Somewhere Over The Rainbow: The Internet, With Two More Zeros

by , Jun 4, 2012, 8:20 AM
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Never mind Hollywood and New York. If you’re looking to keep the TV industry alive, maybe you should think about Emerald City.

Perhaps you recall Dorothy, small and meek. She schlepped around Oz for two-and-a-half hours with three freaks and a Cairn terrier trying to find the wizardry to get her back to Kansas. They dodged flying monkeys, spent a night doing mad opiates, and brutally melted Cora, the Maxwell House lady -- not realizing that Dorothy had the power to get home all along. All she had to do was click her heels three times and deliver the safe words: “There’s no place like home.”

I mention this because for besieged broadcasters, there may be a Glinda, good witch of the North. Her name is Dave Morgan, who says TV has had the power to solve its existential problems all along. All it has to do is click its data together and say, “I know who watches what, when, in every home.”

“Too many people see television as the past, not the future,” says Morgan, founder and CEO of Simulmedia, which calls itself a data-driven audience network, but which is basically the online ad network model adapted for broadcast and cable. “We don’t believe that TV is going to the Web. We believe that the Web is going to TV.”

Morgan would be the guy to see things that way. He was the founder of the behavioral-marketing firm Tacoda, which was sold to AOL five years ago for $275 million. He previously founded Real Media, an early ad network, which eventually became 24/7 Real Media and was acquired by WPP for $649 million. If this were me, I’d be fly fishing in Nepal and playing gin rummy with Kruggerands, but whatever; he has the bona fides. He also has the benefit of looking at the gathering catastrophe that is broadcast without preconceived notions about how things should be done, nor any stake in the status quo.

What he has instead is 300 terabytes of data.

“We have every program schedule for every one of 6,000 systems, every one of the 55,000 ads that run on TV every day, and we have the actual anonymous viewing of 30 million Americans, every second of every day, and we have the entire 30,000 Nielsen panel, box by box.”

And by crunching the data along Tacoda lines, “we can predict with extraordinary accuracy what is watched in 116 million TV households. This is rocket-science data management.”

As a consequence, he says, Simulmedia can create ad schedules that embrace not a few major networks and gorilla cable channels, but of much of the long-tail of the cable universe, so that audiences are aggregated at peak efficiency. The result is that advertisers can benefit from the very fragmentation that is playing havoc with the business models of broadcasters and marketers alike. They can enjoy real reach, without the costly over-frequency they get by desperate buying of GRPs from a handful of the usual suspects.

“Inertia in the television industry,” Glinda says, “is impossible to exaggerate.” Not to mention denial. Not to mention gross misrepresentation. “Almost everyone in this world is living in a dream. I have never, ever in my life been lied to as much as I have in the last three years. What these agencies are telling their clients, it’s unbelievable.”

But wait, you might say -- what about privacy? TiVo ran into all sorts of aggravation from customers who were creeped out by the service’s ability to behaviorally target programming, never mind ads. It was the, “My TiVo knows that I’m gay” problem – one sure to become a far greater issue if 30 million Americans start noticing ad targeting based on their personal viewing habits. Indeed, Morgan believes we are moving inevitably toward an opt-in model on set-top boxes, game consoles, Blu Ray players and other devices capable of gathering usage data.

And he favors opt-in, for what he concedes will be the small percentage of viewers who wish to have the benefit of software that helps them find the programming needles in the 1,000-channel haystack. Let’s say a mere 1 million households opt in, versus the 30 million he gets data on now. No problem.

“Today all of television advertising in the country is based on a panel of less than 20,000 [Nielsen] homes,” he says. “You don’t need to have many people opt in to have drastically better data than what is used to measure TV today. One percent opt-in gives you more than a million households. The projectability goes off the charts.

“TV starts in this game with extraordinary effectiveness. No other medium can drive the awareness and emotional response of the 30-second interruptive, sight-sound-and-motion of TV. It doesn’t need hyper-targeting to unleash its potential. It just needs better targeting.”

