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The NATPE Message: Think Smarter, Advertisers

Much of the buzz at NATPE last week was about how the television business is reeling from assaults by new technologies, such as digital video recorders, video-on-demand services, game playing and even cellular phones, which increasingly feature high-quality video capability.

It's a changing world, and the industry is hard at work trying to figure out new business models to reach a fragmented audience.

They'd better hurry up, because the in-home entertainment distractions are adding up so that, in a very short time, viewers may be "doing anything and everything but sitting in their living rooms watching what we program for them," said former Disney Television Chairman Rich Frank.

That's is particularly true for advertisers, which, for decades, have relied on the 30-second TV commercial to get their marketing messages across. But, as Frank pointed out last week, the medium is becoming less and less efficient for doing business that way. In 1980, the average rating for a top-five show on the networks was a 28. In 2000, it was down to a 14.

"An advertiser that needed to buy 50 spots to achieve a 500-rating-point buy five years ago now needs to buy 100 spots," said Frank, currently managing partner, Integrated Entertainment Partners.

And for those who don't believe digital video recorders are having a major impact on TV, he recalled watching TV with his 5-year-old grandson recently. He asked him what his favorite channel was; the child answered, "TiVo."

Why? "He said it was his channel and all of his favorite programs were on it."

So much for the billions that Viacom and Disney have spent branding networks like Nickelodeon, MTV and Toon Disney. TiVo, Frank said, will render that branding "worthless" in the not too distant future. And he believes that, with cable and satellite services packaging DVR capability in their service offerings, DVR penetration could soar to 30 million homes in the next three years from 1 million or 2 million today. That's going to result in a lot of zapped commercials.

Several advertisers are already experimenting with various forms of product placement and other forms of "brand integration" to counteract channel surfing and commercial zapping. The idea is to expose viewers to a product in ways that they can't zap it, won't be offended by it and might, hopefully, even embrace it.

That was certainly the idea behind The Restaurant, a reality show that chronicled the highs and lows of the planning and opening of a trendy New York restaurant last summer.

The show was successful enough that NBC ordered another installment for this spring—minus two of three major sponsors from the first edition. Both American Express and Coors pulled out.

A key reason for their leaving is that NBC values the time at a significantly higher price in the spring, when viewing levels are greater, according to Ben Silverman, who runs Los Angeles-based program packager and producer Reveille Entertainment, which put the show together.

But Mitsubishi is back as the auto sponsor. The rest of the available time will be sold as spots by NBC, another partner in the show. Other partners are Magna Global, the ad agency that brought the three main sponsors in, and producer Mark Burnett.

Robert Riesenberg, who oversaw Magna Global Entertainment when Silverman pitched him the Restaurant
project said the end result was a "very positive experience" for the sponsors. Viewer surveys indicated "high recall and a positive attitude" toward the sponsorships, said Riesenberg, now with Omnicom.

Still, there's resistance to product integration from producers and sometimes from network sales departments.

Jeff Gaspin, president, Bravo, and executive vice president, alternative programming, NBC, said a lot of producers "simply don't know the process" of product integration and don't care to learn. "I think some producers are concerned they are going to have to be beholden to the advertiser."

Network sales teams, Silverman said, resist product-integration efforts, particularly when it comes to the bread-and-butter formats like comedies and dramas. "The ad-sales people don't want other people in their business selling the ads. I've personally found, on the scripted [entertainment] side, I'm getting much more resistance than on the alternative-programming side." But, over time, he added, resistance will probably break down as new ways of doing business become more accepted.