January Sets The Stage For Faster Disruption Of The TV Ad Model

The annual hype surrounding Super Bowl ads has reached a crescendo this week, and I won't add to it. (You can always go read the article I published in the Journal of Advertising Research when I was CMO of a social media listening company, proving it was more effective to preview your ad before the game than keep it secret.)

Don't let this cacophony drown out three events this month that signal 2014 as a pivotal year in the evolution of TV advertising. Any single one would be big enough news, but the fact that all three happened in just one month shows that the drivers for changes are accelerating:

  • Charter bids for Time-Warner. Behind-the-scenes overtures broke into the open when Charter went public with their desire to buy their larger rival. This event is a symptom of underlying margin pressures and technological change that we will see accelerate this year http://forr.com/TWCinplay 
  • Verizon buys Intel's online TV service. The chip giant threw in the towel in its attempts to create an over-the-top TV service, frustrated in part by content owners' intransigence. Verizon reportedly got a very slick new user interface, but also potential to become the first "virtual MPVD", an IP-delivered TV service that isn't constrained by the geographic footprint of their infrastructure or regulatory definition of its operating territory. 
Read more

DVRs vs Online Video: Which Will Win the Battle for Consumer Viewing Time?

Since the introduction of the DVR more than a decade ago, consumers have learned they don't have to conform their lives to broadcast programmers' schedules in order to watch their favorite TV shows.

Along come online sources like HuluPlus, or the network's own websites promise even more convenience: Get any episode of any show with no need to remember to record it. But adoption is hampered by the awkward viewing experience of the cramped screens of laptops, tablets, and smartphones.

Welcome to TV viewing in the Age of the Customer. Consumers want their favorite shows when they want them, on their preferred device, with little or no effort on their part.

Linear TV, DVRs and today's online viewing experience all fail on at least one of these dimensions. Viewers increasingly cobble together a mix of sources and devices to create this level of convenience, and each of these players vies to capture more of viewers' time by improving its offering.

In my new report, "How Online Video Will Challenge DVRs' Role," I delve into how these two sources of video entertainment vie to meet consumers' increasing expectations. DVRs have the advantage of incumbency, while online viewing offers greater flexibility.

Let the battle begin!

How are you thinking about video content these days?

As I get deeper into the changes impacting television and online video, their convergence, and the possibility of entirely new forms of video entertainment content, I'm thinking about content in the following categories:

  • Long-form professional video -- i.e., produced originally to be broadcast on TV
  • Professional clips -- news, sports highlights, scenes from programs
  • Short-form professional -- i.e., Maker Studios, et al, producing videos shorter than 30 minutes, specifically for Internet distribution
  • Brand videos -- i.e., content marketing done in video form, such as Home Depot's do-it-yourself instructional videos
  • Consumer-generated videos

Then there is the medium by which they are distributed:

  • Linear, i.e., at broadcast time
  • DVR, where the consumer takes control
  • VOD through the cable box
  • Online streaming, from either the cable/satellite provider, the programmer, or a streaming service like Hulu Plus

And, of course, there are the devices on which the content can be viewed:

  • Traditional TV
  • Computer/laptop
  • Tablet
  • Smartphone
Read more

Time-Warner and CBS Settle -- And Set the Stage for the Future of Online TV Viewing?

After a month of haggling, snarking, and outright marketing war, CBS and Time Warner came to terms. While details were not disclosed (though this CNBC article has some intriguing hints) both CEOs -- Les Moonves at CBS and Glenn Britt at Time Warner -- had soothing words about how this agreement is good for everyone. 

I think the winner is the future of online viewing.

Digital rights were the second biggest sticking point (after a roughly tripling of retransmission fees that CBS initially sought). Time Warner wanted a continuation of the 2008 contract, which gave them digital rights as part of the contract; CBS wanted a separate payment. In other words, in 2008, no one thought digital amounted to anything so CBS threw them in at no cost. Now both sides see enough value that they become worth arguing over. And by retaining digital rights, CBS is free to pursue that value by licensing its content to other services like Netflix, Amazon Prime, and is rumored to be talking to Sony for its yet-to-be-announced video service.

