Thursday, July 02, 2009

Will Virtual DVRs Virtually Change Advertising?

Monday’s ruling by the U.S. Supreme Court to allow Cablevision to go forward with its virtual DVR product paves the way for on demand television.

It also spells the end of the current, and somewhat antiquated, VOD model.

Most VOD systems only allow you to choose from shows that are on the VOD menu. Cablevision’s virtual DVR allows viewers to ask for any show to be recorded to be viewed at their convenience. As TiVo’s own CEO touts, when viewing shows in a time-shifted mode, the majority of commercials are skipped.

If I had access to a virtual DVR, I’d ask for all my shows to be recorded for me. Since the shows are stored on Cablevision’s server rather than a hard drive, there is not a space limit to the number of shows I want recorded

Which means it only makes sense to have them all recorded.

When I then decide to sit down and watch one of my favorite programs I, like the majority of people, will skip any interruptions to my viewing pleasure.

What the U.S. Supreme Court’s ruling means is that commercials should now be considered optional viewing if they continue to be delivered in their current intrusive manner.

Not surprisingly, advertisers don’t like their commercials to be considered optional viewing.

No doubt Cablevision will find a way to require a viewer to choose how he/she wants to consume advertising, either before the program plays, or throughout.

Hulu employs this model, and the preference by most viewers is to sit through the advertising before the program plays and then watch the program without interruptions.

Of course, no one really watches the commercials before the program plays on Hulu. After all, it does offer us a two-to-four-minute window to go check emails or what’s happening elsewhere online.

It’s like the previews before you start playing a movie on a DVD. How many of you fast-forward through those?

Yep, thought so.

The role of programming in the past was to deliver viewers to advertisers the way that the advertiser wanted.

The role of programming in the future will be to deliver advertisers to viewers in the way the viewer wants.

Does this mean that advertising is dead? No. What it means is that advertising needs a new way to market itself. A way to transition from involuntary viewing to voluntary viewing.

So, how do we do that?

Like most things, it starts and ends with making money.

Which means the industry needs to figure out how to make money on fewer viewers rather than more viewers. On how long people spend with a message rather than how many see it.

On involvement rather than impressions.

As the number of people who actually see a commercial continues to decrease, a commercial’s ability to hold an audience will become ever more valuable.

An impression's depth will start to outweigh the number of impressions that are made.

Instead of converting 100% of the people 10% of the way, we will need to focus our attention on how we can best convert 10% of the people 100% of the way.

There's an upside to this. Well, actually two.

Not only will the advertising get better.

But, we will need much less of it.

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