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Fuzzy Picture for HD Spots

Tis the season for flashy high-production ads to sell expensive new HD TVs, but come January, the owners of these new sets won’t be watching many ads in hi-def.

Even though the number of homes with HD sets passed the 50% milestone this summer and stood at 63.1% on Dec. 1, according to Nielsen, only 14% of the commercials sent to broadcast and cable channels in the 3rd quarter of this year were in native HD, according to Extreme Reach, which provides a software platform for the electronic delivery of ads.

“With all the HD sets in homes, you would think we would be further along, but in terms of ads in highdefinition, we are only in the second inning of the game,” notes John Roland, chairman, CEO and co-founder of Extreme Reach.

Even worse numbers can be found at DG, which works with media companies to electronically deliver more than $40 billion in ad buys each year. DG won’t be releasing 2010 figures for another month, but president/ COO Neil Nguyen says the proportion of HD ads for 2010 will “probably be in the upper end” of the 6% to 9% prediction they made earlier this year.

The discrepancy underlines a rarely discussed side of the HD revolution: Years after HD programming became widely available, many stations and channels still haven’t completely upgraded their infrastructure to handle HD and are simply up-converting standard definition ads to HD.

The dearth of HD ads runs across all sectors of the television industry, beginning with advertisers that are still producing a lot of spots in standard definition. Some 83% of the broadcast networks are able to get HD ads, but only 30% of the ads they receive are in native HD.

The problem is particularly acute at local stations. Only 32% of local broadcast stations are able to take ads in HD—compared to a majority of cable networks and local cable systems--and only 8% of the ads they receive are in native HD.

That is potentially bad news for broadcasters trying to compete with local cable systems for ad dollars in 2011. About 57% of local cable systems have upgraded to take HD ads, according to Extreme Reach, with more on the way. Comcast, for example, lit up a number of systems for HD ads in the 3rd quarter.

“It gives local cable systems a definite competitive advantage,” notes Roland, who adds that big MSOs have the capital to move much faster than cash-strapped stations.

Still, progress is being made. Low-cost cameras and editing solutions are encouraging more local advertisers to shoot spots in HD, notes DG’s Nguyen. He also stresses that DG saw a threefold increase in HD spots during the first half of this year, and that syndicators made a big push to high-definition this fall.

“In the top 30 markets, roughly 70% of the stations are now in HD, and that is a big jump in the last 10 months,” Nguyen adds. “We also saw a signifi cant growth in HD volume for Thanksgiving and the holiday push.”

Media distribution providers DG and Extreme Reach are both working to smooth the path for HD ads. As part of a major initiative for the distribution and management of HD ads, DG has upgraded its platform and rebuilt its facilities at 10 operating offi ces to support HD-related services in the last two years.

Meanwhile, Extreme Reach has been working to automate as much as possible the delivery of hi-def ads through its software platform. In November, the company introduced what it is billing as the industry’s first automated Active Format Description (AFD) flagging solution to set how 16-by-9 HD spots would appear in 4-by-3 standard-definition simulcasts. “We’re doing everything we can to get rid of the pains of the HD transition and make it as simple as possible,” Roland says.