New television technologies such as TiVo and ReplayTV – which allow viewers to bypass commercials entirely – have North American advertisers and their agencies exploring ways to integrate their messages into programming content.

Product placement opportunities are eagerly being sought and some progressive advertisers are returning to the format that launched television in the mid-1940s – programming built around ads, brands and products.

From the very beginning, television advertisers, their agencies and broadcast researchers have wrestled with the issue of how to keep eyes focused on the screen during commercial breaks. Sponsored programming – think soap operas and Texaco Star Theatre with Milton Berle – is regaining its appeal for both advertisers and networks as the former fights ad clutter and the latter deals with audience fragmentation. Recently, there has been a resurgence of the sponsorship model, through the support of everything from events, specials and miniseries, to entire blocks of programming such as Hasbro and Itsy Bitsy Time.

Bob Reaume, vice-president of media and research for the Association of Canadian Advertisers, says the battle for eyeballs is only going to get worse and that advertisers have to start looking at new ways to present their messages on television because TiVo and ReplayTV have the potential to eliminate commercial viewing.

‘My guess right now is that 60% of commercials are avoided, so if you add TiVo and ReplayTV to that, it’s going to be much larger. A New York Times article said 88% of commercials are skipped once you get used to your TiVo or Replay remote.’

Reaume bases his ‘guestimate’ on an IPSOS-ASI Canadian research indicating that 31% of viewers admit to watching commercials – or conversely that 69% avoid them. Reaume tempers this result with phone-conducted research from Canada’s Radio Marketing Bureau reporting that 50% of television viewers claimed they avoided commercials somehow.

Unlike VCRs that have a fast-forward button, Personal Video Recorders such as TiVo and ReplayTV have ‘skip’ buttons that allow viewers to avoid commercials entirely. These devices record digitally onto a hard drive and use a modem to access program schedules. PVRs can be instructed to record all of a viewer’s favourite shows or all programs of interest by title, category or even actor. Live shows can be paused, replays accessed, and the PVR keeps recording, so the viewer can pick up where they left off.

Obviously, this is going to mean some big changes, says Reaume.

‘Advertisers have to start looking at embedded content – product placement and ads as part of the show content.’

Right now, TiVo and ReplayTV report that between them they have more than 100,000 set-top boxes in U.S. households. Industry analysts predict that nearly seven million U.S. homes will have TiVo or ReplayTV boxes by the end of 2002 and they expect that number to rise to more than 90 million by 2010. Nielsen Media Research is already working with TiVo and ReplayTV so they will be able to modify their measurement system to recognize usage of these systems.

In Canada, at least one of these systems is expected to be introduced to the market this year. Star Choice Communications has been in negotiations with TiVo but that agreement has not been finalized.

Universal McCann, the media services of arm of McCann Erickson in the U.S., has actively moved into product placement and client-sponsored television production. Last year, the company placed Coca-Cola in Young Americans, an eight-part teen drama on the WB network, and developed a Christmas movie with CBS for Johnson & Johnson, General Mills and Nestlé.

Robert Riesenberg, exec VP and managing director of Universal McCann’s entertainment group, says these ventures were very successful.

With Young Americans, the soft drink giant had a presence on billboards, bumpers and through product placement. Riesenberg says that Coke’s follow-up research found that the series had increased brand awareness. CBS research after the airing of the movie Christmas Secret indicated that not only had the sponsors increased awareness of their brands, but their involvement fostered positive attitudes with viewers.

‘In terms of whether this is a trend,’ says Riesenberg, ‘that remains to be seen. I think right now it is, and it all depends how successful advertisers will be with their efforts.

‘Given the direction that technology is moving…it’s important for advertisers to figure out how they can create programming that lets them work within the context of programming and get their message across in a way that’s entertaining and integral to the programming.’

Riesenberg says the company is working on more productions for this year and, if advertisers are able to co-ordinate with their Canadian subsidaries, they are hoping to bring these ventures into Canada.

Hugh Dow, president of Universal McCann’s Canadian counterpart M2 Universal, says the Toronto-based company is currently working on product placement and longer-form properties but that it’s more of a challenge in Canada because so much content is developed in the U.S. However, Dow says companies generating Canadian content have new opportunities to work with advertisers and agencies wanting to go beyond a conventional commercial presence.

‘[With TiVo and ReplayTV] consumers will become their own programmers. Clearly, many advertisers are going to have to look for alternatives apart from conventional placement of 30- and 60-second spots.’

Terry Sheehy, president of Starcom Worldwide, doesn’t think that the 30-second television commercial is dead, but he does allow that there is some alarm among advertisers.

Sheehy says his clients have a lot of interest in product placement and Starcom has already put together some deals on their behalf, particularly in Quebec, where more original local programming is produced. And he’s confident that Canadian domestic production activity will increase and there will be more product placement opportunities.

Laurie Bennett, VP of licensing and merchandising for Alliance Atlantis Communications, says Alliance is already doing some product placement on TV shows and is continuing to explore opportunities, including virtual product placement where a product is inserted after production. Bennett has fielded calls from a number of agencies with interested clients.

But Sheehy is cautious about getting involved in the actual production of programming. ‘Producing your own programming is very expensive and I think producers are overstating the value to clients. But if you can align your product with programming that enhances it – food products on a cooking show – that is positive and interesting communications.’