January 25, 2023
Commentary
Saving The TV Business Model
- by Charlene Weisler , Op-Ed Contributor, August 13, 2015
So with the greatest respect, I say to my friends in the industry: I can’t help but feel frustrated by your slow pace implementing solutions to the changing media environment.
There are many reasons why this stagnation occurs. Internal office environments can sometimes foster fear of change, luddite-ism, risk-aversion and myopia. Competitive external business forces can sometimes discourage collaboration across corporations. And so we tread water until we either swim or drown.
The current marketplace demands that we take more concrete action. Here
are some suggestions on ways to invigorate the business model:
Agree to universal program and ad IDs. Measuring audiences across all possible platforms in a fail-safe,
accurate manner is pivotal to maximizing revenue. But it is taking far too long to reach a consensus on standard universal content recognition IDs for programs and ads. Once we can all agree and apply
these codes, we can truly maximize the value of all content across all possible and potential platforms.
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“We need to make an honest and compelling case for what we need and stop accepting subpar workarounds as the best we can do,” says Janice Finkel-Greene, executive vice president, buying analytics, Initiative MAGNA, and a strong advocate of universal codes. “Systems that were once facilitators have become impediments, but it’s a situation that goes largely unrecognized because it has evolved so slowly. Now it’s something we live with like a morning traffic jam.” But she warns, “The universal codes are only the first big step in the process. Once they exist, we will have to capture and report them by media outlet for verification and audience analysis.”
Stop negotiating and selling on age and gender proxies. There is nothing more frustrating to me than the continued use of the current proxies of age and gender to transact on television. Not only are they arbitrary breaks, (who came up with Adults 18-49 anyway?) they hardly reflect actual spending habits (which are based on lifestyle more than age). They also terribly undervalue inventory by discrediting and ignoring some of the biggest spenders of certain consumer goods, which are often Adults 50+.
On the front lines of this issue is Hanna Gryncwajg, senior vice president, sales, for RLTV, whose network targets Adults 50+ (which now includes the first wave of Gen Xers). She says, “I believe audience-based buying, driven through purchase and behavior data, would be a win-win for marketers and consumers.”
Compensating for declines by increasing the ad load only makes it worse. How many times do we “solve” for under-delivery by increasing the ad load? While it might be a short-term fix, it can soon become a vicious cycle that only denigrates content quality, encourages more ad skipping, and further erodes overall delivery.
There are probably many solutions to this problem. A few years ago, I advocated for pod curation: higher-performing ads could be rewarded with better pod position. Pod lengths could be calculated more scientifically – perhaps by program genre. Neuroscience precepts could be used to improve promo performance in the “A” position and rank ads more effectively. Taking these steps might even help slow ad-skipping.
Steve Sternberg, former senior vice president, research, at ION Media, and author of The Sternberg Report, has conducted extensive pod research. He says, "Part of the problem is that Nielsen's C3 measurement does not measure commercials, commercial pods, or DVR fast-forwarding. It is really a pretense at measuring commercials. C3 was designed as a one-year band-aid until exact commercials or commercial pods could be measured by industry post-buy systems. That was eight years ago.
“We know that the first minute in a pod over-delivers C3 by 20-30% while every other commercial minute within the pod under-delivers C3. So adding additional commercials to a pod should result in further rating declines."
It used to be easy to kick the can down the road and leave the solutions to the next generation of television executives. However, at this business tipping point, we need to act courageously now to ensure that there is a successful next generation.
I agree with you, Charlene, however it should be remembered that "targets" like adults 18-49 are not really targets at all. Rather they provide a demographically tilted umbrella "currency" for buying GRP tonnage which is later split up among an advertiser's brands using somewhat more scientific methods. Take the upfront, for example. There is a great deal of talk about using product usage indices applied to Nielsen ratings, as if this is a new idea---which it isn't. But how do you handle a 15-brand corporate upfront buy using product usage indices---even if the sellers agreed to this? Each product has its own product usage signiture. Since the corporate buy lumps all of the brands together do you average all of the divergent indices together? Of course not as you would have many of the highs cancelled out by the lows. What then? Do you negotiate the upfront on a brand by brand or product category basis? There are thousands of brands. How would they all get bought within a ten day period? Also, wouldn't going brand by brand, put the advertisers at the mercy of the sellers?
