TV needs fewer commercials, but the math is going to be hard

Big question: How do networks reduce the ad load without harming overall revenue?

Fox plans to reduce the ad load for The Simpsons and Family Guy by as much as 40% next year.

Other options: Better targeting (addressable, optimized linear, etc.) will bring higher CPMs (4X+) which will allow for a lower ad load while growing total revenue. This is a rare win for both the advertiser and network.

Quote from David Campanelli — Co-Chief Investment Officer @ Horizon Media:“Conceptually, improving the commercial experience on linear TV is a great idea. It’s a no-brainer… They have overloaded commercials and you have to compete with no commercials or limited commercial platforms. But how you do that is the real challenge.”

TV commercial time according to Nielsen:
1) March 2017–10.8 m/h
2) March 2018–11.2 m/h (↑ 4%)

Flashback #1: NBCU Cuts Ad Time in Original Prime-time Shows by 10%

Planned changes in prime-time:
1) Ad break length — ↓ 20%
2) Total ad time — ↓ 10%

Quote from Mark Marshall — EVP of Entertainment Ad Sales @ NBCUniversal:“It’s the same show, it’s the same piece of glass, so why are they watching longer on digital properties? Part of it is because there’s a lower ad load on that side… The whole goal is to make TV look more like digital TV.”

Flashback #2: Some TV Networks Take a Hit from Cutting Ad Time, Benefits Yet to Materialize

Simple math from NBCUniversal and Saturday Night Live (SNL):
1) Prior to reduced ad loads SNL charges $20/CPM
2) SNL reduces ad load by 30%
3) If the new CPM $ for the remaining ads is $26 or higher, then they generate more revenue while running fewer ads.

More #1: Pass the remote — it’s time to change the channel on TV metrics

More #2: The $70b disruption

More #3: NBCU Joins ‘OpenAP’ TV Ad Consortium, Licenses Data Assets

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