Why Conan O'Brien Can't Go Just Internet -- Yet

This post in 140 characters or less: Conan can't go direct to Internet, because we can't figure out how to pay him http://bit.ly/4fL8V (via @joemarchese)

 

Conan's fans love him. When Conan resurfaces with his new show, many people will be ready to tune in, online and on television. This will present the same opportunity to advertisers that anyone with Conan's talent and audience always presents: the chance to engage an audience with your marketing message in exchange for money. However, even if Conan could get just as many people to engage with marketers through his online content, as might TRULY watch the commercials during a broadcast at the coveted 11:35 p.m. Monday to Friday time slot, he couldn't yet generate enough revenue to sustain the quality of his show. This is in spite of the fact that marketers who deliver their message to Conan's online audience could track  "who is watching" with a greater level of detail of, and have greater tools with which to engage Conan's audience.

Think about this for a second. Even if Conan O'Brien could generate the same audience, with even greater levels of transparency and tools for engagement, he would generate orders of magnitude less revenue.

Why? Because there's a system in place to buy television that levels the playing field for everyone -- in television. It doesn't matter if it's a lie. Want to know why Conan can't make great content for the Internet, and why the New York Times is going to experiment with a pay wall that might be a nail in the proverbial coffin? Because these online efforts are competing with the inflated "perceived" value of their own traditional offerings, which the media industry has spent years creating. Magazines, newspapers and television broadcasters have spent so long building up a system of metrics that tell a story to marketers that helps sell advertising slots. So now, all of a sudden when they have to sell their actual distribution online (because it can be so easily measured), they can't compete with themselves.

Don't get me wrong. It's not that traditional media was cheating advertisers, because as long as all the various media outlets were measured on the same fuzzy metrics, it was all relative. Everyone was selling based on the same story. But now there is an issue because people want to consume content on the Internet, and a $1000 cost per thousand (CPM) rate sounds insane to media institutions, even though $1000 CPM might have been what they were getting all along. It's a big problem for marketers, newspapers and Conan O'Brien.

So while I agree with Nick Bilton's piece in the New York Times calling for Conan to focus on Internet distribution, there are some massive elephants in the media room we need to take a very close look at to help Mr. O'Brien, Hulu and the New York Times out first. Bilton best points out just how ludicrous the current system for advertising that we are stuck in is , when he writes, "I'm sure nothing could matter more on spreadsheets and in traditional advertising meetings. But with the 18- to 34-year old crowd, who have shown undaunted support for Mr. O'Brien, a time slot is as relevant as which brand of frying pan your favorite restaurants uses to cook your meal..."

Think we'll get it figured out in time to save quality content? Do you think Conan O'Brien should focus on online distribution? Continue the conversation with me below on the comments board, or on Twitter at www.twitter.com/JoeMarchese.

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20 comments about "Why Conan O'Brien Can't Go Just Internet -- Yet".
  1. Joe Mandese from MediaPost , January 19, 2010 at 11:41 a.m.

    I agree with you 100%, and think this is part of the greater debate about how the efficiencies of digital media economics are squeezing out the inefficiencies of analog media economics... On a broader scale, it's why NBC is in the position it's in, why they don't know what the bleep to do, and keep shuffling deck chairs like Leno, Conan, etc.

    But there is a real problem here, because if the media biz cannot figure out how to pay for this stuff, what will the incentive be to produce it?

    I agree that an Internet-only strategy simply isn't viable for that sort of content, and it needs to be envisioned in a broader, multiplatform perspective in which online drives traffic, awareness, etc. to things that are actually amortizable.

    Just my 2 cents.

  2. Carl LaFong , January 19, 2010 at 11:42 a.m.

    How many web-only long-form shows have to fail before people get wise to the idea that this is not a good platform for ongoing viewership and buzz for stuff that's longer than a couple of minutes.

