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updated 1/24/2007 6:01:40 PM ET 2007-01-24T23:01:40

A seemingly endless stream of political ads flooded TV sets across the Washington media market in 2006. But Hal Malchow, president of the direct mail firm MSHC Direct, brags that he didn't see a single one on TV. Malchow simply recorded his favorite programs on DVR and skipped the ads -- "I only saw the ones I wanted to seek out and watch," he noted.

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By 2010, nearly half the households in America are likely to have a DVR device, according to Smith Barney and a report by the New Politics Institute. That's a staggering increase from a rate of less than 5 percent in 2002 and a big problem for anyone who relies on 30-second ads to get their message out.

And it's not just DVR: The rise of the Internet and New Media has fragmented the old model of advertising into pieces. "We are in a period of chaos," WNYC's Bob Garfield, the host of "On the Media," said in an interview. "Many people are in a panic, most are in denial."

Advertisers from Madison Avenue to Hollywood to the Beltway are scrambling to adapt as the traditional 30-second spot model becomes less reliable. There is still a lot of experimentation and uncertainty, but two distinct options appear likely. Advertisers can either find new ways to reach viewers outside the traditional 30-second spot or develop better delivery tactics for the existing 30-second model.

Madison Avenue has taken strides down the first path, circumventing direct ads with techniques such as product placement. Any fan of NBC's "The Office," for example, will likely catch Staples shredders or HP computers in the show. Taking it a step further, Microsoft just purchased the ad firm Massive, which places products in video games.

Of course, candidates cannot pay to place themselves in TV shows. They may be hungry for on-screen appearances -- like Arizona Republican Sen. John McCain's BCS Championship Game coin toss -- but that is a far cry from paying to appear. So candidates are more likely to go with the second option: trying to develop ads that excite viewers and then delivering them in a more efficient and precise manner.

Madison Avenue calls it "cutting through the clutter." In the summers of 2001 and 2002, BMW produced a series of edgy commercials featuring its X5 S.U.V. racing through a South American village in an action sequence. The ads did not even mention the cars, but it urged viewers to visit BMWfilms.com to catch the rest of the clip. BMW executives reported over 11 million views online in the first year and automaker posted its most successful sales year to date.

In politics, that kind of thinking outside of the box is rarer. "The basic political campaign ad hasn't changed in the history of TV," said NASCAR Managing Director of Public Affairs Marcus Jadotte, a former Kerry-Edwards deputy campaign manager. "There's just a huge disconnect in the political world." (In fact, a 2006 Republican National Committee ad featured the same exact tagline -- "These are the stakes!" -- that an ad for President Lyndon B. Johnson's campaign did in 1964. LBJ went with the nuke exploding; the RNC showed terrorist training camps.)

But even with a more innovative campaign, advertisers must reach the right voters by placing the ads on the appropriate networks. BMW would probably choose the Outdoor Life Network over the Lifetime Network if it was hawking its X5 to suburban fathers. Similarly, political operatives are learning to target their messages more effectively.

Matthew Dowd, chief strategist for Bush-Cheney 2004, said their campaign targeted "the folks that we needed to persuade" and made ad buys accordingly. "We took it down to the very show," he said. "Whether a 'CSI' show in St. Louis was better than a 'Wheel of Fortune' in St. Louis or whether the Golf Channel in one place was better than A&E.... What show would reach those [voters] with greatest efficiency?"

There was a 310 percent increase in campaign spending on cable TV in 2006 from 2004, according to a report [PDF] by PQ Media. Cable providers are also trying to sell ads directly on their DVR menus. Comcast is offering candidates the option of buying space for ads and short films through its Comcast Searchlight program [PDF]. But considering viewers' propensity to avoid political ads, it's hard to imagine much of a market for those features among anyone but true political junkies.

The More Things Change...
Maybe clarity comes from chaos. Garfield, who argued that this is a period of "chaos" for media, also thinks the political world is the best situated to deal with the turbulence. "From all the categories out there from cars to Kleenex, political advertising is one that has been harmed probably the least," said Garfield, arguing that people who watch the nightly news are more likely to vote.

And Smart Media President Kyle Roberts contends that TV is still the "most efficient way to reach the most people in the shortest time." He adds that TV also has the broadest platform and impact, especially when the press does stories about ads.

The Swift Boat Veterans for Truth ads began with a modest buy in marginal markets and become a national story, significantly influencing an election and even becoming a verb. Some 30-second ads in the latest cycle, including the RNC's foray in the Tennessee Senate race and Michael J. Fox's memorable spot for Democrat Claire McCaskill, also might have tipped elections.

But what about the vault of campaign ads that failed to touch public opinion? Total spending on broadcast TV advertising topped $2 billion in 2006, Evan Tracey of TNS Media Intelligence recently told AdWeek. As campaign budgets continue to swell, there seems to be less concern about the value of each dollar. But diminishing returns will likely accompany the rise of New Media, including the Internet and DVR, and 30-second ad buys will have be smarter and more sophisticated.

As Dowd explained, "It used to be that people just buy gross rating points... but now, in order to get your audience and be effective with every dollar, you have to spend a lot more effort and a lot more time than you ever did before."

Copyright 2012 by National Journal Group Inc.

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