The Future of TV Advertising

Upfront is "Up"

2007-06-25T10:04:00.001-04:00

Hard to believe, but the networks pulled out, according to AdAge, an increase in upfront commitments. The take increased 2.7% over last year.

This happened despite the new ratings indicating an audience decline of 5%-10%. As I mentioned previously, the networks' response of raising rates actually worked!

The argument the networks used was "Hey, you can't get to mass audiences any better". They invoked what I call "the reach premium". The argument is that if you want to cover a large percentage of the US audience with your campaign, you need to buy those with the largest reach to efficiently ensure they get the message. Since there are only so many networks with big reach, they can ask for a premium.

Will local television be able to hold the line on revenues with local advertisers? We'll see.

Read Ephron on Media

2007-06-18T15:34:00.000-04:00

An occasional email I get in my inbox comes from Erwin Ephron, who writes about media planning. His latest post says what everyone in the game knows, and I have been warning advertisers since I started this blog.

He wonders why the Upfronts are not "Open, Candid, Honest", like you can get from eBay (Google, MSN, etc.).

In the national buying party called Upfront, Ephron says:

"Most advertisers do not know the market price of TV, they know only what they are paying compared to last year. A real dollars-paid database like the performance monitoring service MPMA’s shows cost differences of 30% for identical TV inventory bought by different advertisers, Upfront."

In fact, sellers' entire planning process centers around what each advertiser paid last year --- no thought of a transparent market!

In fact, at a local TV level, prices can vary by more than 100%! In other words, because TV ad sales are NOT "Open, Candid, Honest", sellers can charge what they can get, and non-vigilant advertisers get fleeced.

No wonder that as smaller advertisers who sense they are getting fleeced are fleeing to the aforementioned Open, Candid, Honest alternatives, like Internet.

The sales tactics practiced by the TV sales organizations have to be changed to allow them to thrive in the accountable ad market ahead.

Restaurant Raises Prices Due to Drop in Quality!

2007-06-14T08:07:00.000-04:00

Ok. That headline is bogus, but the one in Advertising Age is not! Networks Ask for Steep Increases to Make Up for Ratings Shortfall!

Seems that the new (more accurate) ratings system from Nielsen shows that people actually do skip ads with their DVRs! So the networks are say: "Well then, you need to pay us more per (actual) thousand!"

The article closes with:

"New technology is also giving marketers other venues in which to place their ads, including blogs and e-mail. Due in part to some of these factors, last year's upfront take was one of the lowest in several years, estimated at $8.5 billion to $9 billion, and marked the second straight year where networks took in declining volumes. "

So, why would you pay more, for less?

Now That's the Idea! Local TV on YouTube

2007-06-04T17:21:00.000-04:00

TV Week reports that Hearst-Argyle, arguably one of the more forward-thinking TV groups, has signed a deal with YouTube to allow its real hard asset: local content, to be broadcast on YouTube.

As I have said many times before, local TV has to re-think itself. Viewers are drifting away. Advertisers want a more accountable, measurable relationship.

This type of move does both. It places unique assets in a popular medium, where advertisers really can interact with their audience .. and get measurements that are "real" ... for the investments they make.

This is the right step. Expect more from all the others.

Now Cable Viewing Declines

2007-05-31T13:14:00.000-04:00

Catch the Variety article.

For cable TV, May proved to be the cruelest month, at least in the Nielsen
ratings: Nine of the top-10 ad-supported networks declined in number of total
viewers, five by double digits
This isn't supposed to be happening (yet) ...

Ratings Slip -- Again!

2007-05-29T13:03:00.000-04:00

Broadcast and Cable is running a story about the recent ratings decline.

The reasons are conjecture, and do not acknowledge the real underlying problem with broadcast media.

"The time zone change" --- wow, now that's creative!
"Creative difficulties" --- duh?
"American Idol" --- even though they were down 7% AND were able to increase their rates!

The underlying issues are a bad pincer setup --- a) increased competition for, and fracturing of the audiences, as they have many many many choices for entertainment.
b) Advertisers, especially small and medium advertisers, get much more accountability, feedback and optimization of their buys when they go to digital media.

Oh yea, and digital advertising has passed $17B a year.

Younger Viewers Trust On-line More Than TV

2007-05-22T07:57:00.000-04:00

Comscore publishes a report showing that younger viewers trust ads associated with on-line more than those on TV. While TV is more noticed (in your face!), the on-line ads carry more trust.

Couple that with the fact that viewer measurement is much deeper (for all but the big big advertisers) on-line, it is no wonder that the on-line world is seeing a resurgence in values ... viz: all the M&A activity.