    It's not that the shows have all been bad, but they sure have been largely ignored. Oh, and not made any money. And if you want "fuzzy metrics," the web has got that in spades.

    As for Conan, if he can't get people to watch him on The Tonight Show, he won't get them to watch him anywhere.

  3. Paula Lynn from Who Else Unlimited , January 19, 2010 at 11:55 a.m.

    Paying for something. That's the ticket. At home base, TV costs easily can get to over $100 per month. Add in phone costs of $50-70 per month plus broadband costs. What percentage of 18-34 year olds (there still can be huge differences between 18 and 34 years olds - like 2 demos in one) have more than than to pay for more individual content after itunes, games and other forms of entertainment? Or are the parents contributing? The Conan positioning goes beyond value and fanning. It's economics.

  4. K phillipps Dane from IBM , January 19, 2010 at 12:04 p.m.

    Agree - look at Adam Carolla. Regardless of one's personal opinions regarding his content, Carolla is currently in the midst of just this type of shift. On TV, he's a star, he's an advertiser's dream, and there's a clear business model to support the monetization of that star power - both to the advertisers and to Carolla. On the Internet, he's a blogger among millions of bloggers. Yes, he's got a successful podcast - successful in that it's constantly in the most-downloaded status - but the advertising revenue is questionable (Adam and Eve is his most frequent sponsor) and it's not clear whether there would be as loyal a following if each subscriber were forced to pay Carolla directly on a per-download basis. Carolla is constantly talking about pilots and deals - all with a focus on getting back on TV. TV is where it's familiar, where there's a model for the star to make money, and where the machine is already built - and anxious to crank through the crap to produce dollars. Unfortunately for O'Brien (and the rest of us), the Internet machine is not yet ready to fund his lifestyle.

  5. Mark McLaughlin , January 19, 2010 at 12:08 p.m.

    Joe, your criticism of TV is interesting. The definition of credibility in media research is that buyers and sellers agree to use the same data in the same way in order to conduct transactions. Wouldn't it be refreshing if we could focus on that objective for online advertising.
    People Meters are not accurate but words like "lie" and "cheating" do not help your cause.
    TV advertisers are not stupid. Take, for example, the huge restaurant franchisees that range from McDonald's to TGI Fridays. They know what happens to weekend store traffic when they run TV ads during the week. They know how well breakfast meals sell when they load up on TV ads in late night talk shows. People Meters help their agencies conduct the transactions on their behalf but these companies are focused on the VALUE of the TV advertising and it is a bargain for them. Nobody is running around worrying about what, exactly, the real CPM for a specific TV spot actually is - they just want a consistent model that is useful.
    All models are wrong, some are useful. We would do better to help the online advertising business takes some strides in this direction than to reinforce the notion that TV advertising measurement is all screwed up.
    If Conan went online only, his value to advertisers would collapse - his ability to drive store traffic for chain restaurants instantly and with scale would collapse - this would hurt his ability to attract ad revenue. This has everything to do with REACH and ad effectiveness and nothing to do with the flaws in the models that are used to calculate CPMs.

  6. Joe Marchese , January 19, 2010 at 12:16 p.m.

    Mark - umm, the sentance with "cheating" began also contained the word "not". When "not" is used in a sentance, one is usually trying to imply the negative of a statement. So when I use "not" and "cheating" together, I am saying the it was "not" the case.

    As a matter of fact, I am arguing that it worked just fine for television because it focused on value and the numbers didn't matter. But it is making it nearly impossible to compare "actual" online impression value vs. the math that has always been used to measure value for TV.

  7. Joe Marchese , January 19, 2010 at 12:21 p.m.

    mark - also, take offense to you putting words in my mouth that tv advertisers are stupid. Quite the opposite, I think they have found the system and the numbers that allow a marketplace to work for television ad buying and supporting great content.

    However, the way a story can be created to help sell in traditional media markets is putting unobtainable expectations on digital, which has to deal with more transparency.

