Advanced Advertising Today

Transcript

Introduction

Welcome today to the next installment in the Cisco Technology Audio Series. I am Evan Schuman, and we're here today with John Morrow, Cisco's Vice President for Strategy and Business Development with the Service Provider Video Technology Group. And, John, welcome today and thank you for joining us.

Interview

John Morrow: Thanks for having me.

Evan Schuman: In Part One of our discussion, we talked about where advanced advertising is today and where it's headed, assuming everything goes right. Today, I was hoping to get a sense of some of the perceived obstacles for advanced advertising, such as the DVR and Internet. Where do you see that playing out in the next couple years?

John Morrow: I think the jury's out on that. One thing that I do find very interesting, based on some research I looked at not long ago, is that the DVR isn't necessarily the threat to advertising that it was once considered.

For example, advertisers now recognize that many people watch the ads even if the program is recorded on the DVR. They'll just use it -- people will use it to time-shift their viewing, but they won't use the DVR to fast-forward through the ads, or at least not everyone. And so, for example, you might have a broadcast program, and maybe a million people might tune into that program at the time that it's aired live; maybe 15% of the people who watch that programming live will do so on a delayed -- a slightly-delayed basis, and they'll skip the ads during the course of the hour, if you will, that the program shows. But then a larger percentage of the population will watch that same show on a delayed basis in what's the called the "live-plus-three" window, up to three days after the original broadcast.

And so you have the DVR serving, yes, as a means by which people can fast-forward through advertising, but it also is a means by which the viewership window is significantly expanded because there are people who aren't able -- perhaps they're traveling or they have another obligation -- to see their show that -- at the prescribed live broadcast, but via their DVR, they are able to see it three days or even longer afterwards. And, again, a large percentage of the DVR-owning population doesn't fast-forward through the ads; rather, they watch the ads as they are playing the programming out on their DVR.

And so in some work that I've seen, the actual audience on a live-plus-three basis is larger than -- considerably larger on a net-net basis versus the original live audience, so it's pretty exciting given this expanded viewing window.

So in that sense, the DVR might not be quite as significant a threat as some people thought it would be.

The Internet, on the other hand, is both a threat and an opportunity. There's no question that Internet advertising is growing more rapidly than traditional television advertising.

One study would say that over the course of the first decade of the 21st century, Internet advertising is expected to grow at 21% a year, whereas traditional television advertising is growing at about 5% a year over that same time period. So the Internet advertising is growing four times more rapidly than traditional television advertising, which would tell you that it's gaining share, if you will, of total spend in advertising dollars. So the Internet is clearly the standard that traditional television advertising has to meet and exceed if it's going to win back meaningful dollars from the advertising community.

Evan Schuman: One of the other things that Madison Avenue execs typically are arguing today is that as you get into more customization, more based on geography, more based on interest, that you're actually going to have a lot fewer people trying to skip the ads because the ads will morph from an annoying distraction to a targeted piece of information that I'd like to see.

If indeed you're in the market to buy a car, that ad for the new car may be something you want to see.

John Morrow: Absolutely, and I'm really glad you brought that up. I mean when people talk about advertising, it's generally not -- well, it's often not, you know, very favorably because nobody likes to watch ads that are completely irrelevant to them. I'm no longer in the market for Pampers. My kids are grown. So I'd much rather see an advertisement for something, you know, that I am interested in.

And I think, to your point, that the never-ending advance of technology and networking will enable advertisers to deliver advertising that is absolutely relevant, you know, to the viewing population, and therefore, infinitely more interesting and impactful and actionable and valuable. So, you know, I think it's a real undeniable win-win-win for -- for all the participants involved.

Evan Schuman: And speaking of valuable, your comments today have been nothing but. I wanted to thank you, John, for sharing some time with us today.

John Morrow: Well, thank you. I appreciate it, Evan.

Evan Schuman: For Cisco Podcasts, this is Evan Shuman.

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