KFC Takes on TiVo?

Yum Brands' (NYSE: YUM  ) KFC is taking on TiVo (Nasdaq: TIVO  ) with an innovative new ad for its KFC fast food chain -- or so they say. Internet buzz is calling the ad a "TiVo killer," but I'd argue that the ad actually underlines just how important the DVR revolution has become to companies that rely on advertising to court customers, and how much it's changed TV advertising in general.

The KFC ad in question contains a "secret" that can only be unearthed by watching the ad in DVR-enabled slow motion. The slow-mo secret makes this ad seem more like an accomplice than a killer, giving users the option to interact with the ad instead of ignore it.

DVRs are rapidly becoming part of the well-stocked digital living room. Although TiVo revolutionized the concept that viewers could take control of their televisions, cable and satellite companies like Comcast (Nasdaq: CMCSA  ) and DirecTV (NYSE: DTV  ) have been offering their own DVR service with or without the TiVo brand name. (TiVo recently gained an agreement with Comcast to compensate for the impending end of its deal with DirecTV.)

Meanwhile, DVRs and their commercial-skipping powers have given consumer-products companies reason to question the effectiveness of their TV advertising. Not too long ago, Procter & Gamble (NYSE: PG  ) announced that it would decrease its television ad budget. Comcast recently announced an exercise channel that would include embedded advertising. And of course, product placement within TV shows has been increasing as well.

Whether or not the KFC secret is worth knowing, it shows the importance of innovation in advertising, even if it's at times downright odd. (I'm reminded of Burger King's Subservient Chicken campaign, which proved a viral success on the Internet way back in 2004.) Companies are struggling to grab viewers' attention in a time when that attention is increasingly difficult to get (or deserve). The days of the captive audience are coming to a close, and it's possible that soon, no one will have to see an ad that strikes them as boring or irrelevant ever again.

But as modern advertising evolves, I believe that advertisers need to be very careful no to drive away prospective customers with heavy-handed techniques. I'd expect that moves like KFC's should be increasingly forthcoming, as major advertisers turn to innovation and creativity rather than obnoxious obviousness or trickery. Perhaps advertisers can make their ads as entertaining (and relevant to prospective customers' own tastes, interests, and desires) as the content itself. Investors who own shares of the major consumer products companies should watch the proceeds carefully.

TiVo is a Motley Fool Stock Advisor selection. To find out what other companies David and Tom Gardner have recommended to subscribers, click here for a 30-day free trial.

Alyce Lomax does not own shares of any of the companies mentioned, although she is a satisfied TiVo customer.