TV ad-skipping losses to hit $27billion over the next five years

Ad skipping and on demand viewing could cost the TV industry $27 billion in lost ad revenue over the next five years, according to new research released today by Accenture.

The New York-headquartered management and technology consultancy reports that 70% of ads are already being skipped by viewers with digital video recorders; that trend will only get worse as DVR penetration grows from the current 8% of homes with DVRs to a projected 40% by 2009.

The report's release comes just a week after top broadcast network executives told the annual Cable & Telecommunications Association conference that DVRs pose a serious threat to their ad base. Previously, network executives publicly played down the potential impact of the ad-skipping technology.

Accenture's research suggests that the impact of DVRs, video on demand and interactive TV will have a much greater effect on the linear TV business than anyone previously thought. The report says such changes in viewing behavior will exert downward pressure on CPMs (or costs-per-thousand viewers, the metric by which agencies buy TV audiences).

At the same time advertisers will have a tougher time reaching a mass audience, though more and more marketers, such as McDonald's Corp., have multiple messages aimed at multiple niches.

Read the article: www.adage.com