  8. Marci Montgomery , January 19, 2010 at 12:28 p.m.

    Interesting to me that this is the first article I've seen that spells out the very questions I've pondered myself regarding media costs and spending for TV vs. the internet. If online distributors can prove the same audience numbers, why can't they get the same spend?

    I believe that the answer lies in the entertainment experience. It seems unlikely that audiences would tolerate the same ad loads for online content that they do for broadcast. (Of course, one could argue that today's broadcast ad loads have driven away its customers.) In any case, the psychology behind the broadcast and online difference isn't entirely clear. Perhaps it's the feeling that the TV device is further from the viewer, both physically and psychologically, making it easier to ignore (or get up and walk away from) disruptive ads. Maybe it's the sense that broadcast is programmed, and therefore a certain amount of noise is pushed at the audience, whereas the online world feels more personal.

    Either way, there is clearly less willingness for audiences to watch the same number of ads online, and hence a lower value to distributors -- although to my way of thinking, they should command the same CPM for those few spots they do sell. My guess is that Mr. O'Brien's audience would follow him wherever he goes, but the question becomes whether an alternate environment can afford him.

  9. Douglas Ferguson from College of Charleston , January 19, 2010 at 12:37 p.m.

    Network TV is still a mass medium, so mass-appeal content will always win against "cool" content, even with declining shares. NBC made a mistake pushing Leno out of his chair when he was beating Letterman (another guy who has never mastered mass appeal). Perhaps bringing Jay back will give mainstream viewers an opportunity to enjoy a lengthy monologue at 11:35 again, without all the quirky goofiness to suffer through.

  10. Jonathan Mirow from BroadbandVideo, Inc. , January 19, 2010 at 1:17 p.m.

    1) I won't answer you on Twitter because Twitter is for idiots who have more time than sense. Stop pimping Twitter - it's embrassing. 2) I agree with your assesment of Broadcast metrics and how they don't transfer to the web - the web is not a "fuzzy" place with fringe viewing and lead-in and whatever other voodoo Broadcast has been using for years to pump up the fact that less and less people are watching. 3) It would be the ONLY brilliant thing Conan has ever done to go to web-only: somebody has to be the poster child for making the transition from prime time to web time work - and he's got enough fans to make it happen. PLUS, he's got 40 million in the bank as a departure bonus so making the big game-show bucks really isn't an issue.

  11. Lisa Totino from BGT Partners , January 19, 2010 at 1:31 p.m.

    If anyone could afford to test this out--it would be conan. I say go online-only and build the audience. the advertisers will follow. this is an opportunity to really put a different entertainment and advertiser model in place (with a professional entertainer and celebrity).

  12. Nelson Yuen from Stereotypical Mid Sized Services Corp. , January 19, 2010 at 1:43 p.m.

    I also agree 100%.

    Carl - the number say otherwise. Content consumption online is growing at a much faster rate than tv consumption is dying. (Yes, I meant to word it that way.) I think the issue is people focus on separating the content alongside the medium. The reality is the content is the same. The distribution vehicle isn't. You're looking at the END RESULT of consumption of professional content on one platform. Where others are simply arguing that the television channel's ability to distribute content is inflated against online. (Haha, made another funny. LOL Sorry.)

    The argument you're really trying to make is IF the CONTENT is worth the number, then challenge the ability for professional content to engage audiences better/worse/same as amateur. (Throw in social media into that mix as well - IE the ability/inability for twitter, facebook, myspace, tumblr to engage audiences better/worse than a professionally generated commercial.)

    Professionally generated content may or may not survive online. That doesn't really have anything to do with whether or not an entire platform is worth the dollar value currently associated with it at present time.

  13. Nelson Yuen from Stereotypical Mid Sized Services Corp. , January 19, 2010 at 1:49 p.m.

    And a high-five to Who Else Unlimited for noting the ECON side!!!

