High-Definition Ads Posing a Challenge

[Gregg Lengling]

High Cost, Lack of Measurement System Keeping Advertising Community at a Distance

By Daisy Whitney

Most advertising agencies agree that the demand for high-definition commercials is not strong enough now to spark a change in their creative processes, but marketers will need to begin the transition soon.

"By and large the advertising community is not dealing with it and that's the problem," said Tim Hanlon, senior VP of emerging contacts at Starcom MediaVest in Chicago. "The reality is more and more HD programs are being deployed, the sets are being bought, operators have more and more HD packages."

However, substantial challenges remain. The vast majority of HD viewing isn't measured and producing in HD is expensive. Still, the prospect of HD ads is starting to generate nascent interest at some agencies and cable operators.

As more broadcasters, cable networks and HD platforms like Voom and HDNet air HD programs, HD-produced commercials will follow, said Alan Schulman, chief creative officer of Brand New World in Alexandria, Va., which develops creative for new and emerging media. Viewers will feel a "visual letdown" going from watching a program in HD to seeing a standard-definition commercial. "So advertisers and their agencies need to start getting prepared now for what's coming," he said.

However, Nielsen does not provide separate ratings for HD networks. While the service does collect information from networks that broadcast in HD, the HD audiences are not broken out separately and are instead attributed back to the parent network. The ESPN HD audience, for instance, is compiled with ESPN viewership.

The critical mass doesn't exist yet to justify breaking out the measurements separately, said Bryan Burns, VP of strategic business planning and development at ESPN and the head of ESPN HD.

As viewership grows, HD ratings would likely be measured separately, and advertiser interest in producing spots in HD will rise.

Cable operator Cox took a gamble this spring when it installed equipment to enable local digital ad insertion into HD programming in its Providence, R.I. system, the first such time local HD insertion has been possible at any operator, Cox said. The operator plans to introduce the capability to 12 of its 23 markets by the end of this year.

Guy McCormick, VP of technical operations for Cox Media, said the addition of local HD ad insertion capability at Cox is more for future-proofing rather than because any great demand exists now. Still, HD consumers are usually high-end customers, an attractive audience for advertisers. "We are starting to see interest from automakers," he said.

Cox used SeaChange technology to merge the new HD capabilities with existing local ad insertion operations. Ads created for standard-definition television can be upconverted to be inserted into the HD program, too.

Rejiggering the creative process to produce spots in HD will take months for an advertiser, but it makes more sense for some sooner, such as a Jaguar ad or a private banking ad from Morgan Stanley, Mr. Hanlon said. "It's a matter of when do you as an advertiser make the commitment to future-proof your content or your messages. Everybody has a different tipping point," he said.

Other logical marketers that could move into HD ads include the manufacturers themselves, such as Sony or Samsung, Mr. Schulman said. Shooting in HD requires different cameras and processing, generating an increase in production costs of about 10 percent, he said. "But rest assured the picture quality far exceeds the 10 [percent] premium," he said.

HD programming isn't a threat to the ad business as other new technologies, such as video-on-demand and digital video recorders, are, said David Cohen, senior VP and interactive media director at Universal McCann.

"Against the backdrop of stuff that marketers are dealing with-increased cost, advertising avoidance-HD is probably not at the top of the list today as far as things to keep an eye on," he said. "I would say in two to three years it will get some serious consideration."