I realize that some of the things that are standard practice in TV seem ridiculous, however, sometimes they are not when all of the ramifications are considered. And, just for the record, there are better ways to use demos in the upfront buying process as we point out in an about-to-be-released report on the upfront.
While the mention of a slow pace in the industry might generally be accurate, there have been recent examples of top-end media companies doing things that, 5yrs ago, woudl ellicit a response of "that will never happen in television!" That said, transitioning to these new concpets through legacy concepts such as age/gender proxies, provides a comfortable way to ease an ultra-successful industry into change (gasp).
These examples of innovation by the most premium of media companies will be what shifts the mindset and breaks the perceived stagnation.
They're all done. People are going to begin programming themselves. Its ridiculous to let any other institution do it for one. The last of old dogs like David Letterman finally give up the ghost. So yesterday (Thurs) Johnny Carson Productions announces Johnny's reruns will air at roughly the same time they used to five nights a week, with the 90 minute shows airing on weekends. Reruns are not going to save the existing broadcast systems. The networks and cable are exhausted. Its time for something new.
Upfronts provide risk free development capital to create content.
Innovation and technology is changing this dynamic.
Amazon and Netflix are paving the way with audience data to select and produce content.
Linear TV will need to be re-invented.
Unfortunately Major Broadcast TV networks are not innovators.
Therefore Partnerships are the only way forward in an ever Audience Fragmentation landscape and unbundling of the payTV bundle where viewers choose what they want.
Leonard, could you explain what you mean by Netflix and Amazon are using audience data to select and produce content. Before I comment, I'd like to be sure about your premise here. Thanks.
By this time next year user generated content in the form of live mobile streaming will become more popular than broadcast television programming. Think Apps, like periscope and meerkat. And CPMs and GRPs will be replaced by GSI, (Guaranteed Sales Increase). It's already begun. The revolution WILL be televised!
Dream on, Mark. At least Leonard has a rationale that follows---to him and some others---a logical path. That allows people like myself, who think that the revolutionary vision being epoused is way too exaggerated, to have a semi rational dialog with him.
Charlene's first point is the strongest. Once the eco-system agrees on a universal approach to measuring viewership through technology (such as embedded QR codes on all programs and ads) then the advertising world can move quickly with cutting edge approaches to efficiently deliver targeted audiences to advertisers. Increasing the ad load seems like the exact wrong answer.
Great conversations here! Thank you all. My point with proxy measurements is that they are at once too broad and too specific to mean anything and the ranges omit some of the most influential and monied audiences. We plan on behaviors regardless of age and gender but steward and post on the age gender proxies which erodes the value of many networks' inventories. In a time of eroding audience for linear TV it is in their interest to advocate for behavior/lifestyle measurement I stated of age gender. Also, linking to sales sounds good but omits many advertisers like longer range purchases like cars and durables and image campaigns for branding.
Instead of age gender....sorry for the autocorrect.
The problem, Chris, is that you can't measure "viewing" electronicly. All you get is that the content was on the screen, not whether anyone was even present let alone paying attention. That's what makes it so difficult. And this is compunded by the natural desire of the vested powers to protect their research investments.
I doubt that we will have real progress on this across media platforms for some time, if ever. Imagine what would happen if TV's combination of metered set usage coupled with self-repoted claims of "viewing" were set as the standard. How would digital comply----not only regarding the "visibility" mess but also by showing that users actually "saw" the content in question when it was "visible"? That strikes me as a really tall order.
Ed, l can't tell whether you are bashing me, agreeing with Leonard, or totally indifferent. However if you have any logical or rational reasons for agreeing or disagreeing with any prediction made in my post, l would love to read them.
Mark, I don't bash people, just debate with them. As for Leonard, we probably argee, directionally, but not at all in scale or timeing.
