A Riddle Wrapped in a Mystery Inside an Enigma Swaddled in Coaxial Cables
Recently, there has been a spate of articles written about the mysteriously shrouded Project Canoe, a subterranean, though visible, cable systems operators' joint venture that surfaces periodically, in trade periodicals -- the first sighting, to my knowledge, in The Wall Street Journal at the close of September 2007 -- only to surreptitiously submerge again until the next press sighting, appearing sporadically ever since. Perhaps Winston Churchill said it best (October 1939): "I cannot forecast to you the action of [the cable Industry]. It is a riddle wrapped in a mystery, inside an enigma but perhaps there is a key. That key is [the cable industry's] national interest."
I thought I'd take this written opportunity to chime in on what I don't know about this coaxial cabled swaddled entity, utilizing The New York Times March 10 article, "Cable Firms Join Forces To Attract Focused Ads" as my guide to navigate the mysterium.
The Name & Mission The selection of the code name Project Canoe is meant to emphasize the cable operators' cooperative spirit, paddling for the common good of its members to sell more commercial inventory to national advertisers by enabling national advertisers -- through the deployment of applications and measurement of said applications -- to purchase customized ads and interactive ads across the companies' systems. Or not.
A question: wasn't there a more descriptive, snazzy, nomenclature available that would have encapsulated both sprit de core and modernity? Isn't the visual of two Native Americans sitting in a canoe on a breezeless summer's day lackadaisically paddling, though in coordinated strokes, somewhat of an anachronism?
First Sighting & Membership When I first wrote about this clandestine gathering - late summer 2007 - Comcast and Time Warner Cable were cited as ringleaders. I suspected then, as now, that other operators whose names began with a "C" would also seek admission. Last week, the Times reported that executives from Comcast, Time Warner Cable, Cablevision, Cox Communications, Charter Communications and Bright House have joined the common cause, meeting monthly, alternating between New York and Philadelphia -- the cradles of American colonial national representational aspirations.
The Genesis A $1 million project underwritten by Comcast, Time Warner Cable and Cox Communications last Spring, in which the cabal commissioned consultant McKinsey to determine what the operators needed to deploy (applications and scale) in order to garner a greater -- much greater -- share of television advertising revenue. (Note: some of the recent articles have suggested that Project Canoe partners guestimate that after launch the entity could garner as much as $15 billion annually -- eventually -- versus its current $5 billion take). McKinsey dutifully culled media community and Madison Avenue mandarin thoughts and opinions, synthesized and presented to uppermost management. Hence, the genesis of Project Canoe. Or not.
Another note: since the turn of the 21st Century the cable operators have been deploying addressable applications (ACTV's SpotOn, Visible World, Navic, OpenTV, Invidi, AdExact, Predictive Networks), VOD channels (repurposed, ad-supported and long-form advertisers supplied), interactive program guides (TV Guide and TV Gateway) as well as requests for interaction applications (Navic, Wink, WorldGate). Maybe the cable operator's field experience and advertiser lack of enthusiasm to date has led them to rethink their approach. Or not.
Perhaps, all the Project Canoe managing partners had to do was to listen to Starcom's Tim Hanlon reiterating for the umpteenth time that advertisers need metrics (lots of them) and scale (the heavier the better) for marketers to commit meaningful revenue. Had the cable operators from the get-go simply provided the advertisers with absolute transparency of interaction, viewing behavior, and lifestyle datamining, the McKinsey report, though insightful as it was, would not have been necessary -- and the operators would have saved one million bucks. Or not.
Speaking of Starcom's Tim Hanlon: I mean, Tracey Scheppach.
Advertising Consultants I didn't know that Tracey Scheppach has been "involved in consulting with the cable companies on the project." Is it ever a safe bet for industry players, i.e. cablers in this instance, to rely solely on one agency to base its modeling and test its theories? Does this singular approach alienate those other valiant individuals who have been working on behalf of their clients and agencies to evolve interactive TV models and reportage -- i.e., those Amphibians from Initiative, the OMD'ers, MediaEdgers, the Havasians, the Universal McCannites, the Carat Exchangers, the monitor displayers from the IPG Lab, to name a few. Haven't they all contributed? Isn't their involvement and collective wisdom key to the future success of the Project? Or not.
The Funding It has been reported numerous times that collectively the cable companies will contribute upwards of $150 million to create this national service that will be able to sell targeted advertising across all six cable systems. Or not.
Question: are these fresh, uncommitted dollars -- or green sheet savings, by reallocating resources already utilized in each system and redeploying to other bean counting sheets, i.e., research, national spot sales and support staff, and application deployment costs.
Another question: what will be the future of NCC, the cable-owned sales organization that represents local ad sales and interactivity to the ad community? Will they, and each cable systems operators' national spot sales guys, be folded into the new entity -- and their inclusion counted towards the generous $150 million commitment.
