Should Local Advertisers Leverage High Definition TV Spots?

By Kirby Thornton and Michelle Dietz

A new study from Empower MediaMarketing suggests that local advertisers wanting to take advantage of high definition televisions’ improved quality and viewer interest to strengthen their brands will have difficulty airing their spots on most local stations. The study found 45 percent of local stations unable to accept HD spots.

During the past five years, sales of high definition televisions (HDTVs) have exploded. Only 5 years ago, SNL Kagan reported that just 16 percent of U.S. TV households owned at least one HD set. In 2009, SNL Kagan reported 71 percent of U.S. television households now own at least one HD television, an increase of almost 350 percent in 4 years.

This is amazing growth, especially considering the increase occurred during a severe recession and that HDTV’s remain a relatively costly item for most households.

Source: SNL Kagan “Broadcast Investor” as cited by eMarketer; 2009

“I Want My HDTV”
Viewers love their HDTV. A 2009 report “How People Use HDTV” by Knowledge Networks shows one-third of HD viewers always checked their HD channels first when searching for a program. And about 70% planned their viewing ahead of time, compared with just over one-half of standard definition television (SDTV) viewers. More importantly for advertisers, HDTV viewers are more likely than SDTV viewers to believe ads are relevant to them (41% versus 35%).

“The adoption of television viewers to high definition has been one of the fastest in recent memory. For local advertisers the challenge is how best to take advantage of consumer’s clear preference for HD programming. Does filming your commercial in standard definition undermine your brand message in HD households?” asked Julie Pahutski, Senior Vice President of Consumer Insights at Empower MediaMarketing.

Unfortunately, local advertisers wanting to take advantage of HD’s increased viewer engagement often cannot due to local broadcasters who do not accept commercials in a high definition format. By comparison, national advertisers have almost no issues placing their spots in high definition. According to the leading spot distribution firm, DG FastChannel all national broadcasters and 95% of all cable networks currently accept spots in high definition.

A new Empower MediaMarketing study suggests that local advertisers wanting to take advantage of high definition’s improved quality and viewer receptiveness to strengthen their brands will have difficulty airing their spots on most local stations. In April, 2010 Empower invited all of the 962 local television stations with whom it does business to complete a short survey of its acceptance of HD commercials. A total of 241 local stations completed the survey representing stations in 37 U.S. states and the District of Columbia. 

Source: Empower MediaMarketing; 2010

Local HDTV Adoption is an Evolution
Stations were able to provide additional insight into their decision to accept HD spots. Of the 108 stations that did accept spots, 4 mentioned that while they accepted spots they could not actually run the spots in HD. Instead, these stations converted the HD spots to a standard definition spot prior to airing. In a more optimistic note for advertisers, 16 of the 133 stations that currently are not able to accept HD spots say they hoped to in the near future. This provides some evidence that local station affiliates were finally moving toward acceptance of high definition advertising.

Bottom Line for Local Advertisers
So where does this leave local advertisers deciding to invest in new HD creative? Michele Dietz, Empower’s Director of Local Broadcasting believes local advertisers don’t need to rush to produce HD spots. “We are seeing a progression in this area, but local advertisers don’t need to be in a huge hurry to produce HD spots. Producing and delivering HD spots is extremely costly for the advertiser, especially when less than 45% of local stations will air the spot in HD as intended.”

Dietz added, “Empower plans to conduct this survey again next year in order to help local clients determine the optimal time to make the investment in this technology.”

In spite of these disappointing HD adoption rates, there may be times when local advertisers will want to shoot their spots in high definition. Consider these criteria:

• When the spot is planned to air for a number of years. While this is the first year of the annual Empower study, it’s worth noting that more than 10% of stations noted that while they don’t currently accept HD spots they plan to do so shortly.

• Adoption rates in the advertisers key local markets. If a brand’s key local markets have high HDTV adoption rates, it may make sense to shoot in HD.

• Cost considerations: Consider the additional cost to shoot the spots in HD and the length of time the spot will run. This will add cost to the budget.

• Quality considerations: Standard definition spots that run in HD often are of poorer quality than when they air on a standard definition set. This is caused by the HD set looking for additional pixels within the spot and when not finding them, expanding the existing pixels to give the spot a grainy feel.

Viewers clearly prefer HD content and their love of HD has even carried over to commercials filmed in high definition. However, given the additional cost of filming and distributing an HD spot and the relatively low acceptance rate of HD spots by local stations, local advertisers should carefully consider the return on their HD production investment.

For more on this topic, check out the Mediapost article: “TV Stations without HD Spots Miss Opportunity.”

Kirby Thornton is Director of Consumer Insights at Empower MediaMarketing and is on Twitter as @kirbythornton.
Michelle Dietz is Local Broadcast Director at Empower MediaMarketing