Again, TV can/should respond by pressing harder on accountability and measurement, but larges factions (especially smaller market sales forces) are well tuned to selling just the opposite!

Now This Is Interesting -- Magazines Held Accountable?!

2007-05-07T08:01:00.000-04:00

MediaVest USA has been reported to demand that magazines report actual circulation statistics by issue, not just averages!

Golly! You mean advertisers want to know if they got what they paid for?? Shock!

Again, this can happen because MediaVest controls $900M of consumer magazine advertising.

But, as I always warn, if you are a smaller advertiser, you too should demand full accountability .. and walk to the nearest web advertiser if you don't get it from the traditional media. Remember, the traditional media profits from keeping actual performance obscure!

New Granular Approach to Audience Ad Measurement

2007-05-07T07:00:00.000-04:00

The talk of the "up-front", the annual event where major advertisers and agencies commit to annual budgets with the broadcast and cable networks, is the Neilsen ratings change.

Neilsen has traditionally measured audiences for 1/4 hour segments and did not differentiate between the program and the ad. Independent research, and everyone's anecdotal evidence, suggests that ads ad NOT watched as often as the program itself. So Neilsen and the industry are slowly moving to a system of commercial ratings, where the audience for individual ads are rated.

Now that is a LOT of measuring points!!! Every ad in every pod on every TV station and network for every demo!! Oh! Did I mention that DVR playback within 7 days will be included as well!

The good news: It is a step in the right direction. No intelligent advertiser wants to spend money without some form of measurement. And this provides much more than ever was available before. Big advertisers and agencies have driven this, and will take full advantage, holding the networks accountable for delivering the audiences they paid for.

The bad news: I can't see how the data at a local level will be filled in to the extent that local advertisers can use ... or understand and process. There just are not enough measuring points to find out who is watching the Food network at 2 pm on Wednesday in York, PA. And an advertiser in York hasn't the wherewith all to audit that spot anyway.

The bottom line still remains: If you are a small advertiser ($1M or less in most of the country), beware. You probably don't get what you want and measurement from the media industry is likely to be obscure. Set up your own measurements .. like how many people came into the store after the ad, a phone in number on the ad, or something to tell you the ad worked.

Newspapers Lose paper Readers, Gain Web Readers

2007-05-02T06:59:00.000-04:00

Newspapers lost 2.1% of their circulation in the last 6 months, according to the Audit Bureau of Circulation, and web visitors to newspaper sites was up 5.3%.

Now, unfortunately, that 5.3% in no way makes up for the losses ... and is a sign of the times (again, again) for traditional media.

Ken Rutklowski's lively daily email carries the headline User Generated Content Threatens Traditional Media. According to Accenture, media executives are concerned that videos on sites like You-Tube, amateur web photos, etc. are increasingly appealing to younger audiences, and threaten their future.

Google to Sell Radio Ads

2007-04-19T06:42:00.000-04:00

Google Audio? Have you heard about it? You can provide your audio ad to Google, who will place it on regular radio stations.

Google signed a deal with Clear Channel this week that increases their reach to 1600 AM/FM radio stations in the USA.

The Clear Channel deal represents about 5% of Clear Channel inventory, quite a bit. The Clear Channel spokesperson said the inventory is not "remnant", but 5% in a small market station is very likely unsold, or given as "bonus" anyway, so the definition of remnant is debatable.

This is another step in a good march, where the new media guys like Google and eBay etc are attempting to bring radio and TV advertising to small and medium advertisers in ways that are transparent, measurable and accountable.

Don't you think the traditional players could do that themselves and win more advertisers?

Local TV Measurement Quality is Low (Surprise!)

2007-04-16T06:28:00.000-04:00

Ad Age reports that Group M CEO Irwin Gotlieb called local TV's measurement system the "worst media measurement (systems) that exists in the business".

He went further and said that "local broadcast is competing with digital media. Local broadcast will itself be digital media in only a few short years. And yet, we're still dealing with diary measurement? It just doesn't belong there."

Let me suggest that local TV has adapted well to not being measured! Much of their advertising comes from local advertisers who have either:

crude, but effective, ways of measuring ads, like how many people walked into the auto showroom on Saturday morning, or
are not sophisticated enough to measure effectiveness, as they replay the ad of themselves to friends and family.

