4 ms·

> 18 minutes of advertising per hour of TV. It's a feedback loop. Audiences increasingly switch to streaming, so companies are willing to pay less per a second

> 18 minutes of advertising per hour of TV. It's a feedback loop. Audiences increasingly switch to streaming, so companies are willing to pay less per a second of advertising. TV stations increase the amount of time dedicated to advertising to compensate, which drives more of the audience into streaming.

qnsi 5y ago
You should really read some introduction to economics to get a good mental model of how those things work. Why wouldnt TV companies do this in the past when TV was in the prime? Just increase number of ads and get more money. Clearly there is some limit as to how many ads to show because I dont believe they want to decrease the viewership numbers
- wvenable 5y ago
  If there are a limited number of ad spots, the scarcity makes those spots more expensive. And, as you said, the number of ads has a negative effect on viewership which would make those ad spots less valuable as well. That was past. Now that viewership is declining and alternative mass advertising opportunities are available what we're seeing is the death spiral. There's no natural scarcity making TV ad spots more valuable. Viewership is in decline. The only way to even maintain income levels is to increase the number of ads. If there is a formula on the perfect amount of ads, the inputs to that formula have changed.
- scoopertrooper 5y ago
  I have an advanced degree in economics, but okay :) How would you explain the increase in ads then? If there is a clearly understood equilibrium ad time, why has ad time increased? Have audiences become more accepting of ads? Have ads become more entertaining? I'd say the more likely explanation is that there is a lag between audience loss and advertiser realisation of audience loss. TV stations manage to meet market growth expectations by exploiting this and pumping out overvalued ads to non-existent people. Over time, they've become increasingly reliant on this strategy to keep their heads above water as advertisers catch up to reality. It can't go on forever, so they've now belatedly started their own streaming services to try and keep up.
  - johncessna 5y ago
    > How would you explain the increase in ads then? If there is a clearly understood equilibrium ad time, why has ad time increased? Have audiences become more accepting of ads? Have ads become more entertaining? It seems possible to me that folks who are still watching tv are more accepting of ads, whereas the folks who aren't/weren't moved to something else.
    - scoopertrooper 5y ago
      That'd slow the decrease in overall viewership for sure, old folks homes need to put something on during the day. But the key demographic (18-54 year olds) are likely less ad tolerant, as channels keep upping the ante on ad time they'll lose their most lucrative audience members.
  - bee_rider 5y ago
    I haven't studied economics at all, but if you could get your academic comrades to stop offering intro courses as one-and-done gen-eds, I bet we'd drastically improve the quality of online armchair economic analyses.
  - pomian 5y ago
    I think we have seen the same drama in newspapers. More ads. Even whole cover page, is an advertisement. Reduced readership, and unlikely to attract more due to high advertising volume.
  - willcipriano 5y ago
    I'm a exec, I'm not that creative. I could work real hard and try to provide more value to consumers and attract more customers, but as I said that's hard work and I'm not very creative so it may not even pan out. I could also say, "Increase advertising by 5%!" and in the short term gain the same rewards as the other option, maybe even more. Then put that success story on my resume and move on. At some point shareholders decided they wanted the second option. They all move on quickly as well.
- dmurray 5y ago
  This is harsh. GP's theory doesn't clash with traditional economics. One reasonable answer to your question: TV companies didn't increase the number of ads because consumers would switch to a channel with fewer ads. In fact, they showed just enough ads to break even, as the marginal ad revenue per hour tended towards the cost of producing an hour of television (because of the perfectly competitive TV market you posit). Now the cost has stayed the same, but the number of eyeballs has dropped, so TV networks need to show more ads or go out of business.
  - LexGray 5y ago
