DVR Changing Ad Model, Say Execs

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One nontraditional delivery mechanism that is making a dent in the advertising model is the digital video recorder.

According to a new poll of industry execs, more than half (58%) "have changed or expect to change their ad buys in response to DVRs," and 80% say the recorders, which allow viewers to bypass commercials, will have a "significant" impact on the 30-second spot.

About one in five executives (22%) went so far as to predict the death of the 30-second spot and a "dramatic transformation" of TV advertising.

One unnamed exec cited in a pull-out quote to accompany the survey had cut TV spending "considerably, with more to come unless rates come down to reflect lost viewership."

All that is according to 75 media industry "leaders" polled by the American Advertising Federation for its third annual "Industry Leaders" survey on advertising trends.

Blogs, podcasts, and Web-enabled cell phones are still "relatively weak" nontraditional ad vehicles, they say, while the single-sponsor buyouts, like American Express of the West Wing live debate, get highest marks.
But those same execs suggested, unprompted, that the industry was dividing itself into traditional and new media (online) platforms and that attention must be paid to both. AAF characterized the execs as "concerned but tentative" about new media options.

The execs were generally bullish on the ad industry recovery, with only 7% saying they saw an indefinite decline, 34% saying it was slowly recovering, 24% saying it was recovering well, and even 6% saying they saw strong growth, all well above last year's numbers.

The execs were cooler on product placement, with this year's respondents giving plugs a 2.7 on a scale of 1 to 5, vs. a 3 last year. Cell phone text message advertising improved from a 2.8 on that same scale last year to a 3 this year.

Online advertising projections for 2006 are already outstripping earlier estimates for 2007, with an 18.7% increase compared to the 17% increase predicted for 2007 in AAF's previous survey.

The executives said it was even more important to target ethnic markets, compared to last year's survey, while the good news is they thought it was getting easier to do so. the Hispanic market continued to be the highest priority, but the race is closer. Reaching Hispanics got a 4.2 out of 5 in terms of priority this year, compared to a 4.1 last year. Reaching African Americans got a 3.9, compared to a 3.6 last year.

What did these 75 leaders say were the top five ad campaigns of 2004-2005:
1. Apple iPod; 2. Burger King; 3. Target; 4. Mini Cooper; (three-way-tie) Hewlitt-Packard, UPs, and Verizon.

The most admired brands, order, were Coke, Apple, Nike, Google and Fed Ex BMW (tied).

The study is being released Tuesday to coincide with AAF's presentation of its Advertising Hall of Achievement awards in New York, which go to movers and shakers under 40.

The pie chart of execs polled broke down this way: agency, 39%; media, 31%; advertiser/client, 14%; academia, 12%; other (trade association, PR, consultants), 12%.

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