Much of Local TV is losing the quality advertiser, who demands measurement, and is rapidly moving advertising dollars to media that offers clarity, transparency and better feedback loops. So the local TV ad sales team hunt the yellow page, flyer , radio and billboard advertisers, telling they can get a better bang for their buck through TV. The "cloud of war" obfuscates the activity and outcomes, but, short of offering better measurement, this is the way it is.

eBay Ad Sales Project Hits Major Snag

2007-04-10T06:02:00.000-04:00

I have been very busy this year on a number of projects and have not been posting at the rate I should have, but I'm back! And boy is there some interesting news!

I think one of the most interesting stories was the recent announcement that cable TV is "boycotting" the eBay initiative to sell TV ads "the eBay way" --- an auction.

The project was rumoured to be a $50 million initiative, started last year, and was backed by a number of large advertisers, like HP, Intel and Home Depot.

But the business has had its legs cut off by ESPN, Turner, Discovery and Lifetime who have "boycotted" the exchange.

This is pure hubris! I just love the quotes in the Cabletelevision Advertising Bureau's press release and the NY Times story. "Too narrow", "connectivity issues", "lacked provisions necessary for critical strategic and idea-driven intelligence", "went too far in removing humans from the ad sales process". Even some of the big buyers weighed in, saying that eBay did not allow the integration of promotions into the buying process.

As I have said many times in the past, the sellers of TV spots and the professional buyers do not want the transparency that exists with on-line advertising and will resist efforts to simplify, clarify and commoditize transactions.

Simply put, this move is just one battle in the continuing war that advertisers and TV ad sales are engaged in. Doesn't it sound like the sellers want less transparency, want the "idea-driven, creative process with promotions" to dominate, while advertisers want to know: "What do I get for what price?"

Battle on!

A Silver Lining For Local TV

2007-02-14T08:31:00.000-05:00

Reuters ran a story today quoted a Barron's article, that shows a potential silver lining for local television shareholders.

They note the success in gaining retransmission fees from cable and other distributors. This money goes straight to the bottom line.

Sinclair Broadcasting has been in the news recently with a very noisy fight (they won) over cable company Mediacom. They are leading the charge now with Comcast. Let's see how they do there.

So the cash flow is improving with this (one time) jump in revenues. But I suspect that, as the Barron's article notes, whether we will see one of Hearst, Sinclair, Lin etc. get eaten up by the private equity guys.

Future of Local TV Stations Discussed

2007-01-17T13:52:00.000-05:00

Read the top exec soul searchinig in the TV Week article.

Bill Peterson, senior VP of the E.W. Scripps Co.'s television station
group, said "It is the best medium to build brand and distribute a broad
message," he said. "We should stop apologizing."

CBS Television Stations President Tom Kane said that while the local
station business has changed in recent years, it retains a good advertising
model, adding that synergy between stations and their Web sites and other
distribution platforms is bringing in new streams of revenue. "You want to
distribute across platforms and get paid for it," he said.

It is clear that local TV has the advantage of being local and in the community, and they need to extend this into new media.

Radio Advertising Trends

2006-12-13T08:54:00.000-05:00

Ken Rutkowski of KenRadio.com sent an interesting pack of statistics about revenue trends in radio.

Year to date, Local and National revenues are flat-lined, with local radio declining. Note that these comparisons are political (this year) to non-political (last year), so the base decline is worse than the trends show.

As I have been saying, radio trends are spelling the future of TV. Local has a challenge. Those with content have options.

Radio Re-tooling. New Toys Spell the Same for TV?

2006-12-04T06:58:00.000-05:00

A Reuters story today headlines: "U.S. broadcasters to spend $250 mln for HD radio". They are doing this to compete against satellite radio and iPods.

Now substitute satellite radio with cable and satellite TV, and iPod with "iPod and Zune", Apple and now Microsoft's personal entertainment gadgets, and you have the same scenario set for TV.

I have been eyeing the new Zune with its glitzy color screen, all set for watching video. The screens are great, the hard drives are getting better .. and the reviewers are all clamouring for better video .. which means it will eventually happen. Imagine, hours of HD video in you pocket... just walk up to you 50" HDTV and plug it in ...

Again, content is king, and those with content have lots of options. But it doesn't spell well for those who don't respond (i.e. local TV). A bold move like this has to be an option to consider.

I'll look at the earnings of the Local and National TV groups later today. Given that this was a political year, it should mask some of the decline .. but it's there.

Cross_over Shows Content Drives the Transition

2006-11-28T20:34:00.000-05:00

Seeking Alpha Media Stocks has a great story about Jim Cramer (the Booyah man on Mad Money / CNBC) moving his radio presence to the web!

Aha! Could a local TV station move a good portion of its presence to the web and profit? I think so. Remember, people watch content, not a channel. Too many in the old media have got stuck on the concept that they are there to entertain a captured local audience.

