Advertising & video on demand

November 23rd, 2004

Video on demand has reached critical mass, and advertisers have taken notice, reports the New York Times.
Michael J. Wolf, global head of the media and entertainment practice at McKinsey believes that video-on-demand will become a significant way for consumers to find and watch programs.
But of course this means that people are not watching the ads, they want to be in control of what they watch when they watch.
We have moved from a feudal system of passive viewers of broadcast to active consumers of audio-visual content. Advertisers worried about the impact of this behavourial change, are now actively investigating, how to embed commercial messages into the broadcast media.
Alan Bezoza, a cable analyst at the New York office of Friedman, Billings, Ramsey says

People using TiVo and other digital video recorders expect to be able to fast-forward through commercials, and people who select free on-demand programs on cable expect to see no commercials at all, unfortunately, they're used to it by now.

What is important for businesses and their brands to understand is that marketing has to be rethought.
Over the last few years we have all been so busy battling a hostile economic environment that we haven't noticed the more profound changes in our cultural and social environment. The evidence is everywhere: traditional, interruptive marketing simply doesn't work with the vast majority of consumers any more. For example 78% of all people that own a PVR delete 100% of all TV commercials.
New technologies, media fragmentation, effects such as 'information overload' and changing consumer attitudes have all combined to undermine the economics and logic of modern marketing.

It's not just that different parts, such as advertising, are 'less effective'. The system as a whole has become dysfunctional. In its broadest sense, encompassing all go-to-market activities, marketing now accounts for 50% of all economic activity. But is it really worth paying for? Where is the return?
Brands can no longer be created in isolation: they must be forged collaboratively between businesses and customers who engage with each other. Marketing initiatives like Orange Wednesdays – which build a sense of community and mutual experience -point to the future, not the latest McDonalds adverts.
Additional reading: Non-traditional formats and DVR to shift TV advertising paradigm Centre for Media Research

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