Friday, October 20, 2006

TNT and Nascar Looking to Integrate New Media Into Ad Sales Strategy

TNT, which begins an eight-year, $640M rights deal next year with NASCAR, is “floating a package to potential advertisers that would eliminate ad ‘pods’ during its race coverage in favor of a framing device that would allow for messages — including full-motion video and audio — mostly along the bottom of the screen,” according to Lefton & Ourand in this week’s SPORTSBUSINESS JOURNAL. TNT sources said that talks are “preliminary” and added that the net is “looking for 10 to 12 advertisers to make its schedule ad-free.” (SPORTSBUSINESS JOURNAL, 10/16 issue).

As technology advances, advertisers are constantly searching for the top new methods of reaching the maximum amount of consumers for the longest time periods possible. This is occuring because advancements such as Video On Demand (VOD) and Digital Video Recorders (DVS) are changing the landscape of the advertising industry, with consumers gaining more control over what they watch and when they watch it.

In the past, viewers were forced to watch their favorite shows at the times that networks designated the shows to be aired. Viewers had to sit through countless commercials in order to watch their favorite programs in their entirety. The VCR made it possible for viewers to record their favorite programs onto a VHS and watch the programs at their convenience. However, this process was a bit of a hassle because consumers still had to purchase VHS tapes and fast forward through the commercials that took up roughly 25% of their favorite program's airtime.

With the DVR and VOD, viewers can skip right through commercials and watch what they want, when they want. They can also gain access to added features, past programs, etc. through VOD. This poses a major problem for advertisers, since their expensive commercial spots are literally being skipped over by viewers. Advertisers pay large sums of money to place their commercials in specific programs and at specific times. But technology has found a way to empower the consumer with the ability to completely shut out the advertiser.

As advertising faces these new challenges, the industry has been struggling to find new ways to make sure their brand gets the promotion and airtime they want. This new "framing device" idea being pitched by TNT and NASCAR is a proposed solution to this new problem. The framing device seems like a great idea, as 10-12 advertisers would have exclusive access to the entire race. The race could be brought to viewers "commerical free", while advertisers would still have a strong presence in the race. However, many people have expressed doubts about the new concept.

Octagon Racing Group Exec VP & COO Mark Coughlin said the technology is “great experimentation, but they are going to have to experiment on pricing to attract buyers.” Basically, he believes that the asking price of TNT/NASCAR is too high, and that advertisers won't be willing to pay top dollar for an experimental new method of advertisement. Another skeptic, Optimedia Exec VP & Dir of National Electronic Media Larry Novenstern, said, “I would ... argue that unless I’m getting the full screen and full attention of consumers that advertising is less valuable than a regular spot.” This argument emphasizes doubt in overall utility of the ad method itself. Mr. Novenstern sounds like a traditionalist with his comments, still sticking to the belief that commercial spots are one of the top forms of advertising. But what if viewers skip through them?

A final expression of doubt comes from Lefton & Ourand when they note that other advertiser questions include “possible viewer backlash, the value of adding clutter to sports’ most cluttered commercial environment, and the reaction of car sponsors, who might feel that the value of their on-track branding would be reduced by in-race advertisements” . These doubts span all aspects of advertisement, with fears that consumers will reject the concept, major car sponsors will reject the concept, and the overall concept won't be effective. To me, these arguments seem to be based in a fear of change, not of the technology. People will always doubt and question things that they do not know much about, for the fear of the unknown consumes them.

If this technology were to be used and became successful, it would change the entire landscape of sports television advertising. The industry fears these changes and will oppose them on all fronts. However, in the end, the technology has empowered the viewer/consumer so much that changes need to be made. This is only the beginning.

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