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Pretty, Scarce

HD programming grows, but despite spectacular images, advertisers stay away 8/18/2006 08:00:00 PM Eastern

If high-definition television looks so great and great-looking commercials sell product, why aren’t there more commercials in HD?

Mainly because, even though HD retail sales are popping, at best, fewer than two out of 10 U.S. homes have HDTV.

So, for the most part, HD ads gravitate to a handful of awards shows and the Olympics and other big sporting events, those playgrounds for TV-advertising agencies where spending lots of money is acceptable business. In February, more than half of the Super Bowl’s 60 commercials were in HD.

For the regular season, it’s a different story. In fact, only a dozen or so of the hundreds of cable and broadcast networks can accommodate HD ads. Many of them are the relatively new HD offshoots of major cable channels, such as National Geographic, Discovery and HGTV.

ESPN has two networks that take HD advertising: ESPN and ESPN2. About 20% of the flagship’s regular commercial inventory is HD—perhaps the highest level among big broad - cast and cable networks. HD advertisers tend to be high-end electronics and automotive marketers, which target male viewers.

FEWER SPOTS ON BROADCAST

A far smaller percentage of commercials that are run on the broadcast networks are HD. According to industry observers, a typical primetime viewer of ABC or CBS might see perhaps three or four HD commercials out of 35 or more national primetime spots on a given night. Activity is somewhat less on Fox and NBC.

Only two networks give HD commercials a priority, even refusing to air any standard- definition commercials: Mark Cuban’s HDNet and HDNet Movies. Though small, with about 3 million subscribers each, the networks offer content—program and commercials—entirely in HD.

“We won’t take their low-def commercials,” says Karl Meisenbach, director of advertising & sponsorship sales for HDNet. “It would lessen the brand.”

He estimates that, at any given time, his network has about 15 current TV marketing campaigns. He has done recent business with the likes of BMW, Land Rover, Sub-Zero (kitchen appliances), New Line Cinema, Microsoft’s Xbox, Sony PlayStation and Anheuser-Busch, as well as with HDTV-set manufacturers Sharp, Toshiba and Sony Electronics.

But in the current summer lull in HD commercial production, HDNet has the interesting distinction of having just one advertiser on its air for the next several weeks: Patron, the high-end tequila maker.

Why aren’t there more HD commercials? It’s not cost; it would take only a 10% premium to deliver an HD spot. It’s more about research and all about the lack of research, insists Tim Hanlon, senior VP of ventures for Publicis’ Denuo Group, the media futurist division.

He says, “Until Nielsen starts measuring HD viewership, advertisers will be in no rush to run into the space. According to the Nielsen measurement system, HDTV users don’t exist. That’s ludicrous.”

With HD sets in only 20 million homes in the U.S., Nielsen has been telling clients that there needs to be more HD users to justify measurement. For now, Hanlon says, advertising in HD “requires courage and common sense on the part of advertisers.”

That logic worked for liquor distiller Patron. Dave Kroencke, principal of agency The Richards Group, says it seemed natural for his client to associate the tequila’s high-end, premium attributes with the high quality of HD programming.

Apart from Mike Shaw, president of advertising sales at ABC, few network executives have been outspoken in pushing advertisers to run HD commercials on primetime schedules. But the coming of TV-commercial ratings could inspire network ad-sales executives to place more value on higher-quality commercials, according to industry watchers.

ENGAGING VIEWERS

With TV marketers’ push this past upfront season for “engaged” viewers—in regard to both program content and commercials—one industry ob- server questions why advertisers don’t produce more commercials in HD. “Frankly,” says Denuo’s Hanlon, “I can’t think of anything more engaging than something in high-definition.”

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