Videocassette recorder sales have advertisers jittery over tune-outs
Retailers report that one of the hottest-selling products this past Christmas season was the videocassette recorder (VCR) and the videotapes that enable it to perform. When December's retail figures are finally added up, VCR sales alone are expected to reach nearly $2 million, bringing the total for 1984 to more than $8 million -- just about double the number of VCRs sold in '83, according to industry sources. This has some advertising people involved with the promotion of VCRs and tape cassettes still humming ``Jingle Bells'' as they view their expanded promotion budgets.
But other marketing professionals are questioning just how much of a bonanza these booming VCR sales really are for advertisers in general.
That's because VCRs enable television viewers to turn their backs on commercial TV and use their home screens for viewing movies (videotapes of popular movies can be rented for an evening for as little as a dollar or two), or other fare of their own choosing.
In the last five years, the three major television networks' share of prime-time viewing audience has declined by about 15 percent from an average of about 90 percent of the total audience, thanks to VCRs, cable television, satellite receivers, and the proliferation of channels and alternative networks. Citing these figures, industry forecasters warn that the influx of VCRs could accelerate this erosion of audience base for commercial television.
Fred H. Brandt, media research director for Ted Bates, a large New York advertising agency, is one of those who sees a potential problem for advertisers in the VCR boom. Ted Bates is the agency for Panasonic, a popular VCR brand with rising sales.
According to one trade source, the advertising budget for Panasonic VCRs in 1984 was increased by nearly one-third, to a hefty $12 million -- with much of this advertising turning up in commercials on television.
``We are pleased that sales of our client's product are booming,'' Mr. Brandt reports. ``Our argument is with Nielsen and its ratings measurements.'' (The A. C. Nielsen Company is a research company that reports on the size and share of television audiences.)
``We would like to see a more accurate audience measurement, so we're recommending that Nielsen no longer include the people who are using their VCRs to make recordings as part of their viewing audience.''
Brandt believes this would give a more accurate picture of the actual size of the viewing audience for commercial television, and in turn the agency could pass along more-accurate information to its clients on costs per viewer for commercial time.
There's little question that once installed a VCR gives the home television viewer more control over his set. With a VCR, he not only controls what he watches but when he watches it. This choice of convenient time is called ``time switching,'' and when a viewer does this he can, if he chooses, ``zap'' all the commercials by simply pressing the fast-forward button.
It's this feature, along with the initial loss of audience for commercial television, that is causing concern up and down Madison Avenue, since many VCR owners are choosing the zap when they time-switch their selected programs to a more convenient viewing moment.
``It's ironic, but the VCR tends to be a double-edged sword for television,'' Bill Behanna, an A. C. Nielsen spokesman, told the Monitor recently. ``And there's still no consensus on how -- or, even if -- the VCR viewing phenomenon should be reported.''
Mr. Behanna indicated his company would be reporting the VCR audience component in a separate report, but he added, ``We will continue to include VCR taping in our overall ratings.''
How do the networks, which have been experiencing the substantial loss of audience along with the threat of revenue losses, feel about the VCR challenge?
VCRs represent both a complement to and a competitor of network television. That's the candid assessment of David Poltrack, the vice- president in charge of research for CBS/Broadcast Group.
Addressing a group of Wall Street financial analysts recently, he said that there could be further erosion in the network share of audience but that he expected the decline to taper off in the next two years. He pointed out that VCRs could have a major effect on the future video environment.
``By allowing a viewer to time-switch network programming to better fit his or her schedule, the VCR can serve to increase overall network viewing. But by providing the viewers with access to a new programming option [prerecorded cassettes], the VCR introduces a new competitor to network television for the viewer's time,'' Mr. Poltrack said.
Industry commentators are warning that the new audience created by VCR time switching cannot be credited to the networks, because of the likelihood that this new audience will fast-forward its way right through advertisers' commercials.
But Poltrack feels that at this time any dimunition of the networks' commercial audience attributable to time switching by VCR viewers does not represent a significant threat to commercial broadcasting.
``We do recognize,'' he added, ``that there's a need for better measurement devices to determine just how viewers are using their newly acquired VCRs.''