At Time Warner‘s recent “Thought Leadership” seminar for college professors, a Turner VP presented studies that apparently showed that audiences will tolerate commercials during online viewing. The studies, from 2008 and 2010, tested ad loads. Audiences either stopped viewing at the first commercial interruption, or “pod,” or continued to view the program, no matter if there were 2 or 4 or 10 more commercial interruptions. In other words, if a viewer tolerates 2 commercial interruptions, she will also tolerate many more, so, according to this executive, why not bring the ad load of linear television (24 ads per half hour) over to the online viewing experience (now at 8 ads per half hour on Hulu) and earn more advertising revenue?
I am skeptical that this will succeed in the long term. Some historical background may put this into perspective. Audience toleration of commercial interruptions has evolved over the decades, and, I believe, will continue to evolve, forcing advertisers and commercial television to change in the face of competition for audience attention.
In the early years of broadcasting, the 1920s, many were concerned that direct advertising on the air would alienate audiences and kill demand for the new medium of radio. The solution pursued by large commercial stations and nascent national networks was to restrict or ban direct advertising and encourage sponsorship or indirect advertising instead. Programs such The Clicquot Club Eskimos and the Eveready Hour provided entertainment with no direct advertising except the sponsor’s brand name in the program title. Advertisers hoped listeners would feel “gratitude” for the free entertainment.
The economic exigencies of the Depression opened up more opportunities for direct advertising on national network radio, but still within a sponsorship structure. An advertiser financed a program, rented airtime from a network by the hour or half hour, and carefully integrated product mentions and announcements into the program. Although advertising integrations were designed to prevent the alienation of listeners, the repetitive hard sell strategies of many radio advertisers did indeed alienate some listeners, leading to vociferous public criticism of commercial radio in the 1940s.
Sponsorship, or advertiser-control of programming, declined in the early television era in part because of the higher costs of television programming, but also because sponsorship did not allow advertisers much flexibility for gathering and targeting audiences. Hence, by the 1960s, the norm in commercial broadcasting consisted of programs, overseen by networks, designed to attract targeted demographic groups, interrupted by commercials from a variety of advertisers, who rented the airtime on a per-minute basis.
Audiences tolerated commercial interruptions because they had no choice. To view the program, the price the audience paid was to endure the commercials. Broadcast networks were careful to limit the commercial “load,” or number of commercials per program, not only to minimize irritation, but also to keep their airtime rental prices high. Audiences had few alternatives for high quality home entertainment; commercials were simply the cost of “free” entertainment.
Today, audiences have more options to “linear television” (that is, watching TV in real time as it is broadcast). Viewers can timeshift, or watch at a time they choose, with DVRs, VOD, or streaming services like Netflix or Hulu. Viewers have far more home entertainment options and are multi-platforming (using multiple devices often at the same time).
Concern over audience resistance to commercial interruptions shaped early broadcasting and it should shape what “television” evolves into. The establishment of the norm of commercial interruptions was possible only because of the tripartite network oligopoly’s bottleneck control during the 1960s-70s. Once cable networks began carrying commercials, at lower CPMs (cost per thousand viewers), they benefited from having two revenue streams to help finance their narrowcast program strategies. In each business model, broadcasting and cable, audiences were tethered to network program schedules and simply had to tolerate commercial interruptions in order to access the programs.
Linear television’s monopoly over viewer attention is over. The studies trumpeted by the Turner executive were done in 2008 and 2010, well before Netflix’s streaming of uninterrupted television programs found a large subscriber base. What would those studies conclude today, in 2012? But even more important than what audiences have done in the past, what might future studies find? Are audiences going to continue to behave they way they were trained to during the linear television era? The Turner executive seemed to think that tolerating commercials is human nature.
I am skeptical. With more options, won’t audiences become less tolerant of commercial interruptions?