Local advertisers want local audiences, and lot and lots of people are spending hours searching the web. Why not have a strong local presence? Local TV's real strength is its LOCAL content .. They can ex plot it even more than they do, as far as I can see now.

Advertisers (Should) Demand Accountability

2006-11-15T06:38:00.000-05:00

Odd, but why would someone who spends $100,000, or $1M or $10M on a TV ad campaign want accountability? When I use that word in the TV world context, it consists of a check list of items:

Did the ad run? If so, what copy?
When did it run?
Who watched it? (Not the 1/2 hour program, but how many people (in my target demo), actually sat through the commercial?)

I've been around the media sales guys enough to know that this level of "privilege" (some might call it "service") is reserved for a few customers. If you're a local advertiser, few advertisers will get any assurances on all 3 categories .. some of the problem tracing back to Nielsen's lack of comprehensive information.

"Why should they expect this?", sales guys ask. Because, a small advertiser with $10,000 can run a very accountable campaign on-line. that's the choice .. and that's the choice many of them are making.

Steven Fredericks of TNS writes a touching article in Ad Age. Let's hope someone is listening.

Clear Channel, Largest Radio Group, On the Block

2006-11-13T05:57:00.000-05:00

A Reuters new story today says that Clear Channel, the largest radio group in the world, is up for sale, with private equity firms the likely buyers.

In other words, they are going private, so they can restructure without the spotlight of being public. The list of potential buyers are all skilled at restructuring for big profit gains.

I believe this is a bell-weather event. It's not just Clear Channel that needs a massive make-over to generate better returns for their shareholders. It is the entire traditional media space.

Stay tuned!

Disney Impresses- Thank You Politics!

2006-11-09T21:48:00.000-05:00

The Disney group showed a very nice profit increase. I'm particularly interested in the local TV revenues and profits. They were strong, as has been all the local TV revenues.

Politics, run on schedule every 2 years in this country, create a great surge in local advertising dollars.

Is is reliable? No? can they match the performance in the future?

I doubt it.

http://news.yahoo.com/s/nm/20061110/bs_nm/media_disney_earns_dc_5

Hmm .. Mobile TV Shows A Viewer Time Shift

2006-11-02T07:00:00.000-05:00

Advertising spending rates have traditionally peaked in "Prime Time" (8 pm-11 pm in most locations) ... because that is when people are at home, watching TV.

But a recent report by the Center for Media Research shows that prime time for Mobile TV viewers is noon to 8 pm!! And even more interesting, the study shows that the viewing is NOT dominated by the under 24 year old crowd. More than 3/4's of mobile users are 25 and over!

Their conclusion --- Mobile TV is a "freedom machine" that allows people to watch what they want, when they want, as opposed to wrestling with the remote with others at home.

Comcast a Winner!

2006-10-30T08:06:00.000-05:00

Comcast reported a big jump in earnings last week ... finally, as CEO Brian Roberts said, reaching an "inflection point" of increased earnings.

Comcast sits in an excellent strategic position to capitalize on the change in technology and can now enjoy the yields on their very extensive investments over the past decade.

In addition to carriage (subscription fee) revenues, they leverage their earnings with broadband and telephone fees. Nice leverage!

Not Everyone is Happy With the New Face of Broadcast

2006-10-30T07:03:00.000-05:00

I reported last week that NBC was saying goodbye to 8 pm dramas and going exclusively to (low cost of production) reality shows at that hour.

That didn't get a good reaction from Hearst-Argyle Television CEO David Barrett, who said that that could be a mistake.

Yikes! Well, this is one strategy to the shift away from TV. Lower costs, produce lower quality material.

City bus services in many locations face the same. Ridership down? Raise fares, reduce number of bus trips. I haven't seen that work in those cases, and I wait to see if it will work NBC and its affiliates.

Initial reaction from NBC -- said to be reconsidering ....

The Cost Cutting Begins, Signs of Traditional Decline Widen

2006-10-20T07:28:00.000-04:00

A number of stories caught my eye and prove that the trend away from "broadcast" advertising continues.

NBC is cutting costs by $750 million, and will direct more effort to digital media. Say goodbye to 8 pm dramas! And say hello to layoffs (at a town hall meeting today).
The Wall Street Journal saw ad revenue fall by 5.9% in September!
The new "My Network TV" is not doing well. Ad Age reports that "the shows average 439,000 viewers in the 18- to 49-year-old demographic and a 0.3 rating/1 share. The total number of nightly viewers adds up to 910,000, according to live-plus-same-day figures provided by Nielsen Media Research through Oct. 15. Those ratings are more akin to a second-tier cable network"

On-line Video Will Save Traditional TV

2006-10-19T08:29:00.000-04:00

OK, seems odd that the very thing that is killing traditional media ... can save it.

