DVRs Skip $8 Billion in TV Revenue

Read this morning that JupiterResearch calculates that as much as $8 B in TV revenue could be lost through ad skipping. That’s a little over 10% of the current TV spend. Apparently, 53% of DVR users skip ads, and if they skip 100% of the time, that accounts for the loss. Actually, I’m surprised only 53% skip. I know I do it all the time.

Forecasts of DVR penetration vary, but one report predicts that integrated DVR (incorporated into TV’s and satellite and cable boxes) sales will grow to 27 million by 2008. Currently, it seems that DVR penetration is around 8% of the market, but all agree that it will grow rapidly. Let us remember that any version of Vista with integrated Windows Media Center turns your PC into a DVR. So let’s say that between integrated DVR, stand alone sets and PC based DVR’s, 50% of the homes have DVR’s by 2010. Of those, 53% skip. That’s the erosion of a lot of advertising revenue.

Ironically, I also received a research brief that shows clicks on sponsored search ads continue to climb. Google say a 50% increase in the number of searches that included sponsored advertising and Yahoo had a 30% increase. What’s even more interesting is that across all searches, on Google, almost 12% of the clicks were on sponsored ads, and on Yahoo, it was 11.4%. Remember, those percentages are for all searches, including the ones where sponsored ads don’t show. In our studies, we see between 20 and 35% click through rates on SERPs were sponsored ads show. A recent study saw 30% click throughs on the top sponsored ads alone, not even including the side sponsored ones.

So, a little comparison here. When we’re watching TV, given the choice, over half of us would not ever want to see a commercial, let alone react to one. But when people are using search for commercial purchases, almost 3 out of 4 of us spend some time looking at the ads (by our choice) and 1 in 3 of us are actually clicking on them. That’s the power of consumer controlled engagement. Yet TV is a $80 B market, and search is a $5.5 B market.

Here’s a thought. Take the $8 B you’re spending on ads that people are spraining their thumb trying to skip by, and invest that money in advertising messages that people are actually looking for!

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