If you tuned into FOX’s Family Guy on Sunday evenings recently, you may have noticed something interesting. There were no commercials for 25 straight, heavenly minutes. How did they manage to pull off this feat especially when every corner of digital life is drowning in ads? Well, PlayStation sponsored the whole broadcast and aired 60-second commercials before and after the program.
Other networks have begun experimenting with sponsored broadcasts as well. Google will help Stephen Colbert cut commercials during his late-night show by sponsoring an ad-free segment. “The entry into ad pod takeovers featuring sponsored original content with ‘The Late Show’ is just the beginning,” said Jo Ann Ross, president and chief advertising revenue officer at CBS Corp.
The important question is, why are TV networks so eager to experiment in the first place?
People hate advertisements. Even the head of NBCUniversal, a company that gets its revenue from ad placements, acknowledgesthat “consumers hate advertising.” It’s no small wonder that people hate ads since Americans are being bombarded with more ads than ever from every screen imaginable. With the proliferation of subscription-based television services like Netflix, an entire generation of people have been taught to watch television without commercials. This trend has many in the traditional TV industry worried.
The long-standing business model of TV is beginning to show signs of weakening. There are many different business models quickly chipping away at the gigantic TV wall, but the biggest crack is due to digital media and on-demand video platforms like Netflix. TheNew York Times predicted in 2015 that advertisers would spend more on digital media than TV by 2017 (and that’s exactly what happened).
TV is still king in the advertising world in 2017, however. Last year there was surprisingly strong demand for TV commercial time with networks selling a record $19.7 billion of prime-time commercial time. Some experts attribute this increase in revenue to the glut of premium TV series populating the airwaves. Overall TV advertising is still very effective since it still reaches millions of people. However, brands could stand to modify their approach—or at least diversify—in order to accommodate the multi-screen viewing that occurs during TV commercial breaks.
Dipping ratings for even the mightiest TV juggernauts like the NFL have led some to question whether TV may be on its way out as the primary entertainment source. The contraction of ESPN due to cord cutters has been a huge blow to the TV industry as well. It isclear that TV may need a new business model soon in the face of increasingly feverish competition.
But what model should take its place?
The Soccer Model
Soccer is unique among major sports in that there are very few breaks in the action. Major professional sports like the NFL, MLB, and NBA have many breaks that allow for commercial advertisements. With the cultural shift in TV viewing habits, a backlash towards multiple commercial breaks has pushed many networks to reconsider their ad strategy. The NFL has rolled back on commercials during games in order to combat the growing distaste for ads during broadcasts. However, soccer already seems to have it all figured out.
Soccer games are broken into 2 non-stop, 45-minute halves bifurcated by halftime. The clock doesn’t stop, no matter what. That means no breaks for commercials. In order to get around that fact, networks and advertisers had to get creative. Commercials are aired before the game, during halftime, and after the game. Ads are placed directly on the field and sometimes 3D billboards are used to advertise at critical points in the game. One of the most effective forms of advertising, though, is sponsoring parts of the game.
American TV networks are already experimenting with sponsoring content so there are no commercial interruptions, just like FOX did with Family Guy. The biggest draw of the “soccer model” is that there are zero breaks in action, especially considering the biggest complaint with ads is that they are “intrusive.” With the growth of Major League Soccer in the United States, we might see more networks and sports leagues see the merits of this system and adopt it sooner rather than later.
The YouTube Model
The YouTube ad model has been in constant evolution since its inception in 2005. Much of their strategy has been based on skippable “pre-roll” ads that air before the desired content. As people became more likely to skip the ads, YouTube rolled out 6-second non-skippable ads. The success of this format has led FOX to adopt the same format for their sports telecasts this year.
In fact, many brands and agencies believe 2018 will be the turning point for 6-second ads. These types of ads appeal to younger demographics, which are pulled away from TV by their multiple screens. The beauty of the 6-second ad is that it can be aired during broadcasts and not interrupt the flow of the program.
The real innovation comes from what YouTube TV may become in the near future. YouTube TV is a subscription-based service that provides access to many of the main TV networks that used to be exclusive to cable company bundles. Google’s vast troves of data will allow for more direct targeting of ads. Beforehand, advertisers would have to buy audiences in “big demographic buckets.” Now ads can be dynamically inserted into live program via banners or specialized commercials.
The Downsides of Both Models
Of course, there are downsides to both models. With the YouTube model, advanced targeting only really works when viewed on digital devices. In a TV iteration, Google is basically selling a TV-service and networks make the decisions on how to manage their ad breaks.
With the Soccer model, on the other hand, there is simply less opportunity for ads overall. Plus it would be even more difficult than it is now to measure the effectiveness of ads with the live show ad placements. Unless sponsorship becomes the main advertising route, TV networks could find it difficult to monetize TV programs.
Even so, networks must innovate in order to remain competitive in this fierce market.
The Key to Effective Ads
Remember: if your advertising is bad, people won’t like it! (Surprise, surprise.) This common-sense idea is often lost on brand marketing teams. People love watching the Super Bowl not just for the game but for the commercials as well. Some when even forgo going to the bathroom in order to watch them. Why? For the telecast, brands often create entertaining ads that are higher quality than anything they see throughout the year. In today’s world where people can use their DVR to skip TV commercials, bad advertisements are even more likely to be skipped. But a really good ad can still stick.
People (especially millennials) hate feeling like they’re being sold to and told what to think. The key to maintaining people’s attention is creating interesting content and respecting people’s intelligence, no matter whether it’s a TV program or commercial.