My comment regarding your post about live mobile streaming falls into the same category. Sure, it's growing---I assume you mean live video usage, by the way---but in terms of volume---if that's how you define "popularity"---it isn't even close to TV and won't be next year, either. For your statement to be true---again, I assume we mean live video usage---- for mobile to beat TV, the average person---that's all persons---would have to devote at least five hours per day to mobile video streaming. What evidence to you have to support that?
Mark, I forgot to point out that I seriously doubt that digital sellers---even for mobile video ads----will guarantee sales results to advertisers, so I do disagree with you about this. Unless you mean in a general, not a specific way.
Typo Alert: I meant "timing" not "timeing" in the second sentence of my first reply to Mark. Haste makes waste.
Ed, by "live mobile streaming", l mean, individuals using mobile smart phones to broadcast themselves live to a global audience of other mobile smart phone users. Technology wise it's possible right now with Apps like Periscope, Meerkat, and many more in development. By "popularity" l mean people will be more interested in broadcast ing and watching themselves than watching linear television. I use YouTube and the billion videos made and watched on that site as a prime example of people more interested in watching themselves. In addition there are 2 billion smart phone users so the technology is literally in everyones hands right now. Add the fact live mobile streaming is easy, instantaneous, and interactive and the revolution is just a click away. And as far as your "5 hours of video" requirement, I don't think it's too much of an intuitive leap that people already spend more time with mobile phones than watching linear television.
Ed, l am not talking about guaranteed sales "results". I am specifically referring to guaranteed sales "increases", or GSI. For example, if a cola company wants to increase sales of cola from it's usual 1 billion cans per day to 2 billion for a weekend, the Cola company could buy a 30 second commercial spot(s) with a GSI of 1 billion. When the commercials run over the weekend the cola company would make the increased 1billion sales, as guaranteed. Given the amount of money to be made there is not an advertiser in the world that would not want a GSI. And since it's the advertisers that are paying the bills the television networks, as well digital and mobile will have to eventually have to capitulate.
Ed, also why wouldn't the sellers of advertising agree to guaranteed sales increases? It's definitely possible to do right now. Certainly, networks can charge a premium for such ads. But why wouldn't an advertiser pay a million for a 30 second spot when it's guaranteed to return for example, 2 million in sales? Advertisers pay 4.5 million for the super bowl, and they get no guaranteed sales whatsoever.
Charlene, automotive and durable goods advertising can receive guaranteed sales increases, GSI. In fact l have not found one consumer product where a GSI would not work. However you are correct, that in a world where an advertiser could get a GSI, there would be little to no reason to buy product advertising for mere image or branding purposes alone.
Mark, the media seller has no control over the quality of effectiveness of the advertiser's ad or the way it positions the product. Also, the advertiser may be offering a so-so or "me too" product that a lot of people don't want. Or there may be distribution problems. Or a competing brand may outspend the advertiser, thereby nullifying most of his campaign. Or the advertiser's brand may be over priced. Or this may be the beginning of a new ad campaign or the middle or the end of the effort when it is "wearing out",etc etc. All of these issues can impact sales increases.
While it is a proven fact that almost all advertising generates a short term sales or share-of-market "lift" a media seller would have to know how this varies on a category by category and, even, a brand by brand basis before guarantees as to increased sales could be made. The question of timing also palys a role here. Sure, you get a short term lift, but this soon dissipates. What time frame would the sales lift apply to? Also, how do you you know whether other ads that the advertiser used didn't have an effect of his sales lift?
In short, its a very complicated metric to define properly and a risky one for the seller as things that are out of his control can greatly affect the outcome.
Mark, I appreciate your enthusiasm for mobile but I dont regard the fact that people spend a lot of time on their phones as evidence that the phones are more popular than live TV as entertainment/information media. Most smartphone usage has nothing to do with videos and is not "competitive" with TV viewing---it's just people talking to eachother. As for mobile phone ads, considering all of the viewability issues that mobile faces, plus its small screens and questions about audience receptivity to advertising while using their phones, I don't see this media platform offering live TV much of a challenge for quite some time where branding ads are concerned. Yes, ad revenues will continue to rise, but you've got a ways to go before you capture a majority of TV's ad revenues----which is what I believe you were implying in your comments---even though this wasn't stated explicitly.