Prior to this agreement, CBS had no incentive to think about digital distribution because they had signed away the rights; Time Warner had little incentive because they didn't pay anything for those rights. They have dabbled with TV anywhere, but it was a sideshow to their real business of cable delivery of video. 

Read more

Deals and IPOs in video entertainment and advertising: an inflection point or bubble?

A spate of events this month argues that the industry that revolves around video entertainment and advertising (I no longer call it the "television" industry!) has entered a period where long-delayed change will burst out:

  • Video ad networks/technologies YuMe and TremorVideo both went public. While neither was blockbuster, these IPOs signal that investors have enough confidence in the future of digital video that they'll put some chips on the table. They see advertisers using online video to extend their TV campaigns and this sector growing at rates far higher than the advertising market as a whole. 
  • Two $400 million + deals for cross-device video ad technologies. The much-hyped AOL/Adap.tv deal and the quieter Extreme Reach/DG deal reflect different corporate strategies, but both are rooted in the idea that the distinctions between TV and digital video will continue to diminish. Marketers increasingly realize they must put their sight/sound/motion messages on every device if they hope to achieve the reach that TV alone used to deliver.
  • CBS/Time-Warner dispute. The mutual benefit of carriage fees has made the programmer/distributor relationship cozy for years. Now this relationship is fraying, and outright wars that include blackout of stations like the current CBS/Time-Warner fight have become increasingly common in the past couple of years. The lure to programmers of streaming their programs online increases in direct proportion to how contentious this relationship becomes.  
Read more

Five Trends That Will Disrupt Europe's TV Ad Market

My new report, Convergence Disrupts Europe's TV Ad Market, looks at the fascinating landscape of TV advertising in Europe. The bottom line: disruption is coming that will make established TV buying strategies and practices ineffective. Marketers need to understand this change, and over the next three to five years, adopt new tools and strategies in order to achieve the reach and results they want from their video advertising.

While each country has unique attributes that both drive and hold back this evolution, five trends are unmistakable across the region:

  • On-demand viewing -- While on-demand is a small percentage of viewing time now, consumers are embracing the ability to catch up on missed favorite programs or discover other content on streaming services like LoveFilms. Younger viewers especially flock to these new viewing options and make up an increasing percentage of the classic 18 to 44 age demographic.
  • TV anywhere -- As relates to on-demand viewing, consumers find they're not always in their living room when they want to catch up on their favorite show. Programmers, networks, and distributors are all offering apps and services to make viewing on tablets, smartphones, and computers easy.
  • Original online professional content -- YouTube isn't just cat videos anymore. There is an explosion of high-quality professional content that won't ever be broadcast. I'll be watching these experiments closely to see how well they engage viewers.
  • Addressable advertising -- The dream of delivering different video ads to different viewers to match their interests is a marketer's dream. Long talked about -- and long delayed -- we will see the first broad market implementations this fall.
Read more

AOL and Adap.TV -- Audience, not Content, is King

I talked with several reporters yesterday about AOL's $400 million purchase of online video technology company Adap.TV. A popular question was "Why is a media company buying a technology company?" as if they had no business being combined. The published coverage focused on the value of their technology for programmatic buying and its future application to TV as the digital evolution disrupts today's television advertising industry. Important, but I think misses a more fundamental issue: Content may be king for consumers, but the consumer is king for advertisers. And to deliver consumers to advertisers in the way they want, content companies will need to have strong technology backbones.

AOL has always trumpeted that content is king -- I remember the Bubble 1.0 days (pre AOL Time-Warner, even!) when Ted Leonsis virtually coined this phrase. Even since the Time-Warner split, AOL has continued to pursue the content-centric strategy with the acquisition of The Huffington Post, Tech Crunch, and video syndication firm 5min Media. Until now.

Read more

TV Advertising Goes Cross-Channel: Threat or Opportunity?

