Running head: BROADCASTING AND SOCIETY

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What Impact is the DVR Having on the Advertisers? Steven Joseph Spayer November 12, 2014 BC 323 – Section IC2 – Broadcasting and Society Professor: Dr. Roger Sadler Western Illinois University

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Introduction As technology changes in the communication environment, the impact is felt in the advertising field. In case advertisers fail to adapt as well as monitor the changes being witnessed field of technological communication, they face the threat of losing millions of funds, which they direct to ineffective advertising spending. The DVR (digital video recorder) is one of the major revolutions in technology that advertisers should familiarize themselves with to remain successful in the industry (O'Guinn, Allen, & Semenik, 2011). Since a DVR makes it easy for a viewer to avoid advertisement commercials, it can have significant implications on the creative and placement strategies that the advertising industry exercises. The DVR is creating serious fears to the advertising industry, some certain opportunities are provided by the DVR technology. The advertising industry realizes opportunities by establishing mutually dependent affiliations with television networks, hence creating a communication platform that offers economic benefits to the two entities (Neff, 2010). The focus of this article is to depict the impact that DVR has on advertisers based on the technological advancements that realized in the communication environment. Discussion DVR Adoption Overview For advertisers to develop innovative and placement strategies in the advertising environment, they should understand the manner in which they can distribute messages and how the audience retrieves them while using technological communication devices. The changes that take place in the technological communication setting lead to heavy use of the media by mass. Thus, altering the behavior of the audience, which forces the advertising industry to implement changes to meet the market needs (Biagi, 2014). In this case, advertisers are forced to place their

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adverts in places where their target audience can notice them easily. Advertisers who are not careful with respect to adapting and monitoring to technological changes in the communication environment risk losing significant amount of funds they spend on ineffective advertising (Neff, 2010). Advertisers need to adapt the DVR since it is one of the up-to-date innovation in technology. Although the penetration rate of the DVR in television households was approximately 5 percent in 2004, the rate doubled to 10 percent by the end of 2005. The DVR provides consumers with an option to skip advertisements, record, and store their favorite programs digitally (Neff, 2010). Moreover, they are capable of pausing live television as well as record programming one week in advance. They can also record a similar program each week for the entire season it is aired. These DVR features offer the consumers with more control and choice pertaining to their television experience (O'Guinn, Allen, & Semenik, 2011). The features, which advertisers show more concern is the ability of viewers to skip advertisements by fast-forwarding when they appear. In 2004, for instance, approximately 50 percent of DVR consumers stipulated that the fast-forwarding feature, especially through commercials was their favorite (Fortunato & Windels, 2008). Through the DVR’s future role with respect to the uncertainty issue in cable and broadcast television, most practitioners in the industry stipulate that devices with the ability to skip commercials will have severe impact on the present business model. The whole process is supported by advertising (Biagi, 2014). For instance, in 2006 approximately $5.5 billion advertising revenue was lost as users skipped commercials. Moreover, according to the American Advertising Federation, about 75 percent of senior advertising executives believed DVR will have serious implications on TV advertising, creating room for further development of

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contemporary advertising formats (Fortunato & Windels, 2008). With the tremendous advancements being realized in DVR technology therefore, it is appropriate for the advertisers to device strategies that will help them identify both the threats and opportunities that this device presents. Review of Literature Any form of advertising situation offers both opportunities and threats in order for the advertisers to attain their goals. Communication goals through advertising aim at boosting recall of the brand, sales increase, and attaining the target audience. In order for the advertisers to develop effective advertising strategies, they should put into consideration two vital factors. These include considering communication strategies that can help them reach their target audience and understand the how the audience behaves while using the mass media. All other strategic decisions that the advertisers make are dependent on a thorough understanding of these two major forces (Hendricks, 2010). By embarking on theoretical frameworks, it is possible for advertisers to understand these two major factors and help to analyze as the opportunities and threats presented by DVR use. With the emergence of new technology, the behavior of the audience with respect to ways in which they use the mass media changes on a constant basis. In this case, experts stipulate that the DVR have the potential of altering the manner in which individuals watch television (Hendricks, 2010). The DVR is capable of altering the relationship that prevails between the viewers and television medium based on the ways in which they experience television. This is because the functions of the DVR provide the viewer with more choice and control. With respect to literature influencing uses and satisfactions, it is possible tom provide an explanation as to the relationship that prevails between consumers and media users by emphasizing on notions such as active