Mark, taking the idea of guaranteed sales increases as you propose, how would this be orchestrated? For example, say a mobile phone ad seller made a deal with P&G to advertise one of its products. Suppose, in a four-week period, the P&G brand's ads were served to 1 million people an average of three times. And, of course, the seller knew exactly what phones were exposed. Fine. How does the seller know how many additional---more than usual-----cases of the product were purchased by these people as a result of the exposure to the brand's ads on the seller's platform? Also, even if this can be somehow determined----which I doubt-----if there is a shortfall in expectations, does the seller rebate the advertiser's media dollars---or does the seller offer "make good" announcements?
Mark, thanks for your reply regarding your formula. Frankly, I doubt that advertisers have any idea how many incremental sales they can attain with added media weight at any point in their campaigns using any particular media platform---I gather that this is a pivotal input for your system. I wish you luck on this---sincerely---but I am not at all convinced that anything like this will materialize as standard practice in media selling or buying anytime soon.
Ed, it is not my position that mobile phone usage in general is currently more popular than television viewing. I am explicitly and boldly predicting that mobile live streaming will be more popular than linear television viewing in exactly one year for all the reasons stated. In fact let's put a date on it and say, August 20, 2016. I do understand you disagree, however most of your rebuttal evidence is for the present state and not for the future. As far as mobile ads viewability issues, there are more innovative ways to integrate ads and marketing into live streaming other than the old 30 commercial spot, so that's no barrier at all.
Ed, you are welcome. And your point about advertisers not knowing how many sales they can attain is one of the exact problems the GSI was designed to solve. As for as media buying agencies are concerned this is an opportunity for all to exercise leadership as opposed to just being middle men of the status quo. I for one would not hesitate to authorize and license the use of our GSI Algorithm and technology to a WPP, or any forward thinking agency. The one point of agreement we may have is the slowness of the current television networks to adopt Guarantee Sales Increase GSI Algorithms. They may be simply too fat, rich, and comfortable to change. Although you would think the 2nd quarter stock reports would have been a wake up call. Nonetheless all their hesitancy would do is give an opening to a new upstart network to employ the GSI and seize the day! Whatever the outcome, it's going to be an exciting year!!
Mark, I honestly hope that you are ccorrect, however, I doubt that the information you need for your model will be available. Indeed, there have been efforts, using scanner panel research and set usage ratings, to try to identify the sales effects---or SOM---of various types of TV--primetime broadcast network vs. cable, for example---for branding advertisers who use media mixes involving a number of TV dayparts and network types as well as other media. So far, these have floundered because of the overlapping effects of ad exposure via more than one platform as well as other factors. Having seen many of these studies, myself, I believe that it's next to impossible to isolate the effects of a given subset of exposures to a given media vehicle like a TV show on a particular network, unless you can isolate its audience from other media and prior ad exposures and deal with a very short term measurement---like the same day----which is not appropriate for many products and services. Net, net, I don't think that advertisers , let alone the media folks, can supply the data you need----but, again, I would love to be proven wrong about this. Were that the case, it would certainly revolutionize the media business.
