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.

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.

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