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This Company Thinks Fewer Ads Is The Key to Making More Money

By Daniel B. Kline - Sep 29, 2015 at 8:00PM

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Less may prove to be more which could be good for consumers and the company.

In most cases, media companies think that if one ad is a good thing, then five must be even better.

That's why television shows offer roughly 22 minutes of content per half-hour chunk. It's also the reason local radio hosts seem to disappear for big pieces of their broadcast, and why websites make you suffer through a pop-up to get to a site that's more ads than content.

Cramming in more commercials even explains why the National Football League moved the place extra points are kicked from farther back. In most games the league takes an ad break after a touchdown is scored, then again after the extra point attempt, once more before the kickoff, and sometimes again on the change of possession.

Commercials or ads pay the bills, and in nearly all cases over the year the secret to making money (or cranking out value on your billion-dollar NFL rights deal) has been to go with ratcheting up how much commercial space is available.

One company, however, has decided that scarcity creates value and has begin testing running fewer ads. It's a bold strategy that might make the company's programming more attractive to viewers, which might in turn make ads more valuable, which -- because there's less inventory -- may end up being worth even more.

Which company is testing less ads?
V
iacom (NASDAQ: VIA) has decided to to run fewer minutes of commercials during its primetime scheudle, Variety reported. The company, which has seen significant ratings decline at many of its properties -- which include MTV, Nickelodeon, and Comedy Central -- plans to lower the commercial load on its channels during the key evening hours starting in October.

The company, Variety reported, has been running between 17 and 18 minutes of ads and will try to run between 14 and 15 minutes, the executive said. If it works, Viacom may expand the experiment to other day parts.

This move reverses what has been a rising trend at both Viacom and other broadcast and cable properties, according to the industry publication:

In 2009, for example, broadcast networks on average ran 13 minutes and 25 seconds of commercials per hour, according to data from Nielsen. In 2014, that average had risen to 14 minutes and 36 seconds. Cable networks in 2009 ran an average of 14 minutes and 27 seconds of ads per hour, Nielsen found. In 2014, that average had increased to 15 minutes and 49 seconds.

Viacom, as those numbers show, had been above the already-high industry average, and cutting back from 17-18 minutes to 14-15 minutes will bring it slightly below the norm.

Lip Sync Battle has been a surprise ratings hit for Viacom's Spike. Source: Viacom.

This is a smart move
At some point, cramming more ads into an hour and making commercial breaks even longer will turn viewers off, if it hasn't already. That could be very bad for networks when viewers have the option to DVR shows and fast-forward through the ads or to watch programming on ad-free streaming services.

This is a modest change. It's not as if the company is offering commercial-free hours or even one-sponsor shows with limited introductions, but it's doing something to improve the viewer experience.

Doing this will mean the company's channels will have less inventory, but if it can draw more viewers, that should also lead to higher ad prices. That would be good for both Viacom and anyone attempting to watch its shows.

Ultimately, the rise of ad-free options and DVRs suggests that networks need to make watching their programming less unpleasant. This is a tiny step in that direction, but it could be an important one.

If Viacom can prove that less is more, maybe that will start a trend, and eventually much less will equal much more.

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