News Articles

Airing Hi-Def Commercials Should No Longer Cost More Than Standard Definition

5/02/2013 01:53:07 PM Eastern

Over the past several months, we have engaged in an
interesting research project designed to paint a picture of the local TV
advertising landscape and examine how large and small advertisers fit into that
landscape.

Our method has been to record local broadcasts on multiple stations,
in multiple markets, and then sift through the data.

Some of the results, while surprising, did not completely
catch us off guard. For instance, we learned that 80% of the recorded spots
were aired in high-definition, which represents a major increase from a couple of
years back when around 25% were airing in hi-def. This was only mildly
interesting since we knew from our own internal trends that there had been a
pretty dramatic increase in recent years.

There was, however, a completely unexpected, consistent
trend that stuck out: We expected to find that national advertisers with deeper
pockets had an advantage over regional advertisers in the realm of HD spot
broadcasts on local television.

According to our findings, however, that supposition turned
out to be, by and large, unfounded. While the large national marketers still
maintain an advantage, the regional advertisers have closed the gap and tend to
be more or less on par with the national brands on the local television front
when it comes to airing HD spots.

And quite surprisingly, it became clear, almost right away,
that in the arena of local broadcast television, mom-and-pop advertisers have
pulled ahead of their large national and regional rivals in HD spot airing.

Some examples:

  • The Big Three auto automakers are airing standard-definition
    spots on HD stations, while "lowly" local car dealers are airing
    their locally produced spots in HD, often during the same commercial break.

  • Locally owned furniture retailers are airing HD spots, while larger chains are
    still in SD.
  • Nationally known fast food and pizza advertisers are still running SD spots,
    while the local pizzeria is in full HD.
  • Casual dining national steakhouses are actually showing food shots in SD, while
    the local competitors are running HD food footage.

There are a couple of reasons for this surprising technology
advantage inversion. First, local advertisers' spots are frequently produced by
TV stations which would rather have a root canal than run their in-house
produced spots in SD. Second, the spot upload is free to the clients in this situation. Conversely, a national or
regional advertiser with a 200+ station footprint is being told by their agency
that it will cost up to 1000% more to distribute their spots in HD than SD.

A possible explanation for this phenomenon is that in many cases,
ad agencies have distribution contracts with large vendors that don't
necessarily benefit all clients equally.

National advertisers can afford to pay $100+ per spot to
distribute in HD as their distribution footprint consists of the Big Four
broadcast networks and larger cable nets (30-40 total stations).

It is a different story for the regional clients, however,
which must distribute to a much larger number of stations to reach their
audiences. At those rates, the distribution costs would rival the actual
production costs spent to create the spots.

But given that CPU power, storage and bandwidth have
increased exponentially over the past five years, there's no reason HD
distribution should cost much more -- or more at all -- than SD.

For the media, to run a hi-def spot is not more costly.
Post-production doesn't cost more as most advertisers are finishing in HD
regardless of how the spot runs.

A distribution vendor's exaggerated sales projections to
their shareholders/investors or the contract an agency signed with a vendor
should not obligate a regional advertiser to either pony up ridiculous sums of
money or be relegated to second-class status on the local broadcasting
airwaves, diminishing their brands in the process.

And yet, that is seemingly what has happened.

SpotGenie
Partners LLC, based in Atlanta, is a privately held technology and service
company dealing in the digital distribution of high-definition television and
radio spots, trafficking, tracking, asset management and other post-production
services.

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