Mark, am I correct in assuming that the sole purpose of advertising (to you, and the GSI) is to drive sales? If so, I gotta wonder about that. The purpose of branding, for most of its history, has been to make a brand familiar, whether the customer buys that brand or not. Sales were driven, of course, but not as a first order effect. I ask because it seems to me that the data- and algorithm-driven world of digital advertising (which you seem to be in, but I don't know) is descended from direct response marketing, not from brand advertising, and is crowding out old-fashioned brand advertising. One problem with this is that the creative baby gets thrown out with the "we can't measure this" bathwater. Case in point... One can appreciate a great BMW ad, never buy the damn car, and still participate in a general cultural appreciation for what makes BMW cars great. But if every BMW ad has to have a measurable effect on every individual exposed to it, I doubt that those ads can be especially creative. More likely they'll be annoying. I submit, in fact, that the whole advertising industryis at risk of being terminally annoying today. Direct response marketing, descended from the old junk mail business, has body-snatched advertising, and both brands and customers are the victims. Brands are shunting marketing dollars away from making mostly immeasurable but positive brand impressions, and toward getting constant measurable results. As a result, customers are running ad and tracking blockers, because the difference between direct response advertising and spam is moving toward zero. (While customers also feel pissed and creeped out by having leeches and ticks planted on their virtual bodies to suck out personal data, which is used by opaque advertising mills operating under the illusion that every customer is buying something 100% of the time, and needs to have a personalized "advertising experience.") It's a wacky situation.
Doc, your point about the purpose of branding advertising is well taken. In fact, most of the data-driven concepts that are being promulgated these days assume that the only purpose of an ad placement is to generate a certain amount of sales that can be attributed directly to that particular ad exposure or ad exposure set. Obviously, this kind of thinking comes from the direct response, not the branding side. What's worse, the advocates of these various magic solutions---and I'm not accusing Mark of this, just speaking generally----don't seem to take the time to look at the data they are so enamored with, nor do they take cognizance of how the current system works, granted with some faults. As a result, many of the proposals that promise fantastic improvements in targeting or media buying are more like impractical theoretical fantasies rather than workable alternatives. For example, there is one line of thought that has the media deciding which of its platforms is best for the advertiser---based on "data". In fact, it has actually been suggested that the media create---or help create--- the ads---based on "data".
The one good thing about all of this is that many of the new electronic "visionaries" seem to have good intentions---aside from the usual ones of making money and gaining power. So, in a way, a respectful dialog with them can be beneficial to bith sides. I know that I've learned quite a bit during my "debates" with many of these digital and data advocates; I hope that I've contributed something in return.
Ed, l assure you all the information we need to program and execute the GSI ( Guaranteed Sales Increase ) process is available. What you have to understand is that we have run numerous advertising campaigns for a wide variety of products and services, on all types of media, from broadcast television, to email and social media sites like Facebook and YouTube, and the sales have always increased as planned. I still believe the biggest hurdle to the wide spread adaptation of the GSI is getting the media networks on aboard. If they all close ranks and resist the change then they could hold out for quite sometime, since advertisers would have no alternative but to stay with the old technology. But if just one broadcaster, cable outlet, or social media network blinks, and offers a Guaranteed Sales Increase, everyone will be forced to follow in order to compete and survive. Obviously l am pushing for the latter. Stay tuned!
Doc, advertising can have multiple purposes. Certainly if you are Bernie Sanders, The Foundation For a Better Life, or the Mormon church your commercials will have different goals than those of a publicly traded company with a mass consumable product for sale. Nonetheless all advertising is about selling somthing, whether it be a message or a product. Certainly in your example for BMW, one can sale the message/brand and the car at the same time. The GSI accomplishes both. In our 10 year research, development and testing phase of the GSI we have run TV commercials for entertainment properties that required both building up name recognition/branding and selling an actual product. Brand building and GSI, Guaranteed Sales Increases, go hand in hand and need not be separate processes. As far as my area, l come from both a creative and artistic, as well as a technology, and business background. So l have a whole brain approach to advertising and marketing. Thank you for your questions and feedback.
Ed, let me say l have greatly benefited from your contributions in this discussion and thank you for your participation. Because the GSI, Guaranteed Sales Increase, needs to be challenged, and questioned critically if it's ever going to live up to its great potential and promise for our industry. I do not condsider myself in the so called "Big Data" or programmatic camps where everything is automated and everyone is a stat. Even with the power and technological advance of the GSI, there will always be a human intelligence factor to the eqaution. For example, if there is a sudden and unexpected tsunami in Hawaii there is going to be a significant drop in tourism packages sold during that time no matter how creative and culturally relevant the commercial or precise the determination of the GSI Algorithm before the big wave hit. Those types of scenarios will always require a human beings perception.