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State of the Screens

Fox hits roadblock in its plans for limited commercials

By June 13, 2018No Comments

The plan: Fox is attempting to reduce ad time by 40% during Sunday nights.

Big question: How much more are advertisers willing to pay per spot for reduced clutter?

Flashback #1: TV needs fewer commercials, but the math is going to be hard

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.

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

Quick 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.

Our thought: We will increasingly see fewer ad breaks filled with shorter ads (15s, 6s, etc.).

Projected growth in usage by video ad lengths:
1) 6s — ↑ 24%
2) >60s — ↑ 4%
3) 15s — ↓ 3%
60s — ↓ 7%
5) 30s — ↓ 25%

This shift is occurring due to how advertisers perceive the effectiveness of each format.

Ideal video ad length:
1) <10s — 62%
2) 11–20s — 30%
3) 21–30s — 5%
4) 31–60s — 2%
5) >60s — 1%

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.