Sorry, Internet -- Television Still Getting Last Laugh

While the Web aspires to steal television’s role as a branding platform, with its roots as a direct-response tool, it remains a promotional platform at best, according to Ari Rosenberg, who in his recent post highlighted a surprising reality: “Dave Morgan spun what many may be feeling: Something is amiss inside our own ad revenue growth.  He points out that 20 years into this business, online spending is still predominantly driven by other online companies.  He asks, where is Pepsi, and where is P&G?”  


The Web is Kinda…Cliquey…

That can’t be right, can it?  Let’s see.  In Morgan’s original post, he points to Pivotal Research’s Brian Wieser’s findings that: “The Internet ad industry’s increasing dependence on large endemic marketers for growth is cause for concern for some. Seven endemic Web advertisers -- Google, Amazon, EBay, Priceline, Expedia, Groupon and IAC -- collectively spent nearly $7 billion in U.S. online advertising in 2011. The good news is that spending was up dramatically from 2010, contributing to a 20% overall growth in the online ad market year over year. The not so good news is that excluding these seven companies, the rest of those who advertised only grew their online expenditures by 10% in 2011.”

Ironically, after founding 24/7 RealMedia and Tacoda, Morgan did the unthinkable: he launched a startup based on the premise that TV ads may be “wildly underpriced,” effectively betting against the Web, the media that made him successful.

Is he a hypocrite?  Nope.  A sellout?  Try again.  He’s just realistic and candid.

This, I Swear, is the Best Slice of Bread… Ever!

Before online video has really met its own expectations, we’re now pointing to the iPad (and tablets) as a game-changer in video viewing.  While you may view tablets as an extension of Web video, in reality it’s different for a few reasons, one being the times when people watch videos online on their PC relative to their iPads.  The other is that TV or Web content isn’t necessarily going to prevail on that form-factor. Indeed, according to NBC News’ Chief Digital Officer Vivian Schiller: “Brands and content creators shouldn’t focus on being platform-agnostic; they need to focus on becoming platform-committed.” 

Celebrity Gold Hunt

Right or wrong, this has many implications -- among them, that creating celebrity-driven channels and programming may not be a wise bet.  Yahoo and YouTube are betting the farm on it, as did OWN, whose lackluster ratings serve as a reminder that casting celebrities in shows doesn’t automatically translate to success with audiences.

I know, comparing OWN to YouTube/Yahoo is akin to comparing apples with oranges, but it’s all fruit in this case.  In fact, at a recent industry conference, a big media company executive admitted that audiences preferred generic voice-over to big name talent -- but since advertisers preferred big name talent, the trend was here to stay.

The Web Shrinks Things: Promotional vs.Commercial

Indeed, I’ve long argued that online video remains a promotional medium, a place that shrinks total marketing expense required.

But it might inadvertently shrink the economic activity.

This is happening: “Consumers will watch more movies online than on DVDs in 2012 for the first time, but will spend far less doing so.  The number of movies rented or bought online from outlets like Netflix and iTunes will grow 135% this year to 3.4 billion, according to IHS Screen Digest. But the research firm said people will spend only $1.72 billion on digital movies, compared to $11.1 billion on DVDs and Blu-ray discs.  In total, online stores and services will account for 57% of movie consumption in 2012, but only 12% of spending.”


History Does Repeat Itself (But You Can’t Always Predict What Will Happen to Whom)

While the Internet caught both the print and music industries off guard, it’s important to note that the television and motion picture industries have always been technological pioneers in their own right; the issue was whether they wanted to focus on offense or defense.

Entertainment isn’t about Data and Analytics

It didn’t always have to be this way.  While Hollywood sold through programming, branding and unique opportunities, online sought shortcuts and focused on data, analytics and the Terrible Ts (tracking, targeting). 

That promise fell short with marketers and programmers (who kept the cream of the crop offline).  This meant that despite the increased time spent online, users were consuming anything but top-shelf programming, which in the end has kept online video grounded relative to expectations.

What Does This Mean?

If your business model requires the largest marketers shifting the bulk of their marketing budgets online, you might need to go back to the drawing board.  Some companies are premised on the fact that traditional media companies (and thus, possibly, the big marketers) won’t embrace emerging platforms in quite the way forecasts suggest. That’s Morgan’s (and I presume a few other entrepreneurs’ bet).

After all,  despite the destruction of many news organizations and newspapers, it’s worth noting that globally, print advertising will still outdraw online advertising by a considerable margin: $122 billion to $83 billion, according to the Global Advertising Forecast from Strategy Analytics.

Hold the presses!

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5 comments about "Sorry, Internet -- Television Still Getting Last Laugh".
  1. Patrick Fitzgerald from Poptent , March 26, 2012 at 5:32 p.m.
    Not so quickly Ashkan; TV STILL getting the last laugh, implies the very last laugh has not been had. Citing another fine MediaPost Publication today; http://www.mediapost.com/publications/article/170853/coke-to-focus-on-events-loses-faith-in-30-second.html Coke says the :30 second commercial is not the way to do it any more. The entire media space is in transition, and there is a decided lack of Best Practices that would bring the sea change that digital practitioners have been seeking/predicting/waiting for. Two weeks ago Marc Pritchard CMO and Global Engagement Officer for P&G was referring to the emergence of the mobile platform when he said: “To address these [technology] forces, our vision is to build our brands through lifelong, one-to-one relationships in real time with every person in the world,” He cannot be speaking about any traditional media platform when he speaks of this vision. While Television may indeed STILL be getting the last laugh; he who gets the VERY last laugh laughs BEST. The premise of your piece today implies that TV has some control over their fate. When P&G and Coke issue statements like this, we should be reminded that it is clients, and their economic motivators that will determine how the market will unfold.
  2. Ashkan Karbasfrooshan from watchmojo.com , March 26, 2012 at 6:02 p.m.
    Yes, but Coke probably pays more for that cup to be placed on the table of the American Idol judges than any website charges for a full home page takeover etc. Listen, I'm a big-time bull on all things online, but a bit less boosterism from online entrepreneurs and execs would probably help us have more credibility with decision-makers. That's all.
  3. Daryl McNutt from Adaptive Media , March 26, 2012 at 8:02 p.m.
    I do agree for now. I think things will continue to evolve and the gap will shrink. That's the fun of the business. Really nicely done. Time will tell.
  4. Patrick Fitzgerald from Poptent , March 27, 2012 at 10:27 a.m.
    The boosterism has hurt the digital space to be sure. The history of the digital space is full of decisions driven by the economics of digital/publishers, not the brands. Most recently the agreement to sell "impressions" online. Impressions represent the very lowest value proposition from media, and are a waste of bandwidth. Too many digital plans start with "we need to be on Facebook, there are 800 million people there". Digital at it's highest value cannot be a reach medium. P&G are looking to develop one to one relationships, that is not a linear REACH vision. The final capitulation will come when TV is valued only for what it can deliver, impressions and digital develops engagement metrics that appropriately value what they deliver, real engagement with mobile consumers and the ability to execute transactions. There is sufficient mass in the space to focus effort on delivering fewer, higher quality engagement opportunities. TV will be used to drive awareness, digital will provide engagement/interaction/conversion/transactions.
  5. Walter Sabo from SABO media , March 28, 2012 at 2:45 a.m.
    Coke pays $25Million to be on the AI table. P&G spends 1% of its global ad budget online. Pepsi uses HITVIEWS's web stars to reach online customers.