    Tv failing from pushing advertising again is getting relevant to the current state of social media. The amount of time Twitter, Reddit, Facebook, etc. try to keep their customers away from the content they came for is astonishing. I recently deleted Twitter because they were spamming me with notifications in the app that they were not able to spam me with notifications outside the app for live streams I never showed the slightest interest in and half the posts were topics I never chose to follow. Reddit is neatly as bad with their random top streamer stuffed into unrelated subs, daily requests to add more interests, and a popular and news tab that are toxic. I don’t mind the occasional sponsored item but I am pretty sure Facebook is nearing a 1:1 ratio for junk to content. There most of the content is junk too. I just check my notifications at this point because I can’t make heads or tails of what they show and what they hide or the sort order of what they do choose to present. It is like they learned nothing from why tv and radio dying and are competing to see who becomes irrelevant the fastest.
    - YuccaGloriosa 5y ago
      Even Facebook is trying to distance itself from Facebook these days. I accidentally went to TVguide.co.uk today, on a different PC to usual, not equipped with ad blocking, it was barely usable due to ads.
  - YuccaGloriosa 5y ago
    In the UK at least, TV stations have a limit on the duration of ads per hour.
- jedberg 5y ago
  TV has always had competition. With anything else you do in your free time. When it started it competed with radio. Later it competed with what you had on the VCR. Then gaming. Then streaming. They always had to worry about losing people to other activities. And as such, they couldn't just run 25 minutes of ads and 5 minutes of show, because people wouldn't watch. There are more ads now because the people who are left on linear TV are the people who are most die hard about watching it and will take more abuse, or simply don't have any idea what to do with their free time instead.
Kranar 5y ago
This doesn't jive with how pricing typically works. There is no such feedback loop, at least not one that is as simple as you're making it out to be. Consider that your feedback loop implies a kind of symmetry by which TV stations could presumably also increase revenue by decreasing ads and attracting viewers in the process. If TV stations have good reason to believe that increasing the amount of time dedicated to ads would increase revenue, they would have already done so a long time ago regardless of streaming. My suspicion is that TV is increasing ads because people are moving to streaming without any kind of feedback loop involved. Those who are left willing to watch TV will do so regardless of increased advertisements. It's not that ads are pushing people to streaming creating some kind of feedback loop, it's that people are simply moving to streaming because it's a better product across a multitude of factors and those who are stuck with TV will continue to be stuck with it, ads or no ads.
dreamcompiler 5y ago
I don't know if it's my imagination but I've noticed this with FM radio too. Sometimes I'll turn on the radio in the car because there's a local station that plays music I like, but it's become unlistenable because the ad:music ratio is about 50% now. And the ads seem to be mostly for things boomers might buy (like hearing aids, luxury cars, and blood pressure medicine), because of course everybody younger never listens to the radio. FM radio is dead; it just doesn't know it yet.
- Jcampuzano2 5y ago
  A number of times the past few years I have tried turning on the FM radio in my car just for old times sake, or if my phone is dead or something. A vast majority of the time, I will flip through all 6 programmed channels on my radio and every single one is on ad-break. So I decide to sit on one that I'll just wait through... but then I realize I've sat there for what feels like 5+ minutes (longer than one average song) still being bombarded with ads and justifyingly so decide that radio is no longer for me, and so off it goes for another year.
- Spooky23 5y ago
  AM radio is even worse. It’s descent into fringe talk radio turned the ad side of the business into prostate pills and ads that are probably fake. Radio used to mint money. I think what you’re seeing is the decline in the business led to consolidation, and now they are milking whatever they can get until they can sell the spectrum to someone.
  - dreamcompiler 5y ago
    It seems to me that AM still has an audience in people who are really into nutty conspiracy theories and/or religion. It might survive.
- rhino369 5y ago
  FM radio probably knows it, but what are they going to do? Nobody is going to start listening if they reduced ads. Best course to just squeeze every last dime out of the current listeners until you can't turn a profit anymore.

