Advertising Strategies Challenged in High-Tech Age

2006 is expected to be a challenging year for the advertising industry. Dollars continue to flow out of television budgets and into Internet ads. And viewers have more ways to skip commercials. With TiVos and iPods giving consumers more power, what's an ad guy to do?

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MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, host:

And I'm Robert Siegel.

2006 is expected to be another challenging year for the advertising industry. Dollars continue to flow out of television and into Internet ads, and viewers are finding more ingenious ways to skip commercials. With TiVos and iPods giving consumers more power, what's an ad guy to do? NPR's Robert Smith has an advertising professional walk him through alternatives to the traditional 30-second TV ad.

ROBERT SMITH reporting:

Joseph Jaffe is an advertising consultant and writer. He's worked with some of the big agencies in New York. And yet when I ask him about the best commercials of last year, he admits that he doesn't really watch them.

Mr. JOSEPH JAFFE (Advertising Consultant; Writer): And the dirty little secret in advertising is that most people that work for advertising agencies don't watch commercials, either. It shows that they don't believe in their product.

SMITH: Like millions of Americans, when Jaffe watches TV, he does it on his own terms.

Mr. JAFFE: The air break is coming up momentarily, and you're going to see how quickly I get past the ads.

SMITH: He holds the TiVo remote control like a gunslinger.

Mr. JAFFE: Here we go.

(Soundbite of TiVo noises)

Mr. JAFFE: Congratulations. You just flushed a couple of million dollars down the toilet.

SMITH: And TiVo and other digital video recorders are just the beginning of the end for the commercial as we know it. 2005 will be remembered in the advertising industry as the year that consumers finally took control. On the computer, pop-up blockers and spam filters reduce the Internet clutter. IPods and satellite networks gave listeners radio without ads. And viewers started to watch more TV without commercial interruption, from video on demand to DVD rentals to network shows you can download to an iPod for a small fee. Jaffe wrote about the shift in his latest book, "Life After the 30-Second Spot."

Mr. JAFFE: The 30-second spot is itself a metaphor for a certain way of doing business, when one size fits all, what was once called the spray and pray approach. I think in a way, life after the 30-second spot is also life after mass marketing and mass media.

SMITH: With more consumers able to skip ads, the advertiser has only two options: You either sneak the ads in or you make them stand out. The sneaky part was hard to miss if you watched any reality TV last year. From apprentices hawking ice cream to jungle survivors competing for cars, product placement was everywhere.

(Soundbite of television show)

Unidentified Man #1: I think you know what you're playing for.

Unidentified Woman: Yeah.

Unidentified Man #1: 2006 Pontiac Torrent.

SMITH: But Jaffe thinks that consumers will only accept so much monkeying with program content. The bigger trend next year, Jaffe says, is permission marketing, people who choose to watch ads. Take, for instance, the way Honda introduced its new Element SUV, with a video game on its Web site that had the car talking to animals.

(Soundbite of Web site)

Unidentified Man #2: So you're a platypus?

Unidentified Man #3: Yep. But look at you, part SUV, part van, part surf wagon.

SMITH: Initial research showed that consumers spent more than 14 minutes immersed in the site.

Mr. JAFFE: Question is: What is more valuable to a marketer, you know, exposing someone to a one-size-fits-all 30-second commercial or a consumer that voluntarily gives permission, essentially, to spend 14 minutes interacting in a highly branded environment?

SMITH: But to get that permission, the ads have to offer something unique. In a TV spot for a new Sony high-definition television, the producer dropped a quarter of a million brightly colored rubber balls down a street in San Francisco. It's a beautiful sight, but what was truly impressive was that you could go online and see longer versions of the ad or download video and pictures to your cell phone and even watch a making-of documentary about how the stunt was pulled off. This idea of the ad as a destination is also pushing one of the hottest trends in advertising right now, video on demand. Just as you can order movies from your cable provider, advertisers are now offering long-form ads to watch. Jaffe picks up his trusty TiVo remote control and scrolls through a list of sponsored videos.

Mr. JAFFE: Let's look at another one. It's all about "The Producers." Of course I want to find out about "The Producers"!

(Soundbite of video)

Unidentified Man #4: In 2001, legendary writer-producer Mel Brooks adapted his 1968 classic film "The Producers"...

Mr. JAFFE: OK, that's a three-minute ad, but I wouldn't know it and I wouldn't care.

SMITH: But the advertiser would. Not only can they finally count how many people see their ad, but with video on demand, they know when you're fast-forwarding or pausing the commercial or asking for more information, and that sort of accountability is the Holy Grail of the TV advertiser. A company wants to know that after spending millions of dollars on a concept, a film shoot and TV time, their ad isn't just an excuse to go to the bathroom. Robert Smith, NPR News, New York.

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