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viewer’s choice and control (Schaeffler, 2013). The revolutionary television experience by DVR is capable of altering the link between advertisers and television networks for the advertisers to develop strategies that can help them rely on the behavior of the viewers in order to sustain the prospects of the advertising business. In this case, literature on media dependency plays a vital role in explaining the link between advertisers and television networks by emphasizing on economic gains and relations between the two groups (Fortunato & Windels, 2008). Impact of DVR on Advertising With regard to the challenges facing the entire advertising industry, experts argue that the DVR is another revolutionary technology aimed at providing consumers with additional choice and control. Advertisers have encountered a dilemma with respect to coping with evolving technology while trying to attract the attention of their audience (Biagi, 2014). Advertisers have experienced this problem before and emerging technologies are creating new challenges for them. With the ability of DVR devices to skip commercials after the touch of a button, it facilitates recording and storing of programming. Also, with the ability of DVR to record a similar program on a weekly basis for the entire season, it has significantly altered the manner in which consumers perceive television experience. These features provide consumers with more choice and control over their viewing experience, negatively affecting the advertisement environment (Schaeffler, 2013). In the case of advertisers’ concerns, the issue of skipping commercial easily is paramount. The advent of the DVR did not indicate the first time where advertisers had to face the challenge of commercials evasion. Technological innovation in the case of the DVR can to some extent by attributed to that of the VCR (video cassette recorder). In the perspective of advertising, the VCR posed similar challenges to advertisers since it made it possible for clients

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to record programming as well as skip commercials, which they deemed as disinteresting. The DVR operates in a simple manner, and since it has the potential of storing programming the same way a computer does, it is regarded as an upgraded VCR (O'Guinn, Allen, & Semenik, 2011). In this case, it is true that similar media is capable of addressing similar needs as well as replace the duration that traditional media took, especially if revolutionary technology is assumed to be more advantageous when compared to former technology. In this perspective, it is true that with the enhanced features of a DVR in line with the DVD, indicates that the probability of replacing the VCR is highly likely (Fortunato & Windels, 2008). In this perspective, therefore, it is true that communication technology is regarded as an issue only when consumers treat the equipment as valuable. If the DVR failed to make the viewer’s experience more gratifying, then their use would be limited, having insignificant influence on the advertising industry. The DVR has provides various benefits over the VCR, especially in the case of the flexible time-shifting capacity. The DVR also provides the consumer with the ability to shift television programming and set it to a time that is convenient to him while avoiding unnecessary commercials. The time-shifting capability means that an individual is capable of watching a television program at a different time rather than when the network originally provided it (O'Guinn, Allen, & Semenik, 2011). The linkage of time-shifting capability and potential to skip commercials is creating significant problems for advertisers while trying to grasp the attention of the audience. Research reveals that approximately 80 percent of all prime-time programming in those households using DVR is recorded for later viewing. While watching programming that is time-shifted, users of DVRs skip between 65 and 75 percent of all commercials. Moreover, a study by Starcom Media Vest Group revealed that approximately in all DVR households, about 53 percent of them skip

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TV commercials, while ad zapping was significantly high at 77 percent based on the viewership of recorded programming (Schaeffler, 2013). Moreover, less than 50 percent of consumers watch commercials for top rated shows. In this perspective, it is true that these two major DVR features have more adverse effects than skipping commercials such as altering the manner in which people view television. In addition, they are causing severe implications for television networks and advertisers, making them to witness significant drop in revenues they derive from advertising (Neff, 2010). Conclusion With the advancements being realized in the area of communication technology, it is appropriate for the advertising industry to devise strategies that will help them understand the different communication vehicles that are appropriate for reaching their idea to the audience. They would also understand the ways in which consumers behave towards mass media since the technological communication environment influences how consumers interact with the advertising environment. In addition, it is appropriate for the advertisers to devise ways of adapting revolutionary communication innovations that the audience uses, such as the DVR. When the audience shifts to different media locations, it is vital for them to note this move and follow them. As one of the latest advancements in technology, it is appropriate for advertisers to understand the potential threats and opportunities presented by this medium for them to avoid the prevailing risks and maximize from this medium.

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References Biagi, S. (2014). Media/Impact: An Introduction to Mass Media. Cengage Learning: New York. Fortunato, J. A., & Windels, D. M. (2008). Adoption of Digital Video Recorders and Advertising: Threats or Opportunities. Retrieved from http://jiad.org/article73.html Hendricks, A. J. (2010). The Twenty-First-Century Media Industry: Economic and Managerial Implications in the Age of New Media. New York: Lexington Books. Neff, J. (2010). DVR Threat to TV Ad Model Looks Increasingly Manageable. Retrieved from http://adage.com/article/media/advertising-dvr-threat-tv-ad-model-slowing/147661/ O'Guinn, T., Allen, C., & Semenik, R. (2011). Advertising and Integrated Brand Promotion. New York: Cengage Learning. Schaeffler, J. (2013). Digital Video Recorders: DVRs Changing TV and Advertising Forever. New York: Taylor & Francis.