September 13, 2010

The Amazing, Invisible TiVo Effect

 "...advertisers and television programmers must devise new strategies for combating the potentially disastrous effects of ad skipping." Jupiter Media
No technological development has created more hysteria and hand-wringing in the ad industry than the adoption of the DVR.

Over the past few years, the science department here at Ad Contrarian World Heaqdquarters has tried to counterbalance the intemperate ravings of pundit/lunatics by introducing some facts and perspective into the discussion.

In my most recent post on the subject, I calculated that as a result of time-shifting and ad-skipping only about 3% of total spots were being missed. A recent study, however, leads me to believe that this may be a gross exaggeration.

In fact, the true number may be as little as 1.2%.

In a 3-year study by Duke University, in partnership with Information Resources Inc. (IRI), TiVo, and The University of Chicago, a sample of 1,588 households were studied to see, among other things, how they used their DVRs.

What made this study different from other research done on DVR usage was that it measured actual behavior, not self-reported behavior. As you know, self-reported behavior is highly suspect and almost always turns out be inaccurate.

According to Duke, the results of the study "...astonished the researchers."

One of the key findings of the study was that 95% of the time people with DVRs were watching live TV. Only 5% of the time were they watching time-shifted TV.

If this is true, the number of total spots being missed as a result of ad-skipping is ridiculously small.  Here's the calculation:
(Homes with DVRs)  x ( Frequency of Timeshifting)  = (Total Programming Shifted)
                                                      35% x 5%  = 1.7%
         (Total Programming Shifted) x (Incidence of Ad Skipping) = (Percent of Spots Missed)
                                                      1.7% x .70 = 1.2%

Let me explain in simple terms in case any art directors are reading this.

About 35% of households have DVRs. If they're time shifting 5% of the time, then the total amount of programming being time shifted is 1.7% (5% of 35%.) If they skip ads while time shifting 70% of the time, then the total percent of spots being missed is 1.2% (70% of 1.7%.)

Now remember, TiVo was first introduced in 1998. While all the wailing and panic about DVRs has been going on, TV viewership has increased. As a matter of fact, according to Nielsen, TV viewership has increased 21% since 1998.

So, if the Duke study is correct, here's where we stand 12 years after the introduction of TiVo. DVRs are causing people to miss 1.2% of TV ads. Meanwhile, greater viewership is causing them to watch 21% more TV ads.

The positive effect of more viewing is almost 20 times the negative effect of ad skipping.

Why does no one report this?

Later this week in "The Amazing, Invisible TiVo Effect, Part 2" we'll talk about what effect the DVR is having on consumer purchasing behavior.

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