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Courtesy of Pepsi

Analysis: In a world filled with new viewing behaviors, the old-school TV commercial may no longer be ready for primetime

Even TV networks are growing tired of watching TV commercials.

TV has since 1941 relied on “a few words from our sponsor,”  a polite way of referring to TV ads, to keep the bills paid. Now, several TV networks want to reduce some of that chatter, and eliminate some of the 30-second TV spots that have been part of the medium for decades.

In December, Pepsi ran a commercial during the Fox drama “Empire” that was, more or less, just another segment of the soapy show.  After paying the network to incorporate its flagship cola into the series’ plot for three weeks, the soda-maker capped the project off with a special commercial break:  A  single ad starred  “Empire” character Jamal Lyon in a Pepsi commercial that he had been working on as part of the story arc. Viewers who wanted to soak up every bit of the plot could not tune away or run to the kitchen to grab a snack.

“The 30-second commercial isn’t the perfect solution in every environment,” said Mel Berning, president and chief revenue officer of A+E Networks, in a recent interview.

A bevy of TV outlets have begun to pitch advertisers on something a little different:  Run fewer 30-second ads and invest more heavily instead on video vignettes that play off the shows and networks in which they are featured.  Maybe it’s a Pepsi ad camouflaged as a segment from “Empire.”   Viceland, the new cable network backed by Vice Media and A + E Networks, has pitched ad buyers on the prospect of running non-traditional commercials that might be several minutes or just a few seconds in length, according to people familiar with the situation. Many of the outlets – including several owned by Viacom and Time Warner – have even offered  to cut back on the number of traditional commercials they show.

“We have begun on this path pretty aggressively,” said Toby Byrne, who oversees ad sales for 21st Century Fox’s Fox Networks Group. He predicts more TV networks will roll out what he called “high engagement” commercials, particularly as increased viewership of streaming video allows for commercials that prod viewers to interact with them. “We are committed to trying to evolve traditional commercial practices,” he said in an interview.

The TV networks mull the new methods as consumers increasingly find ways to avoid advertising. Couch potatoes have long had the ability to zap past commercials with the help of a DVR. Now, more of them are simply growing accustomed to watching TV programs without ads at all, as they stream and binge-watch favorites by using subscription-based services like Netflix and Amazon. “You have to respect and listen to what the consumer is telling you,” said Byrne. “Their consumer habits are telling us that we need to evolve.”

The moves are not without risk. If TV networks want to devote an ad break to a single sponsor, well, that could mean giving up an easier form of revenue. Commercial breaks, after all, routinely feature a handful of sponsors, not just one. The networks must also hope advertisers fork over enough of a premium for the new, tailored ads to make up for any loss that comes from shedding the old format. And there could be traffic problems: If there are fewer ad berths in any given show,  the networks could have less room to separate rivals like Coca-Cola and PepsiCo; General Motors and Ford Motor Co.; or Kellogg and General Mills that prefer to avoid having their ads placed near each other.

The 30-second format isn’t going to disappear tomorrow or even next decade. “Not everyone is going to be doing it on the advertising side and not everyone is going to be able to do it on the TV side,” said Melissa Shapiro, president of investment at MediaVest, the large media-buying firm operated by France’s Publicis Groupe. The new ad formats “will get some interest from advertisers, but it’s hardly a trend with any scale,” said another ad-buying executive.

Even so, some TV networks are quickly moving toward running fewer ads.  In recent days,  TNT’s top programmer said the network would run three dramas with a significantly reduced load of ads when they debut. TruTV, also owned by Time Warner’s Turner unit, intends to run fewer commercials and more programming starting later this year. Viacom’s networks are supposed to trim the number of ads they feature in primetime. Other networks are simply devising ads that blend into the shows.  In May, ESPN transformed the set of “Sports Center” into a scene from the movie “Tomorrowland” as part of an ad pact with sister unit Walt Disney Studios. More recently, Viacom’s Comedy Central ran a spot for Hyatt featuring a comedienne using one of the sponsor’s hotels to deliver a series of jokes.

Executives at Turner considered the issue for months. “What we all agreed to is that the experience has gotten a little out of control,” said Donna Speciale, president of ad sales for Turner the Time Warner unit that operates TNT. TruTV and more, in an interview. The answer, she suggested, may have to come in the form of a completely reworked commercial break.  “Just because it’s been done this way doesn’t mean it has to stay, ‘she said of 30-second and 60-second ads.

In the place of the normal entreaties from Colonel Sanders and Flo, the Progressive Insurance lady, are new offers  to create video pieces that blend in more readily with the environment in which they surface. Fox Networks Group last year struck a deal with Tony Sella, a longtime movie-marketing executive, to create “original content” for advertisers across Fox Broadcasting, FX Networks, Fox Sports and National Geographic. A+E Networks recently hired Jim Hoffman, an NBC ad-sales veteran, to bring to advertisers’ attention content projects in development as well as find ways of creating content that features sponsors. Viacom last year began to push more heavily a unit that helps create video vignettes for advertisers that have the look and feel of the programming on networks like MTV and Comedy Central.

Some might call these pitches for a new form of infomercial, a modern-day version of a showcase of K-Tel  1970s hits or entrepreneur Ron Popeil hawking a smokeless ashtray. Those commercials run for a relative pittance, however, and TV networks think tailored, long form videos ought to command a premium.

The new-fangled promotions also represent an attempt to cut back on the number of ads jammed into commercial breaks, a problem more closely identified with cable networks than broadcasters. For years, cable networks owned by Viacom, A+E and others have been proclaimed guilty” by media-buying agencies of “overstuffing” their commercial breaks, which can, during poorly watched portions of the schedule, last well beyond the two to three minutes typically given over to ads by broadcast networks

Ad clutter has been on the rise at both cable and broadcast for years. In 2009, for example, broadcast networks on average ran 13 minutes and 25 seconds of commercials per hour, according to data from Nielsen. In 2014, that average had risen to 14 minutes and 36 seconds. Cable networks in 2009 ran an average of 14 minutes and 27 seconds of ads per hour, Nielsen found. In 2014, that average had increased to 15 minutes and 49 seconds.

In November of 2015, approximately 19.5% of all programming minutes across broadcast, cable and syndicated TV were devoted to advertising, according to Brian Wieser, an analyst for Pivotal Research.

TV networks will have to hope their new ideas shorten the parade of ads their viewers have to endure while increasing the amount of money they get for the new commercials. Solving this problem will take more than 30 seconds of a viewer’s time.

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