A great blog on Video Insider spells out in detail all the ways advertisers can choose to interact with viewers if they watch their video on broadband or via IPTV.

In Maryland where I live, Verizon is offering IPTV (they don't call it that) over fiber they laid. They really have the opportunity to avoid the sins of the past (allowing the sales force to run the business) and offer true quality measurable products that advertisers want.

When you buy local TV, you get measured on 400-600 households in the region, at best daily, in most markets 4 times a year, and in some markets, not at all. So you are buying a statistical probability that your desired audience was watching.

In broadband / IPTV, you know who, when etc. It is no longer the "broadcast model", but a direct marketing engagement.

You now see the big content owners: CBS, ABC, etc. telling you "you can watch us on-line". This will be the trend .. leaving those who have no content (i.e. local TV stations) increasingly out in the cold.

CollegeRecruiter.com offers the latest on internships and entry level jobs.

eBay - A Portent of Change for TV Sales

2006-10-11T08:05:00.000-04:00

Wal-Mart and 117 other advertisers have been pushing an auction based TV ad sales systems, run by eBay, according to Ad Age.

The CAB (Cabletelevision Advertising Bureau ) is urging cable companies to participate.

We'll monitor this development. We think it is the right thing: good for advertisers, good for the owners of media properties. More price transparency, a greater sense of fairness ... should lead to "more efficient markets" and raise the amount of transactions.

This has been the case in many many other types of markets, the stock exchange being one of the prime examples.

Who will be the losers? Why hasn't this happened before now?

Answer: The traders. Sales people who now "manage the relationships", "assemble the right package" and take home $200K to $1 million a year for doing so. They have been a large part, and will continue to be a large part of the resistance to this phenomenon.

The buyers, who loved the perks of directing business (trips, tickets, dinners, etc.) are on the road to marginalization anyway, so there will be less "armed" resistance from them.

It's interesting that this is happening at the same time that the NYSE is finally starting to go to fully electronic trading. The scenes of the trading pit will replaced by colorful screens. And soon most, if not all, of the floor traders will lose their very lucrative jobs on the floor.

If the Wal-mart / eBay experiment succeeds, we have to see the same loss of high-paying sales jobs in the media companies. And it will be good for TV ad sales.

Unified Sales Teams for Your Ad Sales

2006-10-09T09:40:00.000-04:00

I've been working intensively on a web project and have fallen behind ... but this morning's article in Ad Age woke me up! They discuss the merits of having a separate team for web sales, versus a unified team.

It focuses on print, and talks about there being different metrics in print (same for TV) versus the web ... and the desire by agencies to have a single buy plan.

But beneath all this is the clash of cultures. the old style sales forces, as I have observed, see their media as the "be all and end all". They more often than not have more revenue (read, corporate clout). They look at the digital world as neat, but "value added".

The only way for the new media to gain a foothold in media sales organizations is to keep them apart.

The Skinny on Broadband Video Viewing

2006-09-26T06:24:00.000-04:00

Every quarter, Brian Wieser at MAGNA Global publishes his On-Demand quarterly analysis. You can get the entire report here.

MAGNA looks at traditional linear programs broadcast on the internet and concludes:

"Between May and June of this year, Disney reported 5.7 million episode requests from its trial streaming free episodes of Lost, Desperate Housewives, Alias and Commander-in-Chief. Over an identical time frame, this compares with a total equivalent number of program views of these shows through linear broadcasts at 235 million, a popularity factor of 41 times for free broadcast content over free streams"

Read the report. It is well researched.

My question is: Are the young new adult viewers s queung up to watch Lost, or are they "tuning in" to YouTube?

Scanning the TV News

2006-09-23T07:52:00.000-04:00

You might want to review a few of the 100's of stories I scan:

The commercial ratings from Neislen are hitting some bumps. (Ad Age)
Advertising expected to grow 6.4% next year. TV happy for elections! (Ad Age)
Cable MSO 's hope to find new ways into your pocket. (David Deans)
Battle of the Titans (Murdoch / Redstone) for the young viewer. (GigaOM)

Advertisers Sign Up for Streaming ABC

2006-09-23T07:31:00.000-04:00

Ad Age reports that 35 advertisers have signed to advertise on ABC's broadband.

