The Digital Corner

Full Article: http://tinyurl.com/6rp2xv

Will online video content move user online versus the TV? And how can advertisers maximize this opportunity?

I recently had a discussion with a fellow digital strategist about this article and some interesting issues came out of our conversation. Dialog below, please add your own commentary if you like.

Digital Strategist: From this article, maybe in the future people will opt in to the ads they want to see online.

Martin:  Yes, sorta, that is the same cycle that happened in email marketing (opt in marketing) so I’m not surprised at that. The execution of this is what will be difficult. Yes, TV being digital makes this easier to implement, but there is a cost with customizing the user experience to the household. The real question is will that cost be passed on to the advertiser or the viewer.

Digital Strategist: But what if watching TV was completely on demand and along with choosing your program you chose the ads you want to watch (there wouldn’t be infinite ad options, but at least a few to choose from), the only cost then would probably be server space and I think the advertiser should pay that because consumers are more likely to watch their ads in this format so they should pay a premium (to use your term) for access.

Martin: Well, yes and no. watching TV on demand already exist with DVR and TiVo. And in the future viewers should theoretically be able to pick the type of ads they want to see, but not the specific ad. That process goes back to the publisher because they ideally auction that ads space off to the highest buyer. The only thing the user should select is type of ads (i.e. luxury goods, lifestyle, etc) and when they want to see them. Everything else is out of their hands and should be out of their hands. Not sure where the server space thing is coming from, but advertisers aren’t going to pay for that. It has to be baked into the cost from the publisher.

Digital Strategist: Why? On Hulu, the viewers picked the specific ad they wanted to see. If all TV is on demand, users would theoretically be simply from a variety of pre-loaded content and watching it when they wanted to (even if that means watching it ‘live’ which I think will only matter for sports and maybe awards/variety shows in the future)….why couldn’t there also be pre-loaded commercials that users could select and watch to gain access to the shows they want?  Why should that a specific selection be out of their hands?

Martin: Because advertisers are paying for it, not the viewer. In theory what you are saying makes sense for the viewer controlling their experience, but how do the publishers make money from it? You could be limiting their reach. Ideally, as a publisher, you would want a great user experience that the advertisers are willing to pay a premium for. As awful as the Toyota zero down commercials were (http://tinyurl.com/toyota-ad), the network and the agency made a lot of money placing that ad. If viewers can decide to not see that ad, the publisher will need to find a willing advertiser with the same deep pockets?

Digital Strategist: Yeah but doesn’t that force quality from the advertisers? People will want to watch good ads and they won’t watch bad ones…and yes, I’d be limiting their reach but theoretically they’d be reaching a more engaged audience.

Martin: Forcing better quality ads is a blurry subject. Who decides what a quality ad is? As a publisher how is that making me money? If a more engaged audience means more money then, yes they would do it, but TV still isn’t a pure 1 to 1 experience. It’s a 1 to 1 household experience. If you tell advertisers you are going to give tem less reach but more of a targeting, then you have to prove why that is more effective. And because TV is not a pure 1 to 1 communication channel, you really don’t have that as a base. It’s just an assumption that could cost you a lot of money and credibility. The reality is a publisher’s power is in its audience reach. People paid a lot of money to advertise during ‘Friends’ because they had a lot of viewers, why would I pay the same or similar cost to reach less people with a branding campaign?

Digital Strategist: The user decides what quality is—just like they do in every other creative media (music, art, film etc.)

Martin: Viewers buy music and art, they don’t buy ads. Not the same thing. Quality of ads is currently tied to sales of the product which could and couldn’t not be impacted by the TV ad. They could have bought a product because of a radio ad, billboard or a friend told them. All that goes back to real customer engagement mapping.

Digital Strategist: You’re right that people paid a lot of money for ‘Friends’ because the audience was large but the days of audiences that large have come and gone. Ratings don’t lie. No show has experienced sustained viewership since ‘Friends’—not even ‘Lost’ and ‘Heroes’ in the early years. While you could make the argument that it’s because new shows aren’t as good, I think it’s more likely that its happening because people are not tuning in for ‘appointment viewing’ the way they did in the 90s.  Or rather, they are changing their appointment times thanks to TiVo, DVR –while Nielsen and others have begun to account for DVR viewing no one has quite figured out how to measure what’s happening on all those other formats. On top of that, the viewers that advertisers care about are not ‘most of America’ they are young people who are moving to these other formats en masse. I don’t think friends would be as a big a hit today as it was in the 90s because people have so many choices in terms of format for viewing and content to view

Martin: Format doesn’t change viewership and different distribution channels are just that, it doesn’t dilute the overall audience. My guess is most America is still watching TV on the couch. People are still watching TV they just don’t like the shows. And don’t forget about American Idol, people like that program. Maybe it’s a change in the type of shows. If you combine all reality shows for a network and compared to ”premium” programs, the cost benefit is obviously there, but so are the people. And advertisers do want to reach people that aren’t 21, who the hell is buying life insurance, Viagra and Sedan cars at 21 (outside of me).

Digital Strategist: Of course format changes viewership If you don’t have to rush home to watch a show because you know you can watch it on your own time, ratings will definitely be affected.  TV has historically been based on ‘appointment viewing’ of hit programs but now viewers can create their own appointments…there’s no real benefit to watching tv live anymore (again, except maybe sports). Perhaps its not dilution in the sense that hundreds of millions of people still consume ‘tv’ but its fragmentation in that where a larger majority used to watch friends, they now watch LOTS of others things which may or may not include friends

Martin: Format does not change viewership. 1 million people equal 1 million people. It’s the lack of combining the metrics across different channels that advertisers are lacking.

Digital Strategist: I also agree that tv is not purely 1:1 but that also calls for an evolution in the way that viewing is measured and ads are sold— there should be a way to account for group vs. individual viewing and have ads/content priced accordingly—not punishing the consumer because measurement models are wrong.

Martin: How do you do that without actually recording people sitting in front of the TV?

Digital Strategist: I don’t know—that’s for larger brains to figure out but it’s silly that ad prices are based on a system that is at its core, extremely flawed. In a perfect world, networks would be able to demonstrate to advertisers why moving to an engagement format vs. a broad audience format is better but no one knows…everyone is going to have to take a leap of faith (we can’t forget that there was a point in time when the current TV ad model was untested as well) and be willing to stick it out while things shake out.

Martin: In theory yes, but the networks don’t make more money from changing to that model. The demand would actually have to come from advertisers.

Digital Strategist: No, the demand will come from viewers. Ultimately if people stop watching tv in the way they have for the last 20 years, networks and advertisers have no choice but to change. Its just like music, the labels are making less money now but there’s nothing they can do about the fact that people don’t want to buy physical CDs anymore.

Martin: You keep going back to music, so I think you are missing my point here. The distribution of music changed, not the advertising. People aren’t buying advertising, they are buying products. Advertising promotes products. If products are not being sold then advertisers will look at where they are advertising and if it is being impactful.

Digital Strategist: Ok, my brain hurts

Martin: Me too, till next time J