I just wrapped up my report on the future of television: “Digital Disruption Rattles the TV Ad Market.” And, while I was interviewing and exchanging views with advertisers and senior TV industry executives, a clear and surprising find emerged…

I wasn’t surprised to hear visions of dynamically targeted ads to deliver the right message to the right household. Neither was I surprised by the dream of synching messaging on the living room screen to the screen in people’s hands. Nor was I surprised that many in the industry still want to shoehorn these new ad opportunities into the old Nielsen rating model of the TV ad market.

What surprised me was the general optimistic outlook that these new developments will bring even more dollars to the TV ad market.

For decades, talk of the impact of cable television, VCRs, DVRs, online advertising, etc. has usually predicted the end of TV’s reign as marketing’s most powerful medium. New technologies would sap advertising effectiveness and splinter the audience. New advertising opportunities would be more engaging and measureable than the soft branding of TV.

But the fact is, the opposite happened: TV is stronger and more important than ever. Even as prime time TV audiences have shrunk, fragmenting across hundreds of channels on the cable spectrum, the rest of the media landscape has fragmented and faded even faster.

But perhaps I should amend my statement that TV is more important than ever: something like “video entertainment content originally created to be broadcast on television networks is stronger and more important than ever.” As these programs find new audiences, on new devices, at new times in viewers’ lives, it creates opportunities for video advertising to draw more dollars and more advertisers to it.

Read more

Cannes Provides Backdrop For Latest WPP Digital Agency Acquisition

Cannes this year is hosting more and more evidence of the disappearance of lines between “digital” and “advertising”: A mobile category was launched; the new Branded Content and Entertainment category includes subcategories such as “best use or integration of user generated content”; Twitter co-founder Jack Dorsey was named Media Person of the Year and . . .

. . . WPP used the international advertising festival to announce it is acquiring digital agency AKQA and incorporating it as a separate network within WPP.

AKQA is a great pickup for WPP. It's not only one of the biggest indies left but one of the best at blending creative and technology skills in one organization — a mix that doesn’t always live together easily.

It also fills a hole for WPP. AKQA aspires to a category of agencies I call “brand transformers” that are about more than communications and look to leverage digital capabilities to help clients enter new adjacent product and service areas.

Very interesting that it will be a standalone brand and not folded into one of WPP’s existing networks. Digital agencies VML and Blast Radius bring similar capabilities but are locked in the Y&R network; WPP gains flexibility by having AKQA “at large” in its holdings. In addition, AKQA is a little too big to fold into another network easily, but will need to build heft quickly if it wants to remain separate. Otherwise, in a couple of years, WPP will merge it with other assets.

I think it’s likely Interpublic and Omnicom will react. WPP clearly sees digital as essential to its future. This acquisition definitely puts some distance between WPP and Omnicom, which had been pretty close, and Interpublic, which has a couple of strong assets but doesn’t have the strategic focus that WPP and Publicis do.

Read more

For P&G, Will The Revolution Be Digitized? Not The Way You Might Think

 Last week’s announcement by P&G CMO Mark Pritchard that it intends to cut marketing costs in part by shifting money from TV to digital sounds like a possible revolution in the marketer’s traditional TV-centric approach. I agree with my colleague Tracy Stokes that this is not the end of TV.

Nor is it the beginning of a new drive for CPG brands to build digitally based one-to-one, CRM-style customer relationships.

But it is an opportunity for interactive marketers to increase their presence and impact on brand teams if they look ahead of the curve on how the increasing digitization of media, adoption of new devices, and impact of big data will have on TV advertising. Interactive marketers should position themselves to lead brands in the future by adding the tools and concepts of mass branding to their skill sets, then mapping their career path to these changes:

  • Today: Brands like Tide and Bounty still thrive with a brand strategy rooted in mass reach and emotive messaging. Now that is best delivered by TV, but Internet advertising has played the role of reach extender for years. The growth of online video should enhance this role but interactive marketers risk losing control of this medium unless they set aside their traditional action metrics and learn to speak mass media metrics with their colleagues.
  • Tomorrow: Digital will become more important as the Splinternet further fragments media consumption. But tablets and smartphones offer more than reach extension through complementary experiences that will key off the TV ad. Traditionally trained TV experts don’t have the conceptual framework to envision these opportunities; interactive marketers who can plan the reach and design the experiences will have an edge.
Read more