YOUR AD HERE; PVRS CAN ZAP THE COMMERCIALS, BUT ADVERTISERS WILL FIND A WAY.

Byline: Marla Matzer Rose Staff Writer

You can call them personal video recorders, PVRs or by brand names such as Tivo and Replay. The advertising industry has another word for these set-top devices that make it easier than ever for you to control your TV viewing: ad-killer boxes.

``Anything that allows me to fast-forward through programming I don't want to see is bad for us,'' said Allen Banks, executive media director for Saatchi & Saatchi North America and chairperson for the media policy committee of the American Association of Advertising Agencies.

PVR manufacturers know consumers don't want to sit through commercials. Replay in particular has highlighted its ability to ``zap'' through them.

``Hit QuickSkip and you jump forward 30 seconds instantly. With ReplayTV, you spend more time watching what you want to, less time watching what you don't,'' read newspaper ads for the gadget. Tivo hasn't played up this capability - having decided to court favor among networks and advertisers - and now Replay has backed off advertising the feature, too. But both still allow you to fast-forward with ease through commercials.

If you don't watch their commercials, advertisers are wasting the millions of dollars they spend on them. How immediate a concern is this for them, for the networks that make their money by selling ad time - and what will it mean for you? The answers, in order: immediate; sooner than they may think; and you'll be getting ads in more personalized and sneaky ways than before.

Commercials certainly won't go away. If anything, ads will become more targeted to specific consumer groups and will be more embedded in programming. ``Are we going to find ways around (skipping through commercials)? Yeah, we will,'' said Russ Booth, managing director of science and technologies with MediaCom, Grey Advertising's media planning and buying arm. Said Booth, ``It's all about relevance. People will watch commercials if they're entertaining, or interspersed throughout programming in some longer-form way.''

You may have already noticed how ads are becoming more entertaining, through the use of popular songs and by reviving classic ad icons such as Mr. Whipple and Charlie the Tuna. Now, PVR customers who supply their companies with information about their favorite shows and other lifestyle preferences will be shown ads directed at them.

``Say you're a bachelor,'' explained Sean Badding, vice president of the Carmel Group research firm. ``With Tivo, General Motors, instead of showing you a minivan commercial, can show you one for a sports car.''

The networks will also find ways to keep advertisers happy. ``They'll integrate ads into programming through things like product placement and banner advertising, which is like a ticker across the bottom of the screen,'' said Josh Bernoff, principal television analyst for the Forrester Group research firm. ``(The potential loss of viewers for ads) is a really big problem if you're a free broadcast network. It's extremely easy to skip commercials; based on our projected levels of penetration (for PVRs), there will be an 8 percent reduction in ad viewing within five years, and 50 percent within 10 years.''

Analysts expect PVRs to take years to reach the market penetration of the ubiquitous videocassette recorder: Bernoff's projection is for PVRs to be in 900,000 homes by the end of next year, compared to nearly 90 million homes that currently have VCRs.

But by 2005, that number is expected to leap to 14 million, which would make the PVR ``the fastest-growing consumer electronic product in history... surpassing satellite TV and DVD players,'' Bernoff says.

A key reason analysts believe PVRs will take off is their ability to be combined with other essential electronics gadgets. Many families already have a snarl of hardware attached to their TVs: cable box, VCR, DVD player, video game console - no desire for more boxes there. Within the next year, you'll see PVR boxes combined with satellite and possibly cable boxes, giving you more functionality and less clutter for an attractive price compared to $500 or more for a stand-alone PVR.

The big winners in the short run: consumers who can afford to pay for a PVR, along with premium TV networks such as Showtime and HBO. Viewers get more control than ever; they can record and replay programs with ease, and even have the box automatically record their favorite show every week or suggest other shows that they might want to catch.

For the pay TV channels, it's also a win-win. Since they don't take advertising, they don't stand to lose money should advertisers balk at paying the same rates for fewer viewers.

``At Showtime, we look at things in three categories: more, better and different,'' said Mark Greenberg, executive vice president of corporate strategy and communications for Showtime Networks, which has struck partnership agreements with both Tivo and Replay. ``We look at (PVRs) as better and different. It doesn't provide us with more viewers, but it gives us a new way to interact with them. And for us,'' added Greenberg, ``the 30-second 'bleep' button doesn't matter.''

A raft of other basic and premium cable networks, as well as the major broadcasters, have also partnered with Tivo and Replay. Tivo has all the big three networks as investors: ABC, CBS and NBC. The deals are often structured with the network taking an equity stake in the PVR firm in exchange for getting ways to promote their own programming to viewers.

Showtime is one of several networks that has partnered with both Tivo and Replay. Explained Greenberg, ``This isn't a hardware or software supply issue, like VHS vs. Betamax (the two competing video formats in the early 1980s). This is about benefits. I believe there is a marketplace for both to exist, and it's good for the consumer, ultimately.''

The one downside, if you're already feeling crunched for time: You're likely to end up watching more TV. Research by Replay Networks indicates that, with Replay, people watch more recorded TV, less live TV - and more TV overall. The networks and the advertisers seem to be making peace with PVRs because they see that more can be better, in the end, for everyone.

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