They report that 16 million streams were downloaded during their tests starting in June. (and YouTube had how many?)

Anyway, this is a must do step for all TV. They have to move to the net. As an advertiser, you will want to pay more and encourage the TV guys to move.

Problem child in all this is still local TV. When ABC streams and a viewer switches to broadband viewing, the local affiliate loses a viewer. Since ABC has rights and the local affiliate does not, ABC is doing the right thing for ABC, but rings a warning bell for the local affiliate network.

Expect that pressure to increase!

(Sorry with the posting gap .. had a bad hard drive crash and am just getting back to normalcy.)

Hold On to Your Wallets, TV Guys!

2006-09-12T06:33:00.000-04:00

Here is the moment that will push traditional TV executives over the edge. Yahoo today reports that AT&T will offer 20 TV channels (we should really refer to this as video channels) over the internet.

Content owners rejoice. Traditional distributors of TV content --- cringe! IF you run a local TV station, viewership has no-where to go but down ... and as we have seen from this year's up-front ... rates can no longer go UP despite the fall of ratings.

So where does that put many of the traditional TV companies?

Somewhere where they have never been before! They must re-examine their basic assumptions about who they are, where they spend dollars and how they attract and retain customers.

New CW Network to Run Programs on Broadband

2006-09-07T08:22:00.000-04:00

Ad Age reports that the CW will show a number of their youth-oriented programs on the internet before they appear on the old linear network!

And they are teaming up with Microsoft to manage the broadcasts.

This is the the trend, and advertisers (even though they promise these programs will run commercial free) will love it.

The suits have to understand how ads will work in the internet world. People's attention spans are shorter on the net and perhaps the 30 second spot is not it.

In any case, here is a move in the right direction. Unfortunately, if you don't own the content, it's not much help (local broadcaster --- weep now).

Aha! A Good Move by the New York Times

2006-08-30T12:59:00.000-04:00

AdAge.com reports that the New York Times has acquired Baseline StudioSystems for $50M.

It's a smart and very interesting move for 2 reasons:

They can use web-based content to populate the newspaper. This will lower costs .. and they have to lower costs because, like TV will see, they are losing ad revenues and need to!
They take cash from the struggling cash cow, and invest it in growth. Great financial move.

I like this! Good strategic fit, lowers costs, takes cash from a declining asset and invests in new growth!

-----------------------------

Visit Recruit.net to find Australia jobs.

YouTube Revenues Beat Many Local TV Stations

2006-08-29T09:30:00.000-04:00

YouTube revenue estimates (from Markus Frind's blog) make YouTube bigger than many .. check that .. most local TV stations in the USA. In a city like Baltimore, for example, total TV revenues are about $170M / year, distributed among 5-6 local stations and the local cable guys .... so they average $30M or so. Their costs are significant, and they would create about $12-$14 M in free cash flow.

Hello YouTube. All volunteer content .. just collect $1.8 M per month. Nice, eh?

The End of the Made for TV Movie

2006-08-22T07:49:00.000-04:00

The Orlando Sentinel has a great story that discusses the end of movies made for TV.

I remember as a kid waiting to see those well promoted special event programming. But they will be like the dinosaur, something we look at in museums.

The article says the demise is all about costs and competition .. but I think they really miss the point.

When there were 3 networks viewing for your ad dollars, you got 1/3 of the audience if you were OK. But with 100's of channels to choose from, the networks celebrate with 10% of the audience watching TV.

But the end of made-for-TV movies (cutting big risks and costs) is a definite impact of the changing trends.
----------------------------------

BIS provides background checks to employers globally.

Denial Phase Slowly Slipping Away

2006-08-15T09:02:00.000-04:00

Ad Age yesterday published a very interesting article about the (finally) completed up-front.

As I have mentioned, ad execs will spin their results, and the fact that sales and CPMs are up is true if you

"aren't counting marketers who sat out the upfront, such as Coca-Cola or AOL, in their base comparisons to last year. "I just didn't see the money there," said a buyer. "If it was, CPMs wouldn't have been flat." "

At least the word is out. TV advertising is on the decline.

RADICAL SHIFT IN MEDIA CONSUMPTION

2006-08-14T10:48:00.000-04:00

Ofcom Communications published a report that says, in a nutshell, the most desirable audience (16-24 years olds) is going away from TV.

