the chief executive of Viacom, said the
recent reduction in the number of ads on the company’s networks “might have suppressed some
of the short-term advertising growth.”
Still, the television industry’s fledgling efforts to make the traditional television viewing
experience less commercial-heavy have resonated with marketers and advertising agencies. Ms.
Speciale says her company’s plans to reduce the ad load on its networks have garnered kudos
from clients, even before any changes have fully taken shape. “We’ve been getting applause
across the industry from clients and agencies basically saying, ‘Thank you, and we agree with it,’
” she said.
Joe Bihlmier, vice president of global media at American Express, said he saw the partnership
with NBC as an opportunity to “create a different paradigm” for television advertising in a
fragmented media world. Sponsoring segments rather than running a 30-second spot during a
crowded commercial break could also help American Express stand out, he added, because it
will not be competing for attention. BuzzFeed, which secured a $200 million investment from
NBCUniversal last summer, will produce online posts related to the sponsored programming.
American Express, which approached NBCUniversal with the advertising idea in December, will
use the segments to promote its Blue Cash Everyday credit card.
If NBC’s sponsored-content strategy is successful, it could become a model for other networks.
But Ms. Tarrant also said the industry as a whole had to be willing to experiment.
“We have to test to learn,” she said. “We need to be more nimble, we need to be more creative
and we need to take more risks.”
A version of this article appears in print on February 27, 2016, on page B3 of the New York
edition with the headline: Television Networks Are Recasting the Role of Commercials. Order
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