You don’t need to be a rocket scientist to understand that the TV industry is slow to pick up on trends. I mean, after all, they’re still heavily reliant on outdated Nielsen ratings. But what we do know about television people is that they LOVE money, which means that when advertisers learn how to read, people who watch television online are in trouble.
Why? Because while advertisers throw most of their money at old-school television commercials, that’s probably going to change soon.
On average, advertisers pay roughly $20 CPM for a television ad. That means they pay $20 for every 1,000 viewers. However, television viewers don’t watch all the commercials, although you’d be surprised by how much people — even with DVRs — do watch commercials. On average, one study shows that DVR users only skip 46 percent of commercials on network television, and 50 percent of commercials on cable television (really? Are 50 percent of people so lazy they won’t skip commercials, or do they just LOVE commercials?). That means, in reality, that advertisers actually pay around $40 CPM, if you assume that only half of the viewers watch commercials.
That number is significantly different online. People who watch television online are far more tolerant of ads (I can vouch for this from personal experience). Online viewers of television watch a whopping 91 percent of ads. Moreover, if you have been watching television on network websites or on Hulu, you also know that networks have added significantly more ads to their shows. Three years ago, I remember watching one, maybe two, spots per show. Now, however, the ad breaks are simulating the TV set model — there are up to 8 ad breaks. Despite that, 91 percent of viewers are STILL watching them.
Why? Because you can’t skip ads online. Sure, on your laptop, you can browse online in another tab while your show is playing, but in most cases, that’s not even possible on mobile devices. So, in order to avoid paying for cable, there’s a trade-off: You have to suffer through commercials.
Right now, relative to television CPMs, online ads are pretty cheap (as low as $5 CPM). Once TV people figure that out, they’re going to increase those rates. Combine that with 91 percent viewer retention, and television people are going to start testing that limit as much as possible. That means, more ad breaks. There’s also a lot more creative flexibility in online ads: You want to make sure that your ad is seen? Make it interactive. Force viewers to engage with the ad before they can go back to their program. They’ll turn the experience from passive viewing to active engagement, and as long as we tolerate it, they’ll keep pushing it.
Before long, if you want to watch an entire episode of Revenge on ABC.com, you’re going to have to dance like a monkey. You know what? People without cable may do it, too, because dancing like a monkey is cheaper than a $100 cable subscription.
On the bright side, if all commercials starred Kate Upton, maybe it’s not such a terrible thing, after all.