The Ownership Project Canoe will be split off from any existing cable entity as a standalone business. Or not.
Contradictory rumors circulate that the initial delegates will act as managing directors under the tutelage of an executive councilor. Recruiter Spencer Stuart has been retained to search for such a chief.
Question: what type of equity arrangement will exist for the cohorts? In prior industry initiatives in which a bevy of operators participated -- including Comcast -- Comcast seemed to demand and receive a voice greater than its comrades but equal to its prowess:
Will each Project Canoe partner receive an equal vote for an equal share, or will the hierarchy still be determined by distribution and content hegemony? If Spencer Stuart is successful in its quest and a professional is blessed by the managing directors (4+ 2 tiers of layered masters), how many months can that individual and their chosen team survive, given the current success rate of CMOs -- which I understand has dropped from two years to 18 months.
The Closing In closing, I'd like to reiterate some suggestions I offered six months ago via TV Board - no, not scale or measurement transparency:
¨ Involve the ad agencies early on in the process, so that the end product meets the needs of the ad community rather than the "theoretical" applications that consulting firms and members of the individual organizations' sale teams think they have garnered from their "30,000 foot" dialogue with advertisers or the reliance on one agency's hypotheses. Oftentimes the translations have been hypothetical, and supporting management's preordained stance on issues and not a true reflection of the ad personnel mentality, needs and desires across the community.
¨ The local cable markets, where there has been deployment of interactive technology, claim to have launched myriads of experiments with local advertisers. If this is true, which we imagine it is, why has so little information on best practices been disseminated throughout the community? Many of us have a sense of the applications -- don't need another road show -- but are not comfortable with the value proposition. Directional learnings would be invaluable -- even without disclosing the identities of the participants -- and provide an enticement to dip our ad toes in the stream.
¨ Please do not create yet another sales team to approach advertisers and their agencies. So far in the local cable universe we have local sales teams, national sales teams, NCC reps, category specialists, agency specialists, Project Canoers and cross-agency category verticals and horizontals. There must be a way to effectively combine the knowledge of the national sales teams with the skills, market intelligence and reach of the NCC guys and gals to create an effective sales organization truly empowered with the knowledge of advertisers' local and national needs that is immersed in interactive television realm.
¨ Do not be fooled by the ad agencies' use of the term scale -- the Mecca when reached that permits all deals to be consummated -- barring pricing scrabbles. Ad agencies often use this mythic term as a holy grail never to be attained. It's indefinable, personal to the buyer and their client, and truly amounts to the optimal number of undefined persons or households that could possibly view or interact with content. Every scale debate requires its own adjudication.
¨ Although we applaud the cable operators for trying to standardize applications across all of their footprints and extend their reach into every home and set top, we are concerned that if the goal is attained, the operators will be disappointed when the national advertisers do not clamor for all available inventory. The ad community still views the operator's iTV applications as experimental. Clients allocate minimal dollars, if any, for trials. It is affordable to some national advertisers. However, when the cable operators deploy across their footprints and extend throughout the entire cable realm, these opportunities -- though internal intelligence has reported standardized and scalable -- could become unaffordable to national advertisers or will necessitate the cherry picking of markets. As an example, many experiments that we have been involved with cost upwards of $50,000 to $100,000 for one month's activity in one market. Fits within a client's parameter of experimentation. If however, the cable operator expected or attempted to force an advertiser to utilize their whole footprint or the entire Canoe-able route, it would be cost-prohibitive. A word of caution to management expectation.
¨ We know what we will propose next is anathema to some operators -- but we recommend that you engage with the national cable networks. They have content that advertisers wish to be associated with. If their inventory becomes interactive, then it is a way to glean more revenue from the elusive national advertisers. A good one-stop-shop experience will spill over to local unwired cable system deals that are not tied to national programs but rather feel local but extend nationally -- multiple markets at a time. The national guys already have a financial relationship with the national advertisers, who are investing more in cross-platforming and digitally extending their reach. Revenue splits could garner more for both network and local organizations.
In the interim, as we all paddle forward, we continue to ask for a special favor -- one that we think everyone would appreciate. Could we receive the following information in a standardized form:
1) When we ask for household penetration, can that simply be translated as number of households, with access to a service or application rather than number of set-top boxes engaged.
2) It seems that depending on which cable operator or local system or cable network we query, there is different information available concerning gross views and unique views. Can someone standardize that? It shouldn't be an enigma. Rentrak swears it is available. Would appreciate the help.
The Closing Cartoon The visual: two caped super heroes are flying through the air -- one, with his mouth open as if speaking, a few feet above the other -- flanked by a smattering of clouds and a bird or two in the distance.
The caption: "Flying around all day just won't cut it -- sooner or later, you're going to have to fight some evil."