The plan: Fox is attempting to reduce ad time by 40% during Sunday nights.
Big question: How much more are advertisers willing to pay per spot for reduced clutter?
Flashback #1: TV needs fewer commercials, but the math is going to be hard
Other options: Better targeting (addressable, optimized linear, etc.) will bring higher CPMs (4X+) which will allow for a lower ad load while growing total revenue. This is a rare win for both the advertiser and network.
Flashback #2: Some TV Networks Take a Hit from Cutting Ad Time, Benefits Yet to Materialize
Quick math from NBCUniversal and Saturday Night Live (SNL):
1) Prior to reduced ad loads, SNL charges $20/CPM
2) SNL reduces ad load by 30%
3) If the new CPM $ for the remaining ads is $26 or higher, then they generate more revenue while running fewer ads.
Our thought: We will increasingly see fewer ad breaks filled with shorter ads (15s, 6s, etc.).
Projected growth in usage by video ad lengths:
1) 6s — ↑ 24%
2) >60s — ↑ 4%
3) 15s — ↓ 3%
4) 60s — ↓ 7%
5) 30s — ↓ 25%
This shift is occurring due to how advertisers perceive the effectiveness of each format.
Ideal video ad length:
1) <10s — 62%
2) 11–20s — 30%
3) 21–30s — 5%
4) 31–60s — 2%
5) >60s — 1%