• by David Goetzl  @dgoetzl, November 3, 2011

With the costs of producing HD ads declining and seemingly every spot on the Big Four networks in high definition, the local market continues to lag. Are marketers losing an opportunity? Maybe. Are they entirely to blame? No.

A new study from Extreme Reach, an entity that distributes ads, suggests that the slowness lies more on the advertiser side. It found 73% of TV “outlets” in the top-25 markets can run HD spots. Yet, only 12% of ads placed by a “regional” advertiser are in HD, compared to 20% on a national level (which seems a bit low).

That’s not entirely surprising, considering so many local ads come from marketers with limited budgets. Also, a furniture chain with a handful of stores may not believe in an HD benefit, or its long-time agency may not have the production capabilities.

Whatever the reason for the HD dearth, some of the onus must fall on the cable systems and broadcast stations that carry the ads. At a time when many programmers are acting as de facto agencies and helping with production operations for clients, stations should launch renewed efforts to assist and convince advertisers to move to HD.

In the long run, it should prove to be good business. There is loads of research about how HD ads raise brand recall, perception and awareness – station sales executives probably carry much of it in their back pockets.

But, even if that is overblown, the lack of a level playing field is the main issue. Non-HD local spots running in the middle of a CBS or NBC show in prime time can look blurry and inferior, which can reflect negatively on the business.

Extreme Reach says that when standard-definition ads are viewed on big screens on HD broadcasts “the difference in image clarity isn’t difficult to detect” and an advertiser logo can “often appear pixilated or muted.”

If a local retailer wants to compete with Target that can be trouble if the national chain ran an HD spot minutes before.

So, the ads can get attention for the wrong reasons.

Perhaps stations should take a page from some of their retailer clients and offer a sort of HD discount -- cutting pricing by 25% for a few spots when advertisers use HD for the first time.

In the Extreme Reach research, “regional” advertisers are defined as those who don’t use national TV and advertised in 10 states or less in the third quarter. In the auto category, about 32% of all brand ads are in HD, but local auto dealerships run less than 6% of their spots in the format.

This may be less of a problem when the ad features the garden-variety outspoken dealership owner playing a wacky character and promising zero down and zero payments for 12 months. But, when the spots look to show the metal, so to speak, the vehicles may look less compelling.

Extreme Research lists 10 markets where there is a particular gap between stations that can accept HD ads and “regional” advertisers producing them. This is notably acute in Missouri, where in both Kansas City and St. Louis, around 80% of stations can take the ads, but about 15% or fewer of ads are in HD. Top-10 markets Atlanta and Dallas also have a massive gap. 

Stations in those markets need to get particularly creative to find ways to help advertisers improve ROI with HD ASAP.