But wait. Morgan got in touch to respond to last week’s column, asking for dissenting views about my apocalyptic vision of the TV business, which includes my 7-year-old prediction that some or all of the Big 5 English-language networks will be off the air by 2020. Now, the question was never “Is TV a good ad medium?” Of course it is. The question is, will the nets be able to survive fragmentation and associated loss of ad revenue and still keep the lights on? Simulmedia’s model implies more money, not less, flowing out of the big networks and into the long-tail.

Won’t that just accelerate the chaos scenario?

“It doesn’t break the model for broadcast,” Morgan replies, “but it could break the model for some broadcasters. Collapse won’t sweep everybody away, but it will sweep away those who don’t act.”

Ironically, some of Simulmedia’s biggest clients are networks, who use the service to target viewers all over the telesphere with promos for upcoming shows. Because data tells them exactly where to trawl for viewers. Sort of like the Wizard of Oz madly clicking his own heels. This suits Dave Morgan just fine. After raking in gajillions in his online adventures, he himself is feeling he is finally at home.

“I like TV,” says the Good Witch of the Northeast Corridor. “It’s the Internet with two more zeroes.”

5 comments on "Somewhere Over The Rainbow: The Internet, With Two More Zeros".

  1. Dan Auito from Next Century Studios
    commented on: June 4, 2012 at 11:09 a.m.
    Niche specific HD Content providers who properly keyword, tag, title and describe the high quality programs that they create, while syndicating them through online video sharing sites will deliver the exact program surfers want at that exact moment they perform their search. Old school will always find ways to justify old school marketing advancements, unfortunately technology has forever changed the game and the consumer is now in control. Dan Auito COO www.ncs.tv
  2. Bill Duggan from ANA
    commented on: June 4, 2012 at 12:59 p.m.
    I’d love to know if this is a possible solution for more granular commercial ratings. Not C3 averages, but brand-specific commercial ratings as that would help answer the question, “How many people actually had the opportunity to see my spot?" There is the need for greater accountability in television advertising and brand-specific commercial ratings would go a long way towards enhancing that accountability and would support the needs of marketers by: most fundamentally, providing better estimates than C3 for viewership of specific commercials; serving as a copy testing tool to identify the stronger and weaker executions within a commercial pool, enabling advertisers to pull (or fix) weaker spots and heavy up on stronger ones; functioning as an indicator of commercial wear out; providing a better understanding of impact differences related to such factors as pod position, length of creative, and national versus local placement; better establishing the value of in-program and in-game features and sponsorship; helping provide a barometer of the “stickiness” of specific networks for their commercials. It’s time for the television industry to make brand-specific commercial ratings a reality!
  3. Douglas Ferguson from College of Charleston
    commented on: June 4, 2012 at 3:36 p.m.
    Egad, Bob, I can't believe such a smart guy as you lets Mr. Morgan get away with the illogical "tiny representative samples work no better than tiny nonrepresentative samples" claim! Small samples don't work despite being tiny; they work so long as participants are not limited to just those who opt in. Measurement validity is linked to representativeness, for which the sworn enemy is self-selection. Sure, I know Nielsen has a 50 percent nonparticipation rate, which is a flaw, but what Morgan describes is far worse: a wholly self-selected sample. Who can believe that people who opt-in exhibit the same behavior as people who refuse to opt-in? Apparently you.
  4. Carolyn Hansen from Hacker Group
    commented on: June 4, 2012 at 4:33 p.m.
    I love targeted marketing. LOVE it. So this sounds great to me. And, if I'm understanding it correctly, it seems like it would also open up television advertising to much smaller advertisers. Hey, Google and eBay got pretty big working with small potatoes. As far as the non-representative sample issue -- can't the "sample" just represent themselves? If there are millions in the database, you may not need to go outside of it. Or you can develop a test to see if the opt-in database can be used effectively as a proxy for the rest of the audience. It really doesn't have to be perfect. In my opinion.
  5. Richard Walker from iTVX
    commented on: June 7, 2012 at 3:21 p.m.
    @Bill Duggan, your wish has come true with Rentrak's TV Essentials. They have second by second audience data from 19 million set-top boxes. The whole indunstry do not like these data because they show that the audience drops significantly when commercials appear. Sometimes the truth hurts.

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