Ad-skipping may reduce TV rates

With PVR viewers can stop a live programme and continue watching at a later stage. The resultant move from real time viewing to "time shifted" viewing, means that viewers can fast-forward and skip television commercials.

Media specialist MindShare MD Luisa Belter, warns that "time shifted" viewing may reduce the effectiveness of TV ads, forcing advertisers to adopt new strategies: "Research in the UK and US suggests that a high percentage of audiences skip ads during time-shifted viewing. In light of this, peak time shows, which sell at a premium, are likely to be the hardest hit by ad skipping."

To prevent ad-skipping, advertisers may need to shift their focus to live TV shows or even consider other media options. This means that sport and news slots as well as ads positioned first and last in the break, will be sold at a premium, due to the greater likelihood of them being actively viewed. The number of ads in a break is also expected to diminish.

"Programme makers will incentivise people to watch TV live, leading to an increase in interactive TV such as game shows and reality TV with voting," says Belter.

What's clear is that the introduction of PVR's has significant implications for advertisers, who may need to increasingly invest in sponsorship, advertiser-funded content and product placement.

The new technology will also lead to improvements in the quality of commercials, with new attention-grabbing formats being developed to ensure active viewing. Belter says analysts have also suggested that the best ads, may be viewed more frequently than normal, since research has found that many PVR viewers watch more TV and replay their favourite television commercials.

If the adoption rate of PVRs is rapid and becomes widespread, the TV industry may need to compensate advertisers for the loss of live audiences caused by ad skipping and put pressure on rates, this may call for measurement, not only of programme ratings but of advertising ratings as well.

"New audience metrics that can capture the quality of active viewing or of programme loyalty may need to be developed," says Belter.

Although consumer uptake of PVRs is expected to be slow due to the high entry costs, there is no doubt that the new technology will challenge the local TV advertising industry and force a review of established norms.