COMMENTARY

TV Nets Cut Ad Time, And Time-Shifting May Be To Blame

• by Wayne Friedman , Staff Writer, March 7, 2018

Traditional TV time-shifting comes courtesy of DVR technology. Is it finally having an effect on what TV networks do this upfront season?

It was revealed yesterday that a second major TV network group -- Fox -- plans to dramatically cut back its advertising during prime time. NBCUniversal had made an announcement the previous week about cutting back on ads in prime time.

In two years, Fox aims to cut prime-time advertising to two minutes an hour from a whopping 12 to 13 minutes an hour on average. (It’s a bit more time on mature cable TV networks.)

Ultimately, all this would be -- by any estimation -- a seismic change in the way ad-supported TV networks work.

The logic for many is that traditional TV advertising is a bargain for many marketers. But higher prices may be a consequence of getting rid of that advertising clutter. That means getting back to TV’s "scarcity" issue of premium commercial time.

For the last few years, TV executives have said traditional time-shifting wasn’t all that bad. In fact, 50% to 60% of viewers actually view TV commercials. In addition, TV marketers continued to spend more, with national TV revenues climbing.

But now, as offline media consumption has risen -- and advertising dollars shift to Google and Facebook -- there have been some major effects. Rising yearly ad revenue volumes are harder to come by.

If Fox does get to its dramatic goal of just two minutes of advertising time per hour by 2020, it would have a major effect, competing with Netflix, Amazon, Hulu and other subscription-based TV services that don’t carry advertising.

But this doesn’t mean total abandonment. Fox -- and others -- are ramping up efforts to produce more branded entertainment content -- in theory, to replace standard 15-second, 30-second and 60-second commercials.

This may the end of DVR fast-forwarding to skip commercials. Instead, one can just scroll away on social media feeds, associated YouTube content and fan-centric TV internet content -- while traditional TV programming is playing.