Fox TV's Gamble: Fewer Ads in a Break, but Costing More
From The New York Times By BRIAN STELTER
Eight minutes into Fringe on Tuesday, right after a man suffocated on a city street, the hour's first commercial was prefaced by a reminder that the drama would return in 60 seconds.
Sure enough, after ads for Listerine and the BlackBerry Curve, the paranormal investigations resumed on Fox.
Fringe, which had its premiere in September, was the first test of Fox's fewer-commercials strategy, which the network calls Remote-Free TV. Each episode of Fringe includes about 10 minutes of commercials, four to six minutes fewer than the typical hourlong show.
Fox has charged movie studios, wireless companies and retailers a premium price for commercials on the program to partly compensate Fox for a lighter commercial load.
On Friday, the format will be extended to a second Fox drama, Dollhouse, which stars Eliza Dushku as a secret agent who becomes aware that her memory has been repeatedly erased.
But has the commercial format worked? Fox says the shorter commercial breaks keep viewers more engaged and improve brand recall for advertisers. Viewers are also less likely to change the channel or fast-forward past the ads but not to the degree that Fox would have liked. Perhaps more important, the network does not appear to be recouping all the costs of the experiment. It is unclear whether Remote-Free TV will be back next season.
For decades, programmers have shown fondness for fewer commercial interruptions, especially for specials or other event-style shows. Many of these have had a single sponsor. The network evening newscasts have had occasional single-sponsor days and weeks, with one long commercial halfway through the half-hour program.
The Fox format is different. It includes several advertisers in each hour but limits the total number of commercials. When Fox pitched the strategy to advertisers last May, Peter Liguori, the Fox entertainment chairman, said that fewer commercials would present fewer reasons for viewers to to grab the remote and change the channel. Mr. Liguori said the format could potentially redefine the viewing experience.
Some advertisers have lauded Fox for taking a step toward reducing commercial clutter. But others have expressed skepticism that companies experience sufficient benefits in exchange for the premium price that is being charged.
Fox has received 40 to 50 percent premiums for the advertising sold for Fringe, according to executives and media buyers. Advertising Age, in its annual survey of TV ad pricing, found last fall that an average 30-second commercial on Fringe cost $343,000, making it the most expensive show on Tuesdays by far, even surpassing its highly rated fall lead-in, House.
Jon Nesvig, the president of sales for Fox Broadcasting, said last week that the format has worked reasonably well for Fringe.
It is commonly accepted, he said, that the first position in a commercial pod is the most effective one for advertisers. The second most effective position is the last commercial before the program resumes. Presumably viewers who are changing the channel, fast-forwarding the digital video recorder or taking a break are exposed to the bookends of the commercial break.
By shortening the commercial breaks, you basically have all first and last positions and you have lower clutter, Mr. Nesvig said. With less clutter, there's better recall, and that's what part of the objective is.
He said the commercial orders for Fringe have been full all along, owing in part to the support of movie companies like Sony Pictures, Warner Brothers and Universal. Other advertisers have included American Express, Apple, Verizon Wireless and Wal-Mart.
Last fall Nielsen IAG, an ad research company, analyzed the effect of fewer commercials and found that brand recall was 22 percent higher for Fringe than for prime time's most involving dramas.
Shorter breaks are also resulting in somewhat less skipping of commercials, according to Nielsen.
It's better than other shows, Mr. Nesvig said, but it hasn't been as great as we were hoping.
For Fox to break even on the format, the premium pricing for the ads has to outweigh the revenue that is lost by showing fewer commercials. Asked whether that was happening, Mr. Nesvig said the jury is still out on the economics.
Regardless, Mr. Nesvig calls the changes to the commercial load on Fringe successful.
Even if it wasn't an absolutely positive financial success, it was definitely a worthwhile experiment and something that I am glad we have attempted and will continue to work on, he said.
Dollhouse will have its premiere in the Friday 9 p.m. time slot, generally not one of the most popular times of the week for viewers or advertisers. Mr. Nesvig said that Fox is surprisingly well-stocked Monday through Thursday this spring, giving the network an opportunity to extend that beachhead into Friday night. And he hopes the Remote-Free TV format will act as a hook, creating appointment viewing on a night that consumers are more likely to go out with friends or see a movie.
Dollhouse may be a somewhat harder sell to advertisers, in part because of the Friday night slot. We'll still have some movie companies on Friday night, but not nearly as many as on Tuesday, Mr. Nesvig said.
In describing the pricing for the premium spots, he compared the dramas to the Super Bowl. The Super Bowl is obviously not hard to sell in and of itself, he said. It's hard to sell at $3 million a unit. (NBC announced it had sold the last 30-second positions for this month's game one day before kickoff.) Similarly, spots would sell more swiftly if we went out and sold Fringe' for a 10 or 15 percent premium, he said.
Mr. Nesvig suggested that Fox would be in a better position to sell premium ad time in the coming upfront advertising season. The Remote-Free TV plan was presented to media buyers last May without much preparation, he said. Regardless of whether the format returns next season, Fox executives say the experiments with the number of commercials shown in its programs will continue.
There will be ongoing attempts to keep commercial viewing as high as possible, Mr. Nesvig said, adding, It behooves all of us to keep changing the model.