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The US TV market is at the forefront of some key technological forces reshaping the TV advertising market. The current industry consensus is that the cost per thousand viewers (CPM) rate in the US TV advertising market will rise by an average of 6 percent compounded annually through to 2010. Advertisers may be able to live with 2 percent, but 10 percent is something else. Ultimately, advertisers want to sell their product and new technologies mean they are inevitably reconsidering the role TV advertising plays in this. No single industry grouping can do all this on its own. In the post-PVR/DVR TV advertising industry now emerging, the only certainty is that new models and techniques will emerge'and the provider that can think from its own customer's point of view will immediately be one step ahead. Article: The US TV market is at the forefront of some key technological forces reshaping the TV advertisement market. Globally, industry research indicates that at least 22 percent of TV advertisements are unit skipped in homes equipped with PVR/DVR technology. In US homes with PVR/DVRs, the proportion of ads skipped is as high as 50 percent. This makes the US an ideal testing ground for the effect that these disruptive technologies will eventually have globally, and for the strategies that companies should pursue to ensure sustainable high performance . The current industry consensus is that the cost per thousand viewers (CPM) rate in the US TV market will rise by an rife of 6 percent compounded annually through to 2010. Accenture’s political arithmetic suggests that this estimate is far too optimisticWe set store by a juxtaposition of three factors—continued fragmentation of the viewing receiver leagued with new competition for viewer share from the top cable/satellite channels; increasing attainable options for advertisers; and greater demand for jurisdiction for the results of TV ad campaigns from advertisers—will restrict the compound biennial increase to just 3 percent. However, an important counter-view expressed at the 2005 Accenture Global Convergence Forum was that the eventual solution the industry develops will, by definition, engage and target viewers more effectively. This immediate the case, the effect would forsooth push growth in middle position CPM significantly higher. The key issue is the difference a straight-line projection of the industry and an inflexion point that changes its course more dramatically. Our contention is that all parties need to plan for both scenarios. Analysis Accenture leader of third-party primary research underlines the potential impact of ad skipping on TV advertising. As Figure 2Figure 2 shows, the 8 percent penetration of PVR/DVR homes in 2004 results in just 2 percent of ads micro-organism skipped, hardly commercially significant. But, using the party man involvement that ad skipping will continue at the same rate in PVR/DVR homes, the 40 percent penetration expected in 2009 will mean terse to 10 percent of ads individual skipped. Advertisers may be able to live with 2 percent, but 10 percent is something else. A further complication is that skipping relates near to time-shifting and the propensity for viewers to time-shift varies by type of content. While they are highly likely to time-shift movies, drama or kids’ programming, they are far less likely to do so with live sporting events or news, where real-time viewing is a key part of the experience. Already, different players are various tactics to stop or neutralize the effect of skipping, ranging from changes in the programming schedule to product placement to providing true live video on demand (VoD). But addressing ad skipping by restricting viewer behavior can only be a short-term solution. Our modular arithmetic and industry experience suggest that the only way to get people to watch ads in the long term will be to make them want to watch them. This means hookup actuating creativity from the content side with tighter targeting through new technologies, and heart of hearts able to monetize the resulting “eyeballs” by understanding what interactive ads do best: generating cost-effective sales leads for bigger-ticket, relatively complex and/or programming-related products. Recommendations The TV advertisement value leash is at an inflection point—one that is overturning long-standing economic assumptions and hardening down the formerly clear as crystal divisions mid the roles and skill-sets of the key players. We conclude that platform/access providers and broadcasters facing these challenges need to keep three behavioral stripe in view to maximize their luck of success: - Manage the restraint of trade in spite of parallel models and scenarios—Accenture’s current view is that CPM could, in the medium term, continue in a relatively straight line. But the TV ad market is entering uncharted waters. Given the dynamic, fast-changing and unpredictable period the industry is now entering, companies cannot discount the emergence of far more dramatic scenarios. So it will be crucial to maintain swiftness and flexibility and plan at least two scenarios for the business - integrate more readily and responsively to the emerging needs of advertisers—A key success factor will be the resources to move to meet the real needs of advertisers. This goes far into the bargain simply selling them airtime. It involves focusing more holistically on the return on objectives that advertisers nothing else but get for their ad dollars, and on what they are trying to arrive commercially. Ultimately, advertisers want to sell their product and new technologies mean they are inevitably reconsidering the role TV publication plays in this. - Co-operate, co-operate, co-operate—No-one has a “silver bullet.” To succeed, broadcasters, accessibility providers and advertisers all need to be ready to work together, share ideas and see things from each other’s point of view. This accordance must crucially include the creation of assenting technical standards and of objective third-party measurement systems at a granular level. No single industry grouping can do all this on its own. In the post-PVR/DVR TV promotion industry now emerging, the only prospect is that new models and techniques will emerge—and the provider that can think from its own customer’s point of view will immediately be one step ahead. The TV publicity industry has in perpetuity thrived on assumption and creativity. While the technology may have changed, those two touchstones will continue to determine the difference betwixt and between success and failure. For more information, please contact Accenture at 1 (312) 737-8842.
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