The Media Age

It's Just TV. Time to Drop the Distinction Between Cable & Network TV

The March 31 Delaney Report leads off with a front page article headed "Just TV" and makes the point that cable television is a mature industry and so pervasive that the distinction between cable and network TV should be given up and everyone should call it just television. To read more on my point of view on this subject, please click here.

A video exposure is to my mind television unless there is something in it beyond the fundamentals of sight, sound and motion such as interactivity. At some point in the future, when all video transmissions contain an interactive component, even this distinction will disappear.

For now, it's extremely disadvantageous for cable to permit itself to be labeled as in some way a secondary or peripheral medium to broadcast television, particularly as some cable shows regularly out-rate broadcast.

NBC CHEATS KLUGMAN OUT OF "QUINCY" PAYMENTS

Jack Klugman is suing NBC to receive payments for his role in "Quincy M.E." (1976-83 + reruns). NBC says they've lost $66 million on the show through 2006 even though it airs globally even today.

This is pathetic. General Electric and NBC Universal should be ashamed of themselves for nickel and diming a sterling actor who delivered a quality program to them. Lost $66 million after 30 years of airing and re-airing? Impossible to believe.

Whatever Klugman is suing for, the courts should award him 100 times as much in punitive damages for this sort of egregious fraud.

Our First Grandson, Mini Cooper, Arrives!

Our first grandchild, Cooper Askin Silverman, arrived recently so I haven't been on the blog for a while. Here's Cooper:

        He was 6 lbs. 4 oz. and 19 1/2 inches at birth (that length is his height
        by the way...)

Cooper's Mom and Dad, Anna & Andrew Silverman appear here:

And here're granny d and pops:   

So this is the only post to expect from me this week...
Love to all,
Gene
                                              

It's TV Stupid & Ads Pay For It

In reporting on a panel at the OMMA Global Expo in LA, Erik Sass wrote in the Online Media Daily that "advertisers still haven't hit on the magic formula for video advertising".

However, I think they have and that the emergence of an industry standard is unreasonably being resisted by a group of naive digital pioneers who fear alienating consumers. A panelist noted that "unskippable pre-rolls were completed 85% of the time". And most attendees seemed to agree that advertising support is essential to the further growth of the digital video industry.

Well, there you are. 85% is enough for me. The people who are worried about alienating potential digital video viewers with advertising while acknowledging that advertising is necessary to pay for the content remind me of the web 'entrepreneurs' of the 1990's who didn't bother to develop a business plan for their enterprises.

Hulu, the new video joint venture of NBC Universal and Fox, has the right idea with two minutes of ads in a thirty minute show plus six second pre-rolls. This is actually a light ad load and only possible, given the high cost of their content, because there are so many other revenue sources available to these TV shows, from broadcast to cable to syndication to DVD to international, etc.

Producing original programming of this quality exclusively for the net is likely to be financially impossible.

A plausible business model for digital video advertising therefore requires

• Higher quality content than is available on the user-generated sites such as YouTube and MySpace;
• More ad content than is currently being envision by most players in this space;
• Multiple revenue streams to effectively deliver costs for content, distribution and promotion plus a significant profit to justify investment in this high risk business.

Is this possible? Well, certainly the networks and production companies can repurpose current content to generate the small additional revenue available from digital video. However, original programming for DVA seems way in the future if ever.

The dot.com bust was driven by people who didn't take the time to 'run the numbers'. The television business has been around for decades. It's not hard to figure out what these elements cost and to conclude that the biggest near term potential for digital video advertising is via ventures such as Hulu that come with quality content already amortized over large multiple revenue streams.

Muddle in MediaLand. Agencies Shoot Themselves in the Compensation Foot

A million trainees tapping on a million keyboards is not the way to manage media.

The Delaney Report's March 10 Issue leads off with the headline "Media Muddle" and then goes on to discuss the challenges that media agencies and their holding companies are facing in trying to maintain profitability in the face of client pressures on compensation and the need to serve clients on an increasing number of media platforms. (To see this issue, please download the PDF file at the bottom of this post.)

Although my professional goals at this time are to serve on relevant boards and advisory panels, I did last year undertake to manage the media service for New York Life Insurance. In the course of this experience, I oversaw the placement of a few dozen million dollars in all media. What astounded me was how 'manual' and unwieldy much of media buying still is. In fact, some of the transaction processes haven't improved very much in decades, a period when virtually all other industries have achieved huge productivity gains via technology.

Mike Lotito of Media IQ is quoted as saying that "Media agencies need to invest in technology and stop hiring 50 people when they win a new piece of business." I know Mike and have no doubt that his observation is accurate.

This is confirmed for me by a recent college graduate whom I helped to place in an entry level position in the network department of one of the mega media agencies. His job consists of endless and mindless hours of rekeying TV buy data into the Donovan Data System, itself one of the dinosaurs of the business (I should know; my experience predates DDS).

In the late 1960's when I was a media planner at the then fledgling agency Ogilvy & Mather, I learned that the financial department had hired a computer programmer to develop software for them. At the time one of my assignments on the Instant Maxwell House Coffee brand was an annual media analysis that consumed six "person weeks" of time at the beginning of very planning year. I taught myself a computer language called "Basic" and then collaborated with O&M's computer programmer, Hal Samuels, to develop something we labeled NASTEA for Network And Spot Television Expenditure Allocation. The resulting software completed the analysis overnight, on punch cards.

