With 2022 U.S. TV advertising revenues projected to top 2019 levels by less than 5%, cable and broadcast TV networks are turning to reduced and ad-free streaming services to supplement stagnant ad sales.

It appears to be working, enough so that Netflix recently announced its first-ever quarterly loss of over 200,000 subscribers. In a U-turn, Netflix will be turning to advertising-supported services within 24 months, to backfill lost subscription revenues.

With media behemoths on all sides looking to time-shifted content as the next big thing, where does this leave prime time TV viewing? I sat down with Frank Maggio, CEO of React LLC, developers of an “experiential” advertising solution, to get his take on if – and how – prime time TV can stem the exodus away from live viewing.

Gary Drenik: Consumption of media has drastically evolved over the past few decades. In looking at the past five years alone, how have consumers’ feelings towards advertising changed? And more specifically, how has the pandemic influenced this sentiment?

Frank Maggio: The pandemic stimulated new behaviors and emotions that in some ways created more headwind for brands trying to reach consumers enjoying media.

According to a recent Prosper Insights & Analytics survey, when compared to TV viewing time on cable networks, over 60% of viewers across all age groups now spend more than half of their total television viewing time with streaming services like Netflix and Amazon Prime. With this shift, binge-watching of subscription-based (and often ad-free) TV content has become commonplace.

Prosper - Watching Streaming Services

As with full-length movies, the level of intensity around binge-watched content doesn’t lend itself to ad interruption. This reinforces efforts until recently made by Netflix, and to a lesser extent Amazon Prime and Apple TV+, that position ad-free content as a superior and preferred media experience.

TV viewers faced a barrage of pandemic-related and social cause-oriented advertising. Brands became politicized at a time when people turned to content to get away from the negativity. This stigmatized major brands (and advertising in general), for millions of people.

Lastly, extended quarantine periods led to media consumption at all hours of the day, breaking the Circadian-like rhythm of consuming content during specific dayparts. Watching live TV became disconnected from the clock, and with it, many people lost the ritualized behavior that took generations to establish.

Drenik: How does consumer “ritualized behavior” fold into how live TV ad viewing has been on a consistent decline?

Maggio: It is well established that ads embedded in content best viewed live (like news and sports) gain better attention. With nearly 30% of TV ads being displayed to empty rooms, and only 37% of ads that DO get delivered to a viewer being viewed for two seconds or more, TV viewing incentivizes watching now, and that means watching ads now, too. Thinking back to the “Must See TV” days of NBC, Thursday night prime time TV viewing became a national ritual. In those pre-DVR days, “must-see” TV implied “must-see” TV advertising. But with today’s plethora of new media sources and nearly infinite content choices, instantly available to second screens omnipresent in the TV viewing environment, watching linear content - and the embedded ads – is increasingly a rarity.

Drenik: How does the addition of the second screen play into how consumers view and consume media and advertising? Are there any cons?

Maggio: According to a recent Prosper Insights & Analytics survey, only 17.8% of Adults 18+ regularly watch commercials when they air on TV; this figure is reduced to 12.2% when advertising is embedded in recorded television (like streaming and DVRs).

Prosper - Regularly Watch Commercials

This same study indicates that while watching TV, 44.4% are going online, and 23.9% engage in other activities outside of reading or listening to the radio. This clearly indicates that second screens are capturing the eyes and attention of consumers watching TV, especially during commercial breaks.

Prosper - When Watching TV

This is a reality that TV content providers are having to address, as evidenced by the launch of limited-ad and ad-free subscription services by a majority of them.

Drenik: What are the key components advertisers need to consider in order to retain consumer attention in this day and age?

Maggio: Several on our management team, including myself, were trained at Procter & Gamble, one of the world’s largest advertisers. P&G’s Chief Brand Officer, Mark Pritchard, pulled no punches five years ago when he drew a line in the proverbial sand: “It is time for marketers and tech companies to solve the problem of annoying ads and make the ad experience better for consumers.”

We’ve directed our entire business objective on tackling and solving Pritchard’s challenge, and his remarks provide valuable insights to brands on how to retain today’s consumer attention.

First, Pritchard places the responsibility to solve these challenges squarely on the shoulders of marketers and technology companies. Consumers are armed with technology that provides on-demand ability to consume content, skip or avoid ads, engage with the world, and search for information. Advertisers need to embrace creative talent but also understand consumer technology use and behavior when they advertise. How does your ad, and the time it takes to consume and consider the information in it, stack up to the other choices that are instantly available on a smart device?

Secondly, there’s the admission that ads are annoying, and a real problem. This isn’t an indictment of any one ad, brand or medium, it’s a candid assessment of the impact interruption has on the continuity of enjoyment. The injection of something unsolicited, whether an ad, a phone call, or even other content, stands starkly contrasted to content that was sought and selected. How can the transition from content to advertising be better blended, reducing the impact of interruption? This highlights the importance of contextual and integrated advertising tactics, as opposed to merely targeting.

Thirdly, Mark portrays the better ad as being something experienced. This is aspirational, and with a new ad model, attainable. Experiential advertising – extended engagement with branded content (ads) integrated with and made a part of the selected content-increases branded dwell time and therefore memorization and mind share. And if enhanced with a smart device, the experience can generate tons of actionable data.

Drenik: What, if anything, can be done to resurrect the habit of real-time TV viewing to bring back mass audiences?

Maggio: A renaissance for real-time TV viewing is on the near horizon - once industry executives approach the challenge in a consumer-first manner. Every industry decision-maker has a smartphone and if they are anything like the normal consumer, they look at it 262 times a day. That is new technology enabling new behavior – both of which were non-existent when the TV ad model was developed 70 years ago.

In the 1950s, video was available only at home, limited to a single device/screen. Consumers saw TVs video content as magical, and the brands that interrupted programming on a limited basis were the purveyors of this magic. Their ads were acknowledged as the reason it was possible… and free.

Today, content is no longer seen as free, there are multiple screens with unlimited video content present in (and outside) the living room, and the second screen is now the go-to screen.

Why not leverage this reality? Since smart devices provide the ability to react to the content on the TV screen, and to interact with the global audience sharing the same live experience, real-time viewing requires only that the second screen be enabled to enhance the TV viewing experience. This doesn’t mean sending your audience to competing media platforms like Facebook or Twitter, either; it means creating what we at React call a “Total Content Experience™” that choreographs viewers’ media journey through a range of enriching actions across multiple screens.

Advertisers can become an important benefactor for this modern, rewarding experiential approach to content and advertising.

Drenik: Thanks, Frank, for sharing some refreshing perspectives on the challenges facing ad-supported mass media. Using second screens to enhance live TV certainly feeds into the tendency of consumers to multi-task; let’s see how this plays out over the next 12 months.