Fox, NBC Affils Wary Of Nets’ Ad Reduction Plans
This fall, Fox and NBC will test the less-is-more theory of TV advertising – that if you cut down on the commercials in primetime, more people will watch longer and ratings and revenue will ultimately rise.
Affiliates of the two networks with whom TVNewsCheck spoke generally approve of the plans, understand the concept and have been given assurances by the networks that their prime inventory will not be affected.
But they do have their concerns.
“If the reduced load is a tremendous success, they may look at [limiting affiliate commercials] when our contract is up for renewal and try to pivot with fewer primetime spots,” said one affiliate.
Warned another: “If the networks do look at taking time away from local affiliates, and not just their own, that could become very problematic, in terms of the affiliate-station business relationship.”
Those two sources and others preferred to remain anonymous — an indication of the depth of their concern.
The broadcast networks air between 14 and 18 minutes of commercials in every primetime hour, according to the research firm Kagan.
The affiliates get on average six of those minutes to sell locally or on the national spot market.
“Prime time is one of the top dayparts where we maximize our revenue at our stations,” said an affiliate source. “We understand that less commercial interruption could have a positive impact on viewership. But asking local stations to give up inventory would be very controversial thing.
“We need that inventory to generate revenue, especially since we’re now paying so much more in network compensation fees,” the source added.
NBC and Fox hope a lighter commercial load will make broadcast prime more appealing to viewers who have grown fond of the commercial-free environments of pay cable and the popular streaming services like Netflix and Amazon Prime.
The NBC plan is part of a larger corporate-wide strategy that also involves NBCU’s cable networks. It calls for reducing commercial time by 10%. Some 51 shows will be impacted, with the majority on NBC.
In the affected shows, NBC will run 22 minutes of uninterrupted programming followed by a “Prime Pod,” which will comprise just one minute of network commercial time.
After the Prime Pod, the number of commercial pods and ratio of network-to-local avails will be the same as before.
An NBC spokesman stressed that the reductions will come from national network sales, none from local. And limitations will only affect first runs of episodes, not repeats.
Meanwhile, Fox is planning to air slimmed down pods – dubbed JAZ pods – on three Sunday evenings within shows like The Simpsons and Bob’s Burgers. Seth McFarlane’s The Orville, which returns mid-season, will also get the special ad treatment.
According to a source close to Fox, the length of the pods will vary. But on average the network portion of the pods each half hour will shrink from 5.5 minutes to three minutes. On the hour-long The Orville, Fox will be reducing its load from approximately 11 minutes to five minutes.
The affiliate inventory will remain the same, the source said. “Maybe at some point, they’ll look at a different configuration.”
Despite the affiliates’ concerns, there is an acknowledgement that networks need to try new ways of attracting viewers. “There’s a lot of public research out there that shows that ratings are down, and we understand that viewers are used to things like Netflix and other services where there is no commercial interruption,” said a source.
“For the networks, it’s an interesting experiment,” said Stacey Schulman, chief marketing officer at Katz Media, in speaking of the reduced commercial load. “Their environment is already less cluttered than the cable environment. The next year will indicate how well they’re succeeding.”
If NBC and Fox decrease their commercial loads, will it allow stations to increase their CPM (cost per thousand) rates?
“No, I don’t think we’ll see much change, not just yet,” Schulman said. “There are some people who think there might be increased demand. But they’re not limiting the supply enough to create that much demand.”
There are a lot of variables to consider, when playing out supply-and-demand scenarios, said a station source. For example, if inventory becomes scarcer, but both the ratings for a particular show and advertiser demand are strong, then CPMs could rise.
However, if a show’s ratings are weak and the inventory is slimmed down, the CPMs might go down too.
Another broadcaster notes that there are creative ways for the networks to “de-clutter” breaks other than reducing commercial load.
Running a standalone 30-second spot between national and local weather cut-ins on morning shows (like the Today show and Good Morning America) is an approach that has been quite successful, the exec said. “We support such creative re-formatting.”
Schulman believes that the reduced commercial load may lead to even more creative advertising strategies. “If NBC has the opportunity to buy out the [affiliate] inventory in a particular show, that will create an interesting opportunity for advertisers to story-tell across an hour in different ways.”
Fox tried such an approach to a couple of season premieres of 24 over a decade ago, making them commercial free and giving Ford a chance to run longer ads on either end of the episodes.
While that went over well with the ad client, Fox reportedly found that trying the strategy on a more regular basis would be problematic, because the network would need to convince the affiliates to join in, and finding inventory in other shows to compensate the affiliates might be difficult.
“That’s what I’m most interested in seeing – how advertisers will iterate,” Schulman said.