Category Archives: Advertising

Two Elephants in the Media Room

The media business – old and new – is losing millions of dollars in ad revenues for two reasons that are completely obvious and fixable. First, they are not utilizing the growing commercial inventory of on demand and delayed viewing commercial availabilities. This will become a bigger and bigger problem as viewing inevitably shifts to user controlled playback as it already is.
When a viewer watches a commercial program from a month or a year ago, it should have commercials inserted in real time that are in-flight and in-demo for an advertiser. In other words, there is no apparent reason why delay viewed programming shouldn’t generate as much – or actually more – CPMs (cost per thousands) than live inventory. Why? Because when someone is watching on demand or from their Comcast/NBC DVR, the platform can know much, much more about them then a live viewer, starting with at least their zip code.
So when a program is recorded on a cable company owned DVR, codes for control of the commercial breaks should be inserted into the recording for use during playback, which could have more or fewer commercials than originally aired (who cares when the program ends?). If that growing delayed viewing isn’t monetized, the problem will become huge for ad supported programming.
The cable company could even use these simple codes to offer the program commercial free for a fee charged to their cable bill. Consumers are already choosing commercial free viewing of current network TV shows on Amazon (generally $2.95 an episode) the very next day. It’s not rocket surgery.
The other elephant in the advertising world is more closely related to short online programming such as YouTube. How many times do we have to sit through (often the same) commercial over and over in order to see a cat video that we ding after 5 seconds when the cat isn’t cute enough. The wearying pre-roll commercials are out of control, literally, and downgrading the consumer experience and length of viewing.
Ideally short videos should have mandatory breaks in the middle, putting the burden on the programmers who want to make money on YouTube and the others to do a good enough job of hooking the viewer in the first minute that they’ll sit through a commercial to see the rest.
But at the very least, the platforms need to track how many seconds/minutes of actual programming the viewer has seen during a session, and adjusting the number of commercials to some reasonable percentage of total viewing. If they bail out of a video after 10 seconds, it should only count a small amount toward the number of commercials they ultimately see in a session (or even across multiple sessions).
Both of these painfully obvious improvements take some programming, nothing very complicated. What is complex is the need for the industry to agree to standards and I suspect that more than anything will forestall this kind of effort. The result will be to push ad sales down and down in the on demand environment, and hat will hit us even sooner than global warming, although after this winter in Boston that may be optimistic.

Post #26 – Newspapers are dead. Wait, what’s that? It’s a bird, it’s a plane – it’s Jeff Bezos!

Yes, it’s Jeff Bezos, strange visitor from another industry who came to newspapers with power and abilities far beyond those of mortal media owners. Jeff Bezos…who can change the course of mighty industries, make money with his bare hands, and who, disguised as Publisher Jeffrey Bezos, mild-mannered leader of a great metropolitan newspaper, will fight a never-ending battle for truth, profits and the American way.

I have recently come to the conclusion that I was wrong in an earlier post. There actually wasn’t anything the newspapers could have done to meaningfully change their current situation. My reason is that, even if they had hired the sharpest new media tech guys, the mere fact that sites featuring classifieds, want ads, car sales, real estate and entertainment ads were going to start up, spelled their doom.

Because newspapers had been able to sustain monopoly pricing in those areas for so long, which supported their journalism hobby, they were vulnerable to anything that offered a lower cost alternative. As a result, the rates for those advertising vehicles, which together made up typically 80% of a newspaper’s profits were bound to take a dive.

So even though I still believe that newspapers didn’t know what business they were in – they thought they were in the news business, but were actually in the classified ad business – I no longer think they could have done much to save themselves.

I’m hoping that Jeff Bezos at the Washington Post can prove me wrong still again. Amazon’s relentless focus on the customer is so encouraging, I would tend to bet on Bezos. Even as other famous customer-or-product focused companies like Apple are being accused of losing the Steve Jobs passion for excellence, Amazon has not wavered. It continues to chug along, providing an outstanding customer experience and valuable innovation.

If Bezos manages to pull it out – and he has the resources to keep at it for a long time – then we’ll look at what he’s accomplished and say, “Ahah. That’s what newspapers should have done.”

Of course it’s possible that what they should have done is find themselves a Jeff Bezos. Or a John Henry. Or a Mike Bloomberg. (NY Times give him a shot – he’s going to need a job soon.)

Update: This study from the Social Science Research Network underscores what I said above. It estimates that Craigslist cost newspapers $5 billion between 2000-2007. There’s nothing newspapers could have done about this.

Post #24 – To bundle or not to bundle, that is the question.

