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With cord cutting on the rise, TV networks are trying to save TV by ruining TV

Zach Epstein
August 5th, 2015 at 11:02 AM
TV Advertising

It’s happening. There’s really isn’t much of a question anymore. Cord cutting is on the rise, driven by movie and TV show streaming services like Netflix. What’s more, television networks have been so slow to respond that they’re only just now beginning to roll out online-only subscription options in an effort to win back some of the millions of households that have cancelled their pay TV service.

Now, a new report sheds light on just how bad the situation is getting for TV networks: In an effort to minimize the sting from declining ratings and dwindling viewership, they’re making all the wrong moves and, most likely, making the situation worse.

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Aside from the high cost of cable or satellite TV service, what is the very worst thing about television? That’s right, the commercials. Barring the Super Bowl each year, there is nothing more annoying than a commercial break just as you’re starting to get into the latest episode of your favorite show.

So what are TV networks doing in an effort to offset the declining revenue due to dwindling audiences? You guessed it… they’re running more ads than ever before.

A new report from analysts at investment research firm Sanford C. Bernstein found that the volume of TV commercials is increasing at a surprising rate. As noted by AdAge, Bernstein found that AMC has recently increased the amount of advertising it runs by a staggering 10%. Meanwhile, the volume of commercials aired on Viacom channels like Comedy Central and MTV was up 7%, and A&E Networks’ advertising was up 5%.

“The continued ad stuffing is an obvious and unsustainable (some would say ‘desperate’) action by the networks to prop up ad revenue in the face of declining audiences,” Sanford analyst Todd Juenger wrote in the report. “Not only can this not be sustained going forward, it further contributes to the audience declines, making SVOD (streaming video on demand) that much more preferable for viewers made numb by the absurd amount of ads (as well as decreasing the efficacy of the advertising that is still seen).”

He continued, “Such a dramatic increase in ad load, as indicated by our data, would not be a total surprise. AMC’s original programming ratings have underperformed expectations…perhaps forcing the network to make up the difference by increasing the size of its inventory elsewhere.”

As seen in the chart above, Fox is the only network that has actually reduced its advertising load year over year. Of note, however, Bernstein does not measure ads that air during news programming and sporting events.

Zach Epstein

Zach Epstein has worked in and around ICT for more than 15 years, first in marketing and business development with two private telcos, then as a writer and editor covering business news, consumer electronics and telecommunications. Zach’s work has been quoted by countless top news publications in the US and around the world. He was also recently named one of the world's top-10 “power mobile influencers” by Forbes, as well as one of Inc. Magazine's top-30 Internet of Things experts.




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