qnsi 5y ago

You should really read some introduction to economics to get a good mental model of how those things work. Why wouldnt TV companies do this in the past when TV was in the prime? Just increase number of ads and get more money. Clearly there is some limit as to how many ads to show because I dont believe they want to decrease the viewership numbers

wvenable 5y ago
If there are a limited number of ad spots, the scarcity makes those spots more expensive. And, as you said, the number of ads has a negative effect on viewership which would make those ad spots less valuable as well. That was past. Now that viewership is declining and alternative mass advertising opportunities are available what we're seeing is the death spiral. There's no natural scarcity making TV ad spots more valuable. Viewership is in decline. The only way to even maintain income levels is to increase the number of ads. If there is a formula on the perfect amount of ads, the inputs to that formula have changed.
scoopertrooper 5y ago
I have an advanced degree in economics, but okay :) How would you explain the increase in ads then? If there is a clearly understood equilibrium ad time, why has ad time increased? Have audiences become more accepting of ads? Have ads become more entertaining? I'd say the more likely explanation is that there is a lag between audience loss and advertiser realisation of audience loss. TV stations manage to meet market growth expectations by exploiting this and pumping out overvalued ads to non-existent people. Over time, they've become increasingly reliant on this strategy to keep their heads above water as advertisers catch up to reality. It can't go on forever, so they've now belatedly started their own streaming services to try and keep up.
- johncessna 5y ago
  > How would you explain the increase in ads then? If there is a clearly understood equilibrium ad time, why has ad time increased? Have audiences become more accepting of ads? Have ads become more entertaining? It seems possible to me that folks who are still watching tv are more accepting of ads, whereas the folks who aren't/weren't moved to something else.
  - scoopertrooper 5y ago
    That'd slow the decrease in overall viewership for sure, old folks homes need to put something on during the day. But the key demographic (18-54 year olds) are likely less ad tolerant, as channels keep upping the ante on ad time they'll lose their most lucrative audience members.
- bee_rider 5y ago
  I haven't studied economics at all, but if you could get your academic comrades to stop offering intro courses as one-and-done gen-eds, I bet we'd drastically improve the quality of online armchair economic analyses.
- pomian 5y ago
  I think we have seen the same drama in newspapers. More ads. Even whole cover page, is an advertisement. Reduced readership, and unlikely to attract more due to high advertising volume.
- willcipriano 5y ago
  I'm a exec, I'm not that creative. I could work real hard and try to provide more value to consumers and attract more customers, but as I said that's hard work and I'm not very creative so it may not even pan out. I could also say, "Increase advertising by 5%!" and in the short term gain the same rewards as the other option, maybe even more. Then put that success story on my resume and move on. At some point shareholders decided they wanted the second option. They all move on quickly as well.
dmurray 5y ago
This is harsh. GP's theory doesn't clash with traditional economics. One reasonable answer to your question: TV companies didn't increase the number of ads because consumers would switch to a channel with fewer ads. In fact, they showed just enough ads to break even, as the marginal ad revenue per hour tended towards the cost of producing an hour of television (because of the perfectly competitive TV market you posit). Now the cost has stayed the same, but the number of eyeballs has dropped, so TV networks need to show more ads or go out of business.
- LexGray 5y ago
  Tv failing from pushing advertising again is getting relevant to the current state of social media. The amount of time Twitter, Reddit, Facebook, etc. try to keep their customers away from the content they came for is astonishing. I recently deleted Twitter because they were spamming me with notifications in the app that they were not able to spam me with notifications outside the app for live streams I never showed the slightest interest in and half the posts were topics I never chose to follow. Reddit is neatly as bad with their random top streamer stuffed into unrelated subs, daily requests to add more interests, and a popular and news tab that are toxic. I don’t mind the occasional sponsored item but I am pretty sure Facebook is nearing a 1:1 ratio for junk to content. There most of the content is junk too. I just check my notifications at this point because I can’t make heads or tails of what they show and what they hide or the sort order of what they do choose to present. It is like they learned nothing from why tv and radio dying and are competing to see who becomes irrelevant the fastest.
  - YuccaGloriosa 5y ago
    Even Facebook is trying to distance itself from Facebook these days. I accidentally went to TVguide.co.uk today, on a different PC to usual, not equipped with ad blocking, it was barely usable due to ads.
- YuccaGloriosa 5y ago
  In the UK at least, TV stations have a limit on the duration of ads per hour.
jedberg 5y ago
TV has always had competition. With anything else you do in your free time. When it started it competed with radio. Later it competed with what you had on the VCR. Then gaming. Then streaming. They always had to worry about losing people to other activities. And as such, they couldn't just run 25 minutes of ads and 5 minutes of show, because people wouldn't watch. There are more ads now because the people who are left on linear TV are the people who are most die hard about watching it and will take more abuse, or simply don't have any idea what to do with their free time instead.

Kranar 5y ago

This doesn't jive with how pricing typically works. There is no such feedback loop, at least not one that is as simple as you're making it out to be. Consider that your feedback loop implies a kind of symmetry by which TV stations could presumably also increase revenue by decreasing ads and attracting viewers in the process. If TV stations have good reason to believe that increasing the amount of time dedicated to ads would increase revenue, they would have already done so a long time ago regardless of streaming. My suspicion is that TV is increasing ads because people are moving to streaming without any kind of feedback loop involved. Those who are left willing to watch TV will do so regardless of increased advertisements. It's not that ads are pushing people to streaming creating some kind of feedback loop, it's that people are simply moving to streaming because it's a better product across a multitude of factors and those who are stuck with TV will continue to be stuck with it, ads or no ads.

dreamcompiler 5y ago

I don't know if it's my imagination but I've noticed this with FM radio too. Sometimes I'll turn on the radio in the car because there's a local station that plays music I like, but it's become unlistenable because the ad:music ratio is about 50% now. And the ads seem to be mostly for things boomers might buy (like hearing aids, luxury cars, and blood pressure medicine), because of course everybody younger never listens to the radio. FM radio is dead; it just doesn't know it yet.

Jcampuzano2 5y ago
A number of times the past few years I have tried turning on the FM radio in my car just for old times sake, or if my phone is dead or something. A vast majority of the time, I will flip through all 6 programmed channels on my radio and every single one is on ad-break. So I decide to sit on one that I'll just wait through... but then I realize I've sat there for what feels like 5+ minutes (longer than one average song) still being bombarded with ads and justifyingly so decide that radio is no longer for me, and so off it goes for another year.
Spooky23 5y ago
AM radio is even worse. It’s descent into fringe talk radio turned the ad side of the business into prostate pills and ads that are probably fake. Radio used to mint money. I think what you’re seeing is the decline in the business led to consolidation, and now they are milking whatever they can get until they can sell the spectrum to someone.
- dreamcompiler 5y ago
  It seems to me that AM still has an audience in people who are really into nutty conspiracy theories and/or religion. It might survive.
rhino369 5y ago
FM radio probably knows it, but what are they going to do? Nobody is going to start listening if they reduced ads. Best course to just squeeze every last dime out of the current listeners until you can't turn a profit anymore.