The Future of TV Advertising

Tracks trends in traditional television ad sales and the impact of new technologies, new competition.

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Proven senior level executive with over 25 years of leading turnarounds and startups of software companies in media, finance, energy and business intelligence. See more at Linked In.

Monday, July 31, 2006

Coping With Revenue Decline

I just got a call from a sales guy at a software company who sells to TV. He was talking about the opportunity to displace a competitive product by cutting prices!

Yikes!! The prospect is facing, as I have repeatedly discussed, declining revenues. Rather than automate sales, put spots on auction, etc., this TV group is chipping at systems costs. At a time they should be investing to cut their costs of sales AND make their inventory easier to buy, they weaken their suppliers.

Yet another example of management's unwillingness to face reality and change the game to improve performance.

Oh, well. .......

Friday, July 21, 2006

Will Media Buying be Commoditized?

Last week, Cory Treffiletti raised the question: "Will media buying be commoditized?"

A brief review of history says yes.

20 years ago, large buyers gave advertisers a "haircut" by buying for $15 and selling to the advertiser for $20.

Soaring levels of inventory and increased advertiser vigilance have forced increased transparency on the purchasing side, especially with national advertising. At the local level, smart advertisers are lowering their commissions to buyers, to as low as 2%!

A SVP at a major rep firm tells me that she meets buyers at a local Starbucks for a sales call, as buyers increasingly work at home for their 2%.

To hold onto historical prices as ratings decline, tea buyers are wide open to subtle "bribes" from the sell-side to keep the flow going. A trip to Europe, a week in Cancun, or a week at Disneyland ... Are all perks that are a substantial non-taxable income to a buyer who might only be making $40,000 a year.

However, this inducement to keep TV ad dollars flowing has a hard time competing with on-line facts and data, and with the on-going debate about who is watching the TV show.

The TV product needs to come clean to compete in the new environment, and as their margins and revenues slide, surely some will be enlightened remove the "friction" (as the economists call it) in the system, and give advertisers a transparent and reliable means to buy TV advertising, especially at the local level.

Tuesday, July 18, 2006

YouTube Traffic Shows Some Impressive Numbers

100 million videos a day! OK, many of them are very short. 40 seconds to 4 or 5 minutes, with about 2 minutes looking like the average. This is the equivalent of 3,333,333 viewers to a 1 hour TV program on network TV.

That doesn't put it in the top 20. (Last week the Boston Pops Fireworks show on CBS got 7 million viewers).

But it is everyday and growing. As an advertiser, the opportunity to target my audience on YouTube is significant.

The numbers show people will watch lots of low cost productions, as they are more real than many of the high cost reality shows.

Monday, July 17, 2006

Rationality in Media Buying

Yes, there are signs that rational changes are afoot!

Last week, word was out that next year's TV up-front will sell ads on a pay-by-pod basis. That means advertisers will not have to pay for viewers who rush to the bathroom or kitchen during a commercial break. Smart move for advertisers, you say? Well, this pries open the door, as ABC attempted to do this year, for charging for delayed viewing of the ad, whether on your TiVo, or potentially replayed on-line.

The latest research shows that 60% of households have broadband, so you can expect on-line viewing to grow. And you should expect content to change when it can be delivered on-line. On-line is more interactive and involving, and it is reported that the old hand himself, Rupert Murdoch, will be integrating his empire from on-line to TV.

These are important moves, as Kagan Research forecasts that the growth of basic cable networks is slowing.

The value will shift to those who respond.

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Friday, July 07, 2006

Ad Execs, Media Divided On Source Of Upfront Ad Erosion

Duh! Media Post's story is golden! The story shows a sharp contrast in the opinions among advertisers, buyers and media sellers. Wow, what a contrast!!!

It reminds me of Bob Fosse's All That Jazz, where the character Joe Gideon is passing through the stages of acceptance of his own demise. One of the first stages is "denial". That must be what is going through ad sellers' heads!

When asked what happened to ad budgets:
  • 0% of Advertisers said they held back for scatter. 41% of Media Sellers said advertisers held back for scatter. Denial! It is a lot easier to tell the boss, "The money is coming in later!"
  • 88% of Advertisers said money was diverted to other media or marketing, while only 49% of Media sellers agreed. Again, denial! " The money can't be going away boss."

Let's hope the men and women in the corner office are reading Media Post. The trend is in, and smart players must past the denial phase, and move to acceptance!

Wednesday, July 05, 2006

Up-front Slowdown Confirms the Trend

Media Post's story today, For Syndication And Cable, The Holiday Is Here, But So Is The Barbecuing, is a fore-runner of the trend, folks.

Broadcast network TV is down, and the story suggests network cable may be weak as well. It also doesn't help when stories report that ad recall is better on the web than it is on TV!

Is "the brand" what can save the property? Sundance is launching a campaign to let others use their brand.

Who will win, who will lose as this transformation continues?

Saturday, July 01, 2006

What Google's Checkout Means for TV Advertisers

Google's new Checkout, launched this week, is an extremely powerful way to connect marketing and sales. That connect is the holy grail.

TV has to evolve to embrace this capability to end the flight of top advertisers, and to attract the reluctant smaller advertisers who can't really understand how effective TV is.

Each medium optimizes a metric to drive ad revenues.

CPM (Cost per thousand exposures): What did it costs me to send my message to 1,000 people who match my target audience. This is the key metric in TV ad sales, and ad sales people move around advertisers to get the most money for the desirable eyeballs. Does this mean it creates the most sales for its advertisers? It can't tell.

CPA (Cost per Action), CPC (Cost per Click): What percentage of the people who saw the ad did something more. Digital sales have this edge, and Google, Yahoo, MSN, etc. Are exploiting it to TV's detriment.

CPS (Cost per Sale). Google now offers the round trip, from an information perspective. Pay to expose your product, drive clicks, sell and discover what the deal is worth. As an ad network, Google is in a unique position. It can learn who makes more sales, and can alter their ad network to emphasize successful sellers, not the most interesting to click on!!

What steps can TV take? Here is what is happening.
  • Local cable in particular has a huge advantage they are slowly exploiting: the set-top box. They sit in a unique position to offer a way to respond to a sale.
  • Many TVstations run a web sites under the Internet Broadcasting System umbrella and encourage their viewers to go there. They leverage their biggest asset, local news.. As far as I can find, they have difficulty convincing an TV advertiser to pay extra cash for the internet portion. So they are starting from scratch .. but this is a good move.
  • Cable networks are trying the same, but again, these webs are seen as "value added" to close a TV deal.

For now, the traditional TV sales guys use the web, VoD, etc. as "value added" and haven't embraced the possibilities. Compensation plans and skills are getting in the way.

Dave Morgan has written some suggestions to newspapers. Again, I believe that newspapers are further down the "pain curve" and smart TV ad execs should study them so they don't face the same future.