"Television is of declining interest to many 16-24 year olds; on average they watch television for one hour less per day than the average television viewer. Of the television they do watch, an even smaller proportion of their time is spent viewing public service broadcasting channels, down from 74% of total viewing among this age group in 2001 to 58% today.
Instead, the internet plays a central role in daily life; more than 70% of 16-24 year old internet users use social networking websites (compared to 41% of all UK internet users) and 37% of 18-24 year olds have contributed to a blog or website message board (compared to 14% of all UK internet users).
The same group also uses mobile phones extensively, on average making seven more calls and sending 42 more texts per week than the wider UK population.
Extensive use of the internet has also influenced 15-24 year olds' consumption of other media. Their radio listening is lower, by an average of 15 minutes a day compared to the wider population; additionally, 27% of those surveyed said they read newspapers less as a consequence of their online usage."

This week, I will look at the recent financials from public TV groups. What can they do? What can they do?

Hello! McKinsey Study Predicts Continuing Decline in TV Selling Power

2006-08-09T07:49:00.000-04:00

Advertising Age reports a study that suggests that TV advertising was 1/3 as effective as it was in 1990.

The report goes on to state that prices for prime-time broadcast TV are up 40% while viewers are down 50%! I have commented on this wild trend before and all I can say is: "Good work, ad sales guys!!"

How can this keep happening?
Lack of vigilance, too cozy a relationship between buyers and sellers?

And no willingness of TV ad execs to move out of the comfortable box and try auctions, automation, etc. to bring more transparency and liquidity to TV ad sales.

I've been on a 2 week vacation, and have some catch-up to do!

------------------------

You'll find entry level jobs at CollegeRecruiter.com.

Coping With Revenue Decline

2006-07-31T22:46:00.000-04:00

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. .......

Will Media Buying be Commoditized?

2006-07-21T08:06:00.000-04:00

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.

YouTube Traffic Shows Some Impressive Numbers

2006-07-18T07:45:00.000-04:00

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.

Rationality in Media Buying

2006-07-17T10:34:00.000-04:00

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.
---------------------------------------------

NVJobSearch provides Las Vegas jobs for workers hoping to relocate to Nevada.

Ad Execs, Media Divided On Source Of Upfront Ad Erosion

2006-07-07T07:11:00.000-04:00

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!

Up-front Slowdown Confirms the Trend

2006-07-05T08:28:00.000-04:00

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?

What Google's Checkout Means for TV Advertisers

2006-07-01T17:40:00.000-04:00

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.

CBS Cuts Deal with Affiliates

2006-06-29T17:56:00.000-04:00

CBS recognizes that it has to leverage digital distribution. As usual, the local broadcasters have to fight to keep a piece of the pie. And in the TV Week piece, they did.

This case shows that unique content is critical in devising a convergence strategy. CBS has it and is keeping peace with the natives while they make the transition. The big question .. Will it last long?

On Demand Quarterly Report Posted

2006-06-27T15:17:00.000-04:00

Brian Wieser of Magna Global has agreed to allow me to post their latest report that I mentioned on June 14. He suggests the shift is not colossal, but modest.

Read on here.

Local TV Responses to Sliding Revenues

2006-06-26T08:43:00.000-04:00

The New York Times reports today that some internet ad rates are up 33%!!

Online Spending, according to Media Post, will reach $20B this year! (with $9B from Google, as I reported last week), exceeding that of all local television!

While on-line soars, television is lucky to grow revenue, and is finding it very difficult to raise prices. Advertisers like the customer connections they can create in an on-line experience. The decline of television ad spending is expected to continue, according to Booz-Allen's exceptional report. Most frightening to TV executives, has to be the conclusion that auto advertisers overspend on TV by as much as 44%!! See "Waste in the Auto Advertising Media Mix.", page 43

Auto represents a whopping 22.6% of local TV ad dollars. A 44% reduction would have a monumental financial impact on local TV as we know it.

So what can TV do?

I know that many top TV ad sales executives in local TV are digging deeper into their local markets. Smaller advertisers who traditionally only advertised in door-to-door coupon rags such as PennySaver, are being offered low cost ad packages on local cable and broadcast TV. But the "stick rate", the likelihood they are customers in a year, is abysmally low, less than 20% versus the 70%-90% local TV has learned to enjoy. (Why? -- later.) The impact is that the costs of sales rise as revenues slide!! (Gosh! the idea must have been created by the sales team!)

What can they do? I'll look at a few other approaches they are taking in later blogs, and will make some suggestions. In the meantime, TV ad execs should look at the resurgence of "newspapers".

Growing TV Ad Sales Means You Have to Add Digital

2006-06-21T08:21:00.000-04:00

The results for TV's up-front season are showing what we have been forecasting.

