If sports television ratings haven't kept up with escalating ad prices, how do networks expect advertisers to foot the bill for commercials? It's a riddle worthy of the Sphinx—particularly since various networks ponied up $17.6 billion for NFL rights over the next eight seasons and Disney recently offered $600 million to air hockey games over the next five years, and all of them will need advertisers to defray those costs. An answer, at least a partial one, lies in virtual advertising: a technology that superimposes ads, visible only to television audiences, onto stadium fences, goalposts and playing fields.
During the Brickyard 400 auto race in early August, for instance, viewers in their living rooms saw logos of products such as Pennzoil and Miller beer apparently emblazoned on the infield. In truth, the images were computer-generated, and fans in the stands saw green grass where TV viewers saw the ads.
"We're seeing a new application every weekend," says Sam McCleery, vice president of marketing and sales for Princeton Video Image (PVI), a company that has produced virtual ads for such clients as ESPN and the Chicago Bears. "With virtual ads, the networks or the teams that own the broadcast copyrights can reap the benefits," says Neal Pilson, former president of CBS Sports and now a consultant whose clients include Scidel, a rival of PVI's. "It's a great way to create an integrated marketing package, so television can say to the sponsor, 'We're raising the rates for commercials, but we'll offer you virtual ads too.' "
Perhaps the biggest attraction of virtual advertising, however, is that it is zapper-proof. The 30-second commercial has become less effective as viewers have become more prone to changing the channel during breaks in the action. A virtual advertisement—which usually stays in place for half an inning in baseball and often costs the same amount as a 30-second spot—remains on the screen during the game's prime moments, so the maximum number of viewers notice it. What's more, studies have shown that an on-field sign is more than twice as likely to be recalled as a 30-second spot.
Not that virtual advertising comes free of caveats. What happens, for example, when a team sells sponsorship and signage from company A, yet the television networks sell a virtual ad to its competitor? Largely because of potential conflicts of interest, virtual ads have already been banned from the 2000 Summer Olympics. The NBA, NFL and NHL have yet to accept them during regular-season telecasts. But that's really no problem, says Pilson. "Just put a clause in the contract so that there's no confusion."
A deeper concern is that virtual advertising represents an unprecedented level of commercial intrusion. Are we nearing the point where the WWF fan, enraged that the wrestling mat is festooned with a corporate logo, will revolt against watching the event or endorsing the sponsor? "As long as virtual advertising is tastefully done and not a distraction, I don't think so," says McCleery. "I think fans have been very understanding." That will be less so, undoubtedly, the first time a close play at the plate or a game-winning field goal is obscured by a virtual ad.