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State of the Screens

Some TV Networks Take a Hit from Cutting Ad Time, Benefits Yet to Materialize

By May 21, 2018No Comments

Networks like Turner and Viacom have been testing out running fewer commercials per hour.

Why would they do this? Fewer commercial spots per hour create scarcity. If the increased price that they can charge advertisers offsets the lost revenue from the cut spots then this is a good idea.

Simple 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.

More on this topic. Report: TV networks, cutting back ad loads, see falling revenue

The problem. Revenue for some networks has fallen while cutting ad loads.

Early results from Viacom using February 2017 data:
1)
Minutes of ads: ↓ 11% (1,284 from 1,436)
2) Viewership: ↓ 19%
3)
Ad revenue: ↓ 2%

Michael Beach

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.