Allowing ads on VOD and American programs could generate $500 million annually for TV industry: ACA

The Association of Canadian Advertisers (ACA) is urging the CRTC to open new revenue streams for the television sector by allowing advertising on local avails and on VOD platforms. The ACA says the move could pump as much as $500 million annually into the ailing television industry. Bob Reaume, VP, policy and research, told the federal regulator at the ongoing group-based licensing hearing yesterday, that there is still a lot of space on American shows that hasn’t been sufficiently exploited by Canadian advertisers – as much as three-quarters of U.S. programming schedules. “An impediment that Canada’s advertisers have had to cope with over the years is our restricted access to Canadian audiences. Over 20% of all TV viewing in this country is to signals that cannot currently be accessed by advertisers in Canada,” said Reaume. Despite the migration of advertising to the Internet and the preponderance of equipment such as personal video recorders (PVRs) that allow viewers to skip ads, Reaume said television is still a viable means of attracting advertising. All it needs is a little help from the CRTC to enhance its capabilities. Opening local avails to advertising would slow the flight of ad revenues to other platforms, Reaume suggested, adding that it is ultimately a win-win situation because it will not cause audience fragmentation. U.S. channels like CNN, A&E and the Golf Channel make up to three minutes per hour available for U.S. BDUs to sell ads on. Canadian BDUs can use these slots but not to sell advertising. Under the CRTC rules, 75% of the time is made available to Canadian broadcasters and 25% of the time can be used by carriers to promote their services such as high-speed Internet. The ACA’s suggestion is not a new idea. Canada’s big cablecos have in the past called on the CRTC to repeal the restriction. For instance, following a CRTC call for input on a new framework for the sale of commercial advertising on local availabilities last October, Rogers Communications Inc. told the regulator that ads on local avails will benefit the whole industry and will entice BDUs to invest in advertising infrastructure that will generate $100 million annually for the broadcasting system, a figure that could increase to $150 million in five years. But despite the ACA’s higher projection of $500 million annually, the idea of ads on local avails is likely to garner little sympathy from broadcasters, who still remain suspicious of BDU intentions and are concerned about the lack of a reliable mechanism for estimating the value of ads to be sold on local avails. Extending ads to video-on-demand Another way of boosting revenues for the television sector is through advertising on VOD platforms, which Reaume said will also help in circumventing the negative effects of PVR, which if not checked, will have far reaching consequences for the industry. “PVRs are being used by consumers to avoid commercials. And if too much of that goes on, advertisers will suddenly say, “the value isn’t there anymore, see you, we are going to the Internet,”” said Reaume in an interview. He explained that PVRs strike at vital programming—scripted dramas and comedies—that the CRTC is trying to encourage. He warned that increased PVR penetration will diminish advertising on dramas and comedies on linear television. In order to save these programs, Reaume suggested that VOD may be the optimum platform for their exhibition. “Advertisers will benefit from new forms of digitally-based advertising because their value on the VOD platform will be enhanced,” said Reaume, adding that this will facilitate updated ads targeted on a geographical and demographic basis, creating relevancy to consumers and value to advertisers and broadcasters. “Broadcasters, too, will benefit from these enhanced revenue opportunities, since they will be able to segment and sell more of their total program audience on this platform.” Selling ads on VOD platforms is also likely to be contentious as stakeholders in the television sector hold various divergent opinions on it. The disagreements range on issues such as the amount of Cancon levels to packaging concerns. Commissioners, however seemed impressed with the ACA’s suggestions calling it “a forward looking proposal,” “upbeat” and “refreshing.” But they wanted a breakdown of where the $500 million will come from. Apart from saying that it expects local avails advertising to make about $30 million annually, the ACA didn’t have estimates for VOD advertising, due to lack of established parameters for estimation. The hearing continues today with presentations from Astral Media Inc., Cogeco Cable Inc., Telus Corp and The Small Market Independently-owned Television Stations.

Allowing ads on VOD and American programs could generate $500 million annually for TV industry: ACA

Broadcast | November 24, 2009

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