Media Meltdown: The Death of Networks?

[Posted by David Card]

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After my panel on The Future of Media at last week's Marketing Forum (coverage from colleague Jeremiah Owyang here, and more from David Berkowitz here), my ultimate boss, Forrester CEO George Colony came up and said, "Good work, but you missed the most important thing. There won't be any TV networks in the future." Eh, I beg to differ. So file this response under "career-limiting moves, number XXXIII."

Here's what a TV network does:

• Fund a portfolio of shows
• Program and cross-promote them
• Sell the shows' audiences to advertisers

For distribution, cable nets collect fees from carriers (or pay them if they're start-ups), while the broadcasters still own  some local stations, and pay other affiliates to carry their shows. In an increasingly on-demand, multimedia, Omnivideo world, the first three bullets remain critical -- and best handled by a company that looks a lot like a TV network. It's distribution that gets disrupted.

I don't buy that every man is his own programmer or that all viewing will be consumer-paid. I don't see enough scalar economies for smallish studios on their own. Hits will still matter, and they'll carry most portfolios, just as always. Hulu and YouTube feel like hybrids between carriers and networks, and their strengths right now are in distribution, with some cross-promotion thrown in. Apple's a retailer, at least for the moment.

In a conversation with MTV Networks creative exec Kenny Miller, he said that in the brave new world, networks would have to re-invent "lead-in," which today is their primary linear promotion tactic. Miller figures 21st Century lead-in comprises search, social elements, and recommendations. I think he's on to something.

Some relevant Forrester reports for clients behind the paywall:

Omnivideo
The Internet TV Value Chain
Preparing for the Online TV Backlash
Modern Media Mix Planning

Media Meltdown: Online CPMs to Zero?

[Posted by David Card]

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Last week at the Marketing Forum, Forrester COO Charles Rutstein challenged a couple of us media & marketing analysts to answer the question, What happens when online CPMs get so close to zero that they make ad-supported businesses unsustainable? He drew scary charts on a napkin.

It's true that online media has been nearly overwhelmed by an onslaught of inventory -- there's something like 80% more online ad space, a lot of it from social media, than there was a couple years ago. CPM-CPC "arbitrage" is being squeezed. (It's harder for a branded online media company to sell impression-based inventory to a network who targets it and resells it on a click-through basis.) Prices are being forced down across the board.

This is not all good news for marketers. If brand-name media companies can't make it online, it'll be pretty tough to do brand-oriented marketing, and difficult to construct integrated cross-media campaigns. Targeted remnant inventory can't do everything.

But for all the macroeconomic forces of "infinite inventory," some ad space -- and some audiences -- are worth way more than others. Cut clutter, experiment with new formats, and know your audience really, really well, is the easy advice for online publishers. Build out a marketing platform that's flexible in terms of targeting and in incorporating data from many sources. Encourage comparison. Add other sites' inventory to your own. Pit your salesforce against multiple ad networks to see who can best monetize some sections of your site (but hold back the best stuff.) Engage marketers and agencies deeply (even while you're trying to steal some agency functions.)

How can online publishers work with marketers to create win-win solutions? Let me know your thoughts.

Meanwhile, here are some relevant Forrester reports available to clients:

Six Ways Publishers Can Boost CPMs
Advertiser Hot Buttons
What Agencies Want from Online Media

What Does the Media Meltdown Mean for Marketers?

[Posted by David Card]

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The Advertising Age headline reads “Future May Be Brighter, but It’s Apocalypse Now.”

 

CBS, the number one TV network, saw its ad revenues decline 13% in 2008, and that was before the recession really took hold. CBS’s radio business was down 12%. The former home of “must-see TV,” NBC had two shows in the top 20 for the week of March 30, and they were both ER. Unfortunately they were the series finale and a retrospective. NBC will be replacing its 10PM line-up with a Jay Leno strip because it’s cheaper than producing dramas and sitcoms.

 

It’s one thing when the Rocky Mountain News stops printing. But the venerable New York Times might have trouble making its debt payments, and is threatening to shut down the Boston Globe if its unions don’t cave. Meanwhile, Oxbridge Communications’ Mediafinder says that 335 magazines launched in North America in 2008. But 525 folded.

 

The most recent Forrester advertising forecast is the Jupiter model from December (we're updating it as I type). We were projecting negative five-year growth for US “off-line” -- i.e., not online or digital -- advertising as a whole. The total spending on print and radio will be down double digits in 2013 versus 2008. TV will be down double digits this year, but will eventually start to grow again, probably in 2011.

 

Clearly, ad-based media companies are scrambling.

 

But what does this mean for marketers?

 

• Hits still matter. Sure, media’s fragmenting, but the Super Bowl and Amercan Idol still pack ‘em in. They’re not cheap to produce, or to buy. Joint sponsorships, crafted early in programming development, will gain traction.

 

• All media is multi-media. Audiences are demanding their content on whatever screen they want. Some media brands have good multichannel stories (ESPN, CNN, Comedy Central, Nickelodeon, the Wall Street Journal). But online is dominated by pure-plays like Google and Yahoo, who don’t have cross-media capability.

 

• Integration might get harder. So if you want to do cross-media integrated campaigns, you’ll have to pick your partners well. Otherwise it’s up to media buying agencies that generally lack creative thinking about engagement, or online ad networks powered by robots. That’s fine for direct marketing, but how do you do engaging branding?

 

• Social is the biggest thing in media. And no one really knows how to do it yet. How can media companies harness their fans’ creativity, use them for promotion, for distribution? There are early examples of fun “meta media” -- media about media, like Television without Pity, TV.com, Rotten Tomatoes, and, yes, reviews on Amazon and Netflix.

 

• Dis-intermediation seems unlikely. Agency “studios” have pretty much flopped. Creating great content is an art and a science, and I remain skeptical that popular entertainment and information media can be created in-house. And even then, it still needs a distribution channel. The current media industry value chain may have some loose links, but it doesn’t feel like it’s ready to be replaced completely.

 

• Branded entertainment is a must. Which brings us back to deep partnerships and co-sponsored content. In order to create win-win-win content  -- good for marketers, good for programmers, good for audiences -- it feels like marketers and media companies have to get together sooner in the process. Not every network can be HGTV or the Food Channel, where product promotion and placement is a natural. It’s going to take more than getting Jack Bauer to use a Sprint phone and a Cisco router.

 

I’d like to hear what you think. Stay tuned: I’m working on a series of reports on how marketers should handle the media meltdown. And check out my “Future of Media” panel at Forrester’s Marketing Forum in Orlando this week.

See you in Orlando: Forrester's Upcoming Marketing Forum, April 23-24, 2009

[Posted by Jeremiah K. Owyang]

The Forrester team is gearing up for yet another great Marketing Forum, this time, in Orlando, Florida. We've carefully selected speakers to take on the hard topics of the recession, ROI, and taking risks.

We've got a strong line of speakers that include Marty St. George, SVP of Marketing for JetBlue, Greg Clayman, EVP of Digital Distribution for MTV Networks, and Annis Lyles, VP of Media and Interactive for Coca-Cola North America. Including presentations based on latest research from Shar VanBoskirk and Peter Burris.

The venue is located at the Disney's Yacht & Beach Club Resorts in Orlando, and if you can take your family, you can not just get educated and network, but enjoy some Florida sun.

To sweeten the deal even further, Forrester has cut $300 from the event price and is offering a free night at the hotel.

The night before the official event, we'll be assembling some of the local social media practitioners at a Tweetup on the night of the 22nd, where you can come and learn, network, and meet with online influencers.