When I launched DeWitt Media in the early 1980's it was on the back of the 'new' IBM PC and a spreadsheet program called Visicalc. I figured that with these new developments I could do the work of 200 agency media people with 20 people trained to work with this technology. I did and it worked. Because ad agencies at the time had no interest in investing any money in their media departments, we thrived and eventually came to compete effectively with the biggest of them.

Now it appears that these media agency behemoths have lost sight of the necessity for businesses not only to grow revenue but also to increase productivity constantly. Perhaps this is because so many media agency leaders are former network television buyers and who therefore have never run a business as complex as a media agency.

Whatever the reason, it is clear that the media agency industry requires a major productivity initiative to provide clients with the services they want at prices advertisers are willing to pay. One side of this coin is of course to increase the perceived value of media agency services that are commodities and perceived as such. Another imperative however is to harness the latest technologies to enable media agency work to be done in a far more efficient and timely manner.

Perhaps then the agencies can find time to train their junior people and to empower them to use their intellect on behalf of the agencies and their clients rather than fritter ways years of their lives and billions of brain cells rekeying data.

Download delaney_report_31008.pdf

 

The Last Upfront

In the next year it will become clear that the upfront has become extinct, of no practical value in the future.

By next Spring we will have become accustomed to buying time when we want. All buys will be guaranteed as to audience delivery so one of the major positive attributes of the upfront will be gone. In addition, advertiser demand will cede most choice of programming to the largest spenders. Other media buyers will have to be content with the promise of achieving an audience within a range of prequalified programs or genres.

The crashing economy will slacken demand to the point that those advertisers satisfied by average ratings and programming fare will be comfortable with the reduced CPM inflation that the market will afford them. Those who can guarantee huge sums to the networks will have access to the few high-rated television platforms but at premium even punitive pricing with requirements for commitments required not only in the TV vehicle but also in related offerings on the Internet, on Cable, perhaps even in print, radio and out-of-home.

In order to attain the added value elements of sponsorships and product placements, advertisers will need to be in the mega circle or to establish investment and operating relationships with program producers and distributors on Cable, the Net and/or Syndication. These arrangements will require a major concentration of these advertisers limited ad budgets in fewer media vehicles, thus greatly reducing the reach of their advertising. On the other hand, well produced and promoted sponsored vehicles will balance smaller overall audiences with a high concentration of high quality, engaged viewers.

Interactivity, especially on the Internet, will make the video platform a much more effective marketing tool than television.

Other major developments we can expect in national television in the coming years will be the irrelevance of Nielsen in the face of a new audience measurement system based on set-top boxes and PC’s and the replacement of Donovan Data Systems as the industry’s computerized stewardship system as all media work to make ad placement verification electronic and seamless.

The last paragraph should be considered an early April Fool’s joke or just plan wishful thinking. It’ll all happen but certainly over a much longer time frame than we can visualize today.

Digital Video Advertising: What's holding it back?

DVA (Digital Video Advertising) has some fantastic advertising attributes:

• Sight, sound and motion
• High advertiser demand
• Targeted audiences
• Interactivity
• Measurable performance

What's missing from this picture? To become 'the next big thing' in media, DVA needs to accomplish the following:

1. Scale. A recent WSJ report noted that a MySpace show sponsored by Ford, "Special Delivery" delivered a very unspecial audience of 200,000 viewers. In a country of 300 million people and an auto company that sold 2.1 million cars in the U.S. last year, this is not even spit in a bucket.
2. Efficiency. In a recent speech to a group of Columbia University Business School alumni, Rishad Tobaccowala, CEO of Denuo, said that advertisers could buy mass TV ads for around $20 cost per thousand exposures vs. about $560 for online video CPM's. For a smaller screen and a shorter message, this seems out of line with common sense, no matter how engaged or targeted the audience.
3. Production Quality. MySpace estimates its production costs at $1,000 per minute vs. as much as $50,000 per minute for broadcast network programming. One wonders if this affords a high quality program environment for a major advertiser's message. As for user-generated content, that may be fine if you're marketing songs or soft drinks to sub-teens, but may not be appropriate for advertising leisure travel or financial services to older, affluent audiences.

I'm reminded of the early days of cable when all the new networks would come in and present proposals that promised extraordinary ad efficiencies if each network 'only' delivered a 1.0 rating. When the first Nielsen surveys came out, I recall that it took an accumulation of eighteen cable networks to total a 1.0 rating. The cable networks then called it 'targetcasting' which Ted Turner, founder of the Turner networks, called 'a euphemism for low ratings.'

Nevertheless, cable not only survived, it thrived. Perhaps there are some lessons for digital video ventures in what we learned in building audiences and advertising for cable.

1. Promotion. Presenting a TV or video content and advertising opportunity without promoting 'tune-in' is like staging an expensive party without sending invitations. However, increased tune-in promotion alone, while necessary, is unlikely to drive online video advertising to critical mass levels.
2. Syndication. Given the somewhat scattered nature of online viewing, an aggregation of platforms may be required to accumulate significant audiences for internet programming. This will require individual sites to find a way to collaborate on the development, scheduling, promotion and ad sales for a new generation of video with wider appeal to potential audiences and advertisers.
3. An Entrepreneurial Business Model. When I advised Jon Hendricks and his Discovery channels in building audience and advertising throughout the 1990's, we developed a P&L pro forma for every program and special. The idea was that spending more on promotion and programming could be justified if this resulted in higher ratings and ad spend. Similarly, DVA providers will need to invest in added promotion and broader distribution to make the leap into the big time.

And big time it will be since these are not particularly daunting obstacles. What's needed is a bit of vision to get over the blinders of today in order to see the path to tomorrow.