Skipping The Ads

Most media and telco businesses are constantly trying to find ways to generate more revenue from advertisements. The rise of the Googles of the world is nothing more than a bid to steal ad revenues that would otherwise be spent on traditional media. Customers, though, do their best to avoid them. Both sides are using increasingly sophisticated technology to win this battle. Ofcom’s 2007 review of the UK communications market hints at a vital sign that customers may be getting the upper hand over traditional media. It reports that 15% now have a digital video recorder (DVR) and up to 78% of adults who own them say they always, or almost always, fast-forward through the adverts when watching the shows they have recorded. That undermines the prospects of using traditional ad breaks as a way to promote products, and hence inhibits the revenue potential for broadcasters.

The likely retaliation from television broadcasters will be to weave more advertising into the actual content of the show, like the infamous Zero Halliburton case that featured prominently in the television show Lost. That was no one-off for Zero Halliburton. Placement in television and films is a key element of Zero Halliburton’s promotional strategy. Several episodes of Lost revolved around how the case was durable and virtually impossible to break into. National laws to prevent such aggressive product placement were stretched to their limit when handling the inclusion of a product that was also so deeply and repeatedly embedded within the plot of a popular program. The EU solved the problem of US shows featuring product placements by giving in – instead of trying to stop them, it changed course and gave the broadcasters the right to charge for them like any other adverts.

Other tactics will be to offer more interesting ad campaigns where the consumer pulls the ad rather than having it pushed at them, or spreads the content by choice, on a viral basis. However, only so many campaigns will be able to get the attention of the public meaning that the traditional forced push of unavoidable adverts will still be key for many companies. So rather than putting money into traditional television, expect more money to go into internet-based campaigns, where the power of computing offers more options and can force eye-catching adverts to be placed precisely alongside content. One of the factors driving companies, including traditional broadcasters, to offer IP-TV is that it will give them increased control over placement and prominence of adverts within and alongside the television stream. Although I say that adverts are placed ‘alongside’ content, a lot of internet advertising appears right in the middle of the content, so can hardly be avoided. There has always been a large segment of the internet/computing universe which is altruistic/open source/anarchistic in nature. The question in my mind is whether they are looking for ways to write browser code to strip advertising content and suppress its display. And if they succeed, where would that leave the business model of the Googles of the world?

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.