DVR owners fast-forward ads? Not always

Add that to the list of urban--and suburban--myths.

It turns out that a lot of people with digital video recorders are not fast-forwarding and time-shifting as much as advertisers feared. According to new data released Thursday by the Nielsen ratings company, people who own digital video recorders, or DVRs, still watch, on average, two-thirds of the ads.

One big reason is that many people with DVRs still tune in to watch about half of their shows at the scheduled start time, meaning they must sit through commercials.

And even when people watch recorded shows later, many are not fast-forwarding through the ads. On average, Nielsen found, DVR owners watch 40 percent of commercials that they could skip over--perhaps because they like ads, don't mind them or simply can't be bothered.

"People are actually playing back more of the commercials than we thought," said Steve Sternberg, director of audience analysis at Magna Global Media Research, an ad-buying agency. "People are buying DVRs not because they want to time-shift all of their viewing and skip all commercials, but because they want to time-shift some of their viewing."

While the new data may well be fodder for cocktail party chatter, it also has major financial implications. That's largely because many advertisers thought that people with DVRs were not watching their ads, they have not been paying for time-shifted viewing on DVRs. Now the networks could use the new information to try to charge more. And advertisers may begin pressing networks to rethink commercial breaks--maybe making them shorter.

People who have DVRs often insist that they never watch commercials, as if skipping commercials were a badge of honor. And while it is true that some DVR owners probably watch no commercials, others never touch the fast-forward button. Most people are probably in the middle of those two extremes.

"That's part of the reward of taping: being able to zip through the advertisements," said Marjorie Elson, a 62-year-old psychologist in Maryland. "But sometimes I do watch them--only if they capture me."

TiVo has found that its customers view the last commercial in a break the most, followed by the first commercial. (Viewers sometimes do not start fast-forwarding right away, and they often stop a bit early so they do not miss the next part of the show.) Commercials in the middle fare the worst, said Todd Juenger, general manager for audience research and measurement at TiVo, which serves 4.5 million of the roughly 15 million DVR viewers.

Nielsen announced the data as part of its preparations to release commercial viewing numbers for every TV program, starting in May. Nielsen, which collects data every few seconds through its set-top boxes, added DVR households to its sample in the last year; its commercial ratings data reflects the total time viewers spend watching ads, including viewing of partial ads, rather than whether ads are watched from start to finish. Advertisers spent upward of $70 billion last year for their TV spots--more than in any other type of media.

"The cable operators that have the subscribers, the programmers who have the content and the marketers have to get ahead of this," said Curt Hecht, chief digital officer at GM Planworks, the part of the Starcom MediaVest Group that manages General Motors' ad buying. "They need to figure out how advertising can remain sustainable and effective in the new landscape."

Advertising and television executives have not yet figured out which DVR owners are more likely to be commercial skippers, though Nielsen has found that younger people generally skip more commercials and time-shift more of their viewing than older people.

Nielsen has also found that commercials are more often watched during playback if the viewer is looking at the show the same day it ran. Commercial viewing drops significantly over time after the original showing. If advertisers start paying for DVR viewing, one question is whether they will pay just when viewers play back shows within a few hours.

Without DVRs, people can, of course, change the channel, leave the room or not pay attention during commercial breaks, but those activities seem to have only a minor effect on ratings during commercials--only 5 percent, according to Nielsen data.

"DVRs are really the big X factor going forward," said Brad Adgate, senior vice president for research at Horizon Media, an ad-buying agency. "People's DVR behavior is going to drive the marketplace."

DVRs, which were introduced in 1999, are becoming more popular every year, and the cable operators are increasingly offering the feature in new set-top box packages. Analysts say DVRs are now in 12 to 20 percent of households. DVR owners tend to be wealthier and more educated than the average TV owner. DVR owners tend to have more children, and some own more than one DVR.

DVR owners account for about 6 percent of all TV viewing, but that figure is likely to grow, said Tracey Scheppach, video innovations director at Starcom USA. "Four of five people use the word 'love' when they describe this product," Scheppach said. "And when you have a product that powerful, it is going to become mainstream."