  14. Mark McLaughlin , January 19, 2010 at 2:09 p.m.

    My apologies, Joe. That was a first draft of my response and I hit the submit button by mistake when my phone rang. My bad for editing in the cloud instead of on my hard drive.

    I still believe that a sentence like this; "Because these online efforts are competing with the inflated 'perceived' value of their own traditional offerings, which the media industry has spent years creating" - implies that Marketers who buy lots of traditional media are dumb enough to be fooled by "inflated perceived value."

    It is inappropriate for me to put words in your mouth so I should not have suggested that you think client's who buy TV are stupid. It still think a reasonable person could read this post and conclude that you are saying that there is a willingness by advertisers to use misleading data, to work within a ludicrous system and to be seduced by a sales story based on fuzzy metrics when they make investment decisions for traditional advertising. If advertisers were doing that, one might conclude that they were stupid.

  15. Cece Forrester from tbd , January 19, 2010 at 8:26 p.m.

    It's not just the economics. Watching long-form video on a computer just isn't attractive enough, from the standpoint of media ergonomics, to interest most people beyond the initial novelty. Many aspects of the experience need some work, but then the rest should fall into place. I don't know what it takes for a program to jump from the Internet and show up crisp and clear on a big screen and good speakers near my couch and DVR remote, but figure out how to get it there, and if you can make an end-run around the cable company and networks so there's no pop-up junk at the bottom of the screen, I'll be happy to pay you for the show.

  16. Mike Einstein from the Brothers Einstein , January 20, 2010 at 11:23 a.m.

    Talk about all dressed up with nowhere to go. Conan to the Internet? This should delight both of his fans.

  17. John Fredette from Alcatel-Lucent , January 20, 2010 at 4:46 p.m.

    I love the frying pan metaphor. And it is not just for the young and (demographically) attractive. We (baby boomers) watch Chelsea Lately every day during dinner. Does it matter that the show is 18 hours after broadcast - not a bit. I prefer the 24 minute version without the ad clutter. More Chelsea - less distraction.

  18. Fraser Elliott from Opinions expressed herein are solely my own , January 20, 2010 at 5:35 p.m.

    When will people quit flinging boogers at offline metrics as being fuzzy and inaccurate, and start honestly admitting that the granularity and measurability afforded by online metrics has led us to measuring, and therefore valuing, the wrong things?

  19. Nelson Yuen from Stereotypical Mid Sized Services Corp. , January 22, 2010 at 2:03 p.m.

    Nobody is going to read this... if they do they won't respond. BUT...

    Fraiser: What a valuable metric is to one brand or company may not be valuable to another. The author makes a good point to also illustrate the fact that the "fuzziness" is relative. So everyone played ball with the same set of rules albeit the rules were written by a bald bear. (Get it??? fuzzy wuzzy was a bear? NM... lame joke.)

    But let's just play devil's advocate and say that "TV" metrics aren't all that fuzzy. The value is inherently there, and Online Metrics con volute the channel. Then by comparison, if I was debating on which channel to advertise on, TV VS Internet, wouldn't the most basic measure of success for me as an advertiser/media buyer be to pick the channel with the biggest audience? So.... which channel has the biggest audience? (I don't know the answer.) And which channel has the biggest growth in audience reach, engagement, etc?

    Which brings me to Cece.

    While I'm not arguing for or against your claim that long form video is hard to watch on a computer screen - I think your issue is really about infrastructure. (It's kind of like a Google problem. Scale.) In other parts of the world, bandwidth is actually at an average of 100MPS. In sweeden, it's actually a LAW that states every citizen should have access to HIGH SPEED internet. So in terms of quality, it's the infrastructure that's the issue and the capability of publishers pushing HD content to the computer screens. And as for the size??? I actually have my computer plugged into my television... I prefer to stream things from the internet and watch them on my TV.

  20. Joe Marchese , January 26, 2010 at 10:55 a.m.

    Nelson - Good points, and I don't think it was a lame joke ;-)