Loyalty schemes to benefit from TV ad losses

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By: Wise Marketer Staff |

Posted on December 5, 2002

Advertisers in the US say that, due to ad-skipping features of personal video recorders (PVRs), they are reducing television advertising budgets, favouring alternatives such as loyalty programmes, magazines and internet marketing, according to a survey by Forrester Research.

Around 75% of advertisers responding to Forrester's e-mail survey said they will reduce spending on television advertising as a result of PVR ad-skipping technology. And, of those who are to cut their spending, some 75% are to cut their budget for commercials by at least 21%, while 26% are to cut over 40% of their budget.

"As PVR's penetration nears 2 million households, advertiser concern is mounting," explained Josh Bernoff, principal analyst for Forrester. "Advertisers say they will cut television spending across the board, on national, local, and cable advertising, during the next five years as PVRs reach 30 million households."

Two-thirds of advertisers said they would increase spending on programme sponsorships, and 46% will spend more on product placement - the two television formats which remain unaffected by ad-skipping technology.

The advertisers will also spend more on other media, with the top four alternatives being magazines, loyalty programmes, e-mail marketing, and web site advertising.

The survey report, Will Ad-Skipping Kill Television?, also explores the logic and effects of on-demand television. According to the report, some 49% of consumers will have some form of on-demand television - either a PVR or video on-demand service - by 2007. As a result, consumers will watch 28% of their television on-demand instead of on the networks' schedules, leading to a predicted growth in advert avoidance of up to 19% during the next five years.

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