Few are getting rate increases. Fox claims the highest increase, 2-3%, while NBC is "holding out" for more.
Overall dollar commitment to broadcast networks is down, while cable (who has been historically under-committed) will get a slight increase.

But a trend that is emerging is that many many of the traditional TV ad buys include an on-line component. On-line continues to grab share --- 12%, from 10% last year.

Advertisers realize that on-line advertising can be more targeted. Will we arrive at a point where TV advertising is nothing but a means to drive people to a web site? My good friend Buford Smith says that this is the only way a small advertiser should use TV ads.

With the latest Harris poll showing that 77% of adults are on-line for an average of 9 hours per week, this trend should continue. Smart TV ad sales will continue to combine their offers. Proving that the ads work is much more tangible!

And that's good for a media company's stock. Media General expects revenues to rise 14% to 16% this year, as their internet division is growing.

--------Advertisement ------------------
Find job listings around the USA at JobCentral.

Influence 2.0

2006-06-21T03:52:00.000-04:00

Great Wiki that captures a lot of the transition going on in advertising. More from the Web 2.0 perspective, but a great resource.

Google is Larger Than Any TV Network

2006-06-16T06:32:00.000-04:00

The buzz this week is all about the annual up-front orgy of ad spending commitments on networks, especially the traditional broadcast networks.

Will the networks get an increase? (Very difficult) Will they sell a substantial part of their inventory up-front? (Tough, too)

Time to pause and look at the real trends. According to the TVB (see chart left), the broadcast industry's trade association, network TV prime time viewing minutes have decreased 60% since 1980, while their average CPM has increased 466%!! (Nice job if you can get it!!)

As the same time, DVR's and on-demand programming are growing. Advertisers can get interactive display ads on the internet for $1 - $5 CPM or 30% to 40% more if they are targeted.

Impact? They're moving their ad dollars. Google, despite click fraud concerns, will end up with $6.1 Billion in revenues, mainly from click-ads. (Sources: TVB and Google annual reports). In 5 short years, Google is larger than any TV network. And you can see why! Lower costs, more feedback and more eyeballs!

--------Advertisement ------------------
Find job listings around the USA at JobCentral.

Magna Global Data Confirms Major Shift

2006-06-14T05:34:00.000-04:00

The people over at Magna Global updated their "on demand" forecasts. (You'll have to email them for the full report.)

They expect almost 30% of households will have DVR's by 2010 and "on demand" technology will reach almost 100% of wired households. The continuing shift of viewing away from the the traditional "on schedule" routine is placing colossal pressure on TV ad sales. Eyeballs are now only sellable when they watch a program on schedule.

Unless you own the on demand technology (like the local cable provider does), you haven't got any other options. Local broadcasters are in the least enviable position. Their larger national advertisers read this sort of research and cut their purchases on local television.

This trend is leading a flight of quality advertisers and it is changing the landscape.

Commentary on the Changing Landscape of TV Ad Sales

2006-06-12T17:32:00.000-04:00

For the last 4 years, I have been the CEO of a software startup aimed at TV advertising sales. Our plan was to provide pricing and inventory management intelligence, much like the airline and hotel industry had adopted decades ago. (See Sabre Systems).

We were encouraged by many top executives in television, who admitted that TV ad sales was, with some exceptions, "pretty fluid" and not easily controlled by management. We built technologies just like those used in the airline industry, the hotel industry, or for that matter, the on-line advertising industry. But we have had great difficulty getting adoption in traditional television. We're regarded as very knowledgeable about the sales process, and have provided millions of dollars of software and services to ad sales groups. We have managed the details of literally $100's of millions of ad deals. We've been told "You're ahead of your time!"

Despite the revenue pressure on television ad sales teams (whether they sell local broadcast, local cable or national broadcast or cable), none have embraced revenue management technologies in any big way. Competition (and the amount of places you can place a video ad on television) has soared! It seems odd that many sellers in a $67.9 Billion market still employ a chalkboard to set and track pricing. The fact of the matter is that most front line sales reps and the advertiser's buyer set individual prices. Let me repeat: the sales rep from the local TV station can change the price of the ad space. So if you are told $300, you could offer $200.

There is simply more inventory than they can sell, and the sales manager will take anything they can get. Why? As one manager said to me, "I don't need revenue management, I need revenue."

The purposes of this blog are:

to monitor and track trends in television advertising sales
to observe and predict how traditional players will cope with the trends
to monitor the tactics of the challengers

From time to time, I will relate some lesser-known facts from our experience (protecting the confidentiality of past customers), and forecast the likelihood of success of various tactics.

As one VC said to me, "You can usually forecast the future. The question is When?"