The World: Insider's View - US

The rise of personal video recorders jeopardises the TV funding model as we know it. The answer is branded entertainment, Brian Terkelsen says.

Branded entertainment is top of mind for US marketers. Barely a day goes by without some new press release on the latest example... as if it's something new or even revolutionary.

The fact is, ad-funded programming is one of the oldest weapons in the savvy marketer's arsenal, and has been since the inception of broadcast.

But the recent rush to get in on the action is more than just a case of "everything old is new again". Branded entertainment is a powerful tool to help marketers connect with their target audiences in an engaging and unobtrusive way. It appeals to today's advertisers particularly because the challenges we face are more significant than they were in the early days of TV. In addition to fragmentation and clutter, personal video recorder penetration is a growing reality.

Already, 8 per cent of US homes use PVRs, and this is expected to grow to 40 per cent by 2009, largely thanks to cable companies offering embedded, set-top devices at little cost to consumers, competing with the US leader, TiVo. Worse, 77 per cent of people who use PVRs skip commercials. No wonder industry pundits are predicting the demise of the 30-second ad.

This reality forces two little-known truths to surface. First, the network revenue stream is tenuous at best, given that advertisers will be less likely to support programming if no-one is watching their messages. Second, if programming is no longer subsidised by the advertiser via 30-second ads, but consumers still want "free" or cheap programming, we will need to see a new advertising model.

The good news is that consumers may be more receptive to branded entertainment messages than cautious marketers had guessed. A recent study noted that 80 per cent of consumers have a positive view towards branded entertainment and product placement. And marketers are responding. A survey by the Association of National Advertisers found that 63 per cent of marketers have tried some form of branded entertainment. And I would not be surprised if more airtime is dedicated to brokering branded-entertainment deals at the negotiating table at this year's upfronts.

For anyone wanting to get into branded entertainment, I would suggest creating a strategy born from a consumer insight, and remember that content takes many forms - digital, broadband, music and mobile - not just TV.

And hire an expert to help you navigate the waters. To ensure we get and keep consumers' attention, we have to raise the bar on the art side of the equation. Otherwise, branded entertainment will be left behind as advertisers rush to find the next "next big thing".

Feature, page 30.

Brian Terkelsen is a senior vice-president and the director of branded entertainment at MediaVest USA.