Unbundling is the elephant in the cable MSO room. The recent report by Needham & Company’s Laura Martin that predicted cable networks would lose half their revenue if they were unbundled, makes this a tricky question.
Unbundling, or a la carte choice, refers to the movement by some consumer advocates and legislators, most particularly Senator John McCain, to force cable MSOs to let consumers choose which ad-supported networks they want. Almost all cable networks get a piece of the consumer’s monthly spend, from a few cents per subscriber up to a few dollars a month for ESPN.
So customers are paying for networks even if they don’t watch them, with no ability to opt out. That money, which is generally about half of a network’s revenue, is obviously a big deal. Cable networks and Internet sites are similar – most of them can’t make it without a dual revenue stream, advertising and pay. Unfortunately for the Internet, they don’t get subsidies from anyone.
But cable, particularly in the early days, needed to boost consumer demand by offering programming like CNN that they couldn’t get on broadcast TV. So the habit of paying a per subscriber fee to the networks started.
Having worked for a company that at one point was the largest MSO in the 80’s, I can tell you that one consumer complaint about cable has stayed constant for decades: too many channels. Yes, the wonderful 500 channel (or 1,000 now) bonanza has always been seen by many subscribers as a rip off. When they see channels on their box whether it’s 5 or 50, that they don’t want or watch, they assume that they’re paying for them – and they really are.
On the other hand, this is a delicate question for Reinventing Media, whose goal is more quality programming and fewer commercials in ad supported content. Without these subsidies, cable networks would undoubtedly have to cut back and some would go out of business. That same report predicts we would have about 20 ad supprted channels left.
Just when some of the networks are weaning themselves from off-network reruns with shows like Mad Men and Sharknado (joke), their foray into original programming may be cut brutally short on networks like AMC, TNT and yes, Syfy. We may never get to see Sharknado II where the sharks eat New York! Actually, that should be Sharkicane.
But seriously, ceasing this form of subsidy could be very bad for the overall quality of TV and its commercial load. After all, everybody in Britain has to pay a tax to the BBC if they own a TV set. Why not here?
But of course a compelling case can also be made that consumers shouldn’t be forced to pay for something they don’t want by these near-monopoly MSOs. It will be more than interesting to see how this particular made-for-tv drama plays out.

Post #20 – The TV business is moving way too slowly to on-demand.

TV is making some progress, but it’s a lot slower than it ought to be. I’d like to recommend a video of a panel discussion from the recent Videonuze Ad Summit orchestrated by Will Richmond. His newsletter is a great way to keep up with online video by the way.

The panelists are from Comcast, BlackArrow (advertising technology for the MSOs) and OMD (Optimum Media Direction, the largest worldwide ad agency buying network). The moderator is Ashley Swartz from Furious Minds (“a collective of cross trained, ad tech natives that helps companies deliver revenue and accelerate growth by aligning and defining monetization strategies with innovations mandates. We provide fluid, on-demand talent solutions across the marketing, revenue and business planning functions.” If anyone can figure out what they actually do from this description on their web site, let me know.)

It’s an interesting panel and Swartz does a good job keeping it moving. She had the best quote: “has anyone ever seen TV move fast?”. Point taken. But it’s frustrating to see the ad industry and the largest cable MSO (multiple system operator) moving at such a glacial pace toward total on-demand television and addressable ad delivery.

As Himesh Bhise, the impressive VP of New Video Services at Comcast pointed out, now that they have dynamic ad serving into on-demand streams, the next step is planning and buying tools for the agencies. That’s going to be ten miles of bad road. We knew this would be necessary a long time ago.

The reason for my frustration is that the current ad-supported TV system is repeatedly shooting itself in the foot. Actually both feet. There are too many commercials for a quality viewing experience. They are pushing the world toward HBO, Showtime, Netflix, iTunes and Amazon video, to name a few.

That’s not necessarily a bad thing – unless you can’t afford those services. Even though 90% of the viewers get their TV from cable, which they pay for, a lot of them can’t spend the extra money for the pay-TV services.

The tragedy is that everyone wins in a completely on-demand, addressable system of TV delivery, where every viewer sees his or her own stream with targeted or even personalized commercials. These ads would be more valuable and therefore there could be far fewer of them. The viewer wins. The advertiser wins by eliminating waste and annoyance. The programmers & platforms win by getting more revenue per commercial slot.

The current system is reminiscent of how AM music radio lost out to FM by doggedly sticking to their 18 minutes of commercials while FM carried half that number. It wasn’t really the quality of the signal, it was the commercial load that sank music on AM. The TV business is doing the same thing to quality dramatic ad-supported programming.

Post #17 – If you think on-screen promos are the work of the devil, raise your hand.

Ad-supported TV has a death wish. It wasn’t enough to overload programming with an unwatchable number of commercials. Now they are ruining good dramatic programs and movies with pop up animated graphics promoting other shows.

What moron decided that this was acceptable? What other morons decided the first moron was right? There seems to be nothing stupid that these people won’t do to convince us that the only TV worth watching is on HBO, Showtime, Starz and the other pay channels. Oh, and maybe PBS.

Now that consumers are skipping commercials, as well as promos, with their DVRs – and for good reason – programmers are desperate to put largely irrelevant promos right over dramatic programming. No thought is even given to where in the program it appears, not that there really is anywhere it should be.

Would they allow this in France? Where is the collective outrage from the creative community? Does J.J. Abrams like the fact that NBC is ruining Revolution with constant on-screen crap?

Viewers obviously have very little say in this or any other matters. They just keep voting with their channel changers, with more abandoning network TV every year. Three years ago AdAge quoted Adam Stotsky, president-marketing, NBC Entertainment as saying that consumers have developed a “capacity to accept multiple messaging all at once”. What a joke.

It’s one thing to scroll repetitive and often stupid news headlines across the bottom of a news program. It’s quite another to have sitcom characters marching along the bottom of a poignant dramatic scene.

It’s truly amazing to see a medium driving a nail into its own coffin.