Although TV stations continue to report hefty financial gains in recent periods, broadcasters are still trading below the stock market as a whole. "The sector appears undervalued by around 15%," says Michael Alcamo, president of New York-based media investment company M.C. Alcamo & Company. In fact, Alcamo was a bit shocked looking at the results versus a year ago. "The results surprised us -- trading multiples were significantly lower than the year previously, possibly reflecting investor caution or uncertainty," he notes. Looking at six pure-play publicly traded broadcast TV station companies, Alcamo says selling cash-flow multiples (earnings before interest, depreciation, taxes and amortization} are down 20% from a year ago at the end of 2010 -- currently at an 8.7 times rate, versus 10.7. Cash flow multiples are down 10% from a 9.6 number three months ago. The six companies include Belo Corp., Gray Television, Nexstar Broadcasting, Sinclair Broadcast Group, LIN Television and Fisher Communications Group. Analyzing an index of these companies shows stock prices at a 53% index to the S&P 500 Index of 98%. This group posted $113.6 million in incremental revenue in third-quarter 2010 -- 19% over third-quarter 2009, and $81.8 million in incremental EBITDA. At the broader integrated media companies -- those with other assets, such as magazines and newspapers -- it's the same story. Those stocks are down 25% to a 6.1 cash flow multiple from an 8.0 number -- although Alcamo says things improved for these companies a bit at the end of the third quarter. Overall, he says, "investors remain cautious -- despite improved rising profitability, improved credit profiles, a good outlook for 2011, an exceptional outlook for 2012, and audience trends all pointed in the right direction."
As far as important industry milestones go, the one announced late Tuesday by Interpublic's Magna Global unit, that DVRs are finally poised to reach the 50% mark - a level often thought of as critical mass for a mass medium like television - may seem a bit anticlimactic, and just goes to show that big industrial shifts sometimes are more evolutionary than they are revolutionary. In fact, Magna estimates that milestone will not be crossed for another five years, but its year-end 2016 forecast is the first time the ad industry has had an official halfway mark for the dreaded devices, which have been Madison Avenue's main nemisis for nearly a decade. DVRs, Magna's Brian Wieser said in his understated fashion, will officially cross the 50% penetration level at year-end 2016, up from his previous estimate of 49%. But the significance of that milestone now seems more of a whimper than a bang, and certainly not the sonic "boom" many on Madison Avenue had feared a decade ago when Michael Lewis' cover story on the New York Times Magazine announced that the end of TV advertising was near. Not nearly, as it turns out. Ten years after Lewis' "Boom Box" article captured Madison Avenue's attention that DVRs - and especially their ability to fast-forward through TV commercials - were about to change everything, some things have certainly changed. Others have not. Advertisers, for example, still spend more on the medium than ever before, and its share of total ad spending continues to climb, both in the U.S. and worldwide. If anything, the recent global economic recession - and Madison Avenue's own economic rollback - have proven the vitality of television, which increased share as marketers cutback on total advertising and consolidated spending on media they believed would generate immediate returns: TV and digital media, including the next generation of TV, online video. "The worst news is that no one watches commercials anymore," Lewis proclaimed in "Boom Box," citing early research that "eighty-eight percent -- 88 percent! -- of the advertisements in the programs seen by viewers on their black boxes went unwatched, and issuing an understatement that became a new rallying cry for Madison Avenue, and the television networks for the next decade: "If no one watches commercials, then there is no commercial television." The Lewis piece was important, and most likely prophetic for a number of reasons beyond this prediction, which certainly has not come true. In it, he accurately predicted the shift toward more consumer control, as well as better ad targeting, but also discussed the "black box," as he called DVRs in the context of an ongoing progression of technologies (including the Internet, and more powerful computing), that were shifting electronic media from linear to non-linear experiences, including things like time-shifting, augmented memory, and the ability to access content on-demand, anytime, anywhere. Lewis did not address the stickier business issues like copyrights or payment models, and he probably underestimated some important cultural factors -- especially how Madison Avenue makes and controls media markets, and how and whether those markets are economically sound for advertising agencies, advertisers and media suppliers who can influence their outcomes. But the reality is that things have changed. DVRs will soon be in half of television homes, but by the time that finally occurs, other equally significant shifts will have already happened in the media industry's ecosystem that may make Lewis' "Boom Box" seem like a bust by comparison. But for now, the bottom line is that TV advertising still works, and TV advertising spending continues to grow. It is growing because consumers are watching more TV than ever before, despite all the time they're spending doing everything else, according to Nielsen, anyway. That's probably for a number of reasons. One is that a significant number of people didn't watch TV commercials before the advent of DVRs. They did it the old-fashioned way, of course, and simply ignored them, got up and walked out of the room, or turned the channel. It's hard to know what the actual percentage was in the pre-DVR days, but it could well have been 88% back then too. The real culprit to TV's declining economies of scale is not DVRs, or more consumer control. It is more consumer options. People simply have more options to turn their attention to than TV programming and advertising, and that is most likely impacting. It's also a significant factor within television itself, where the number of channel options has exploded, fragmenting consumer choice and viewing. Yes, TV usage levels may be as high as ever, according to Nielsen, but the average usage of any particular TV program - what people in the business call ratings and shares - has gone down dramatically, changing the economics of buying TV, and making it a less efficient medium than it was in its most golden days. TV still works, of course. And there is an ample body of marketing mix modeling research to prove it. It may not work as well as it used to, and it may be more expensive to do things like build reach or influence consumers, but no other medium has come up with anything that approaches its unique scalability. Online search is great, but it cannot scale like TV. Social media? Well, that's another story that's still playing out. For now, TV is still king, even in a land where one out of every two serfs are surfing past the commercials. But let's revisit this story in another ten years, and see where we are at.
While the obvious Super Bowl ingredients are beer, chips, football action, parties and conversation, one study says not to forget another growing multitasking activity: smartphones. Young Super Bowl TV watchers 18-34 who have smartphones will be using them heavily during the big game on February 6. According to Lightspeed Research, 59% intend to send emails and text messages about the game during play. But almost as many viewers will be emailing and texting on non-Super Bowl-related matters -- 54%. Among the other activities about the game while using smartphones: 24% will be searching Super Bowl-related stories and content; 18% will be watching Super Bowl video clips or Super Bowl commercials; 17% will be going to Super Bowl advertiser digital areas; 12% will be researching past games; and 8% will be buying Super Bowl merchandise. Looking at the broader picture, the study says while 55% of those will be keenly interested in the game, 15% will be there primarily to watch commercials. Females have a 21% interest in the messages; males have a 9% interest. But given the number of Super Bowl parties, 27% said they are primarily interested in the social interaction of family and friends. Women are especially there for the social elements, with the study putting their interest at 37%, while men's social interest rates 19%. The study predicts that young Super Bowl viewers will continue to watch less actual Super Bowl football action than older demographic groups. Seventy-one percent say they plan to watch the game -- the majority from their homes. Viewers anticipate commercial spots from Anheuser-Busch more than any other advertisers.
Scared away from possible content issues over MTV's new hit show "Skins" in its premiere episode, the advertisers in the second episode were the usual ad clients: movies, video games, and program promos. Many big-name consumer products company abandoned the show after its premiere, including Taco Bell, Wrigley, General Motors, Schick, H&R Block and others, when controversy ensued. Movies were the dominant category in this show's second airing. Fully 16 commercials ran for upcoming movies -- mostly for February premieres. There were two runs each for "No Strings Attached" from Paramount Pictures (a Viacom Company that also owns MTV); "The Mechanic" from CBS Films; "Just Go With It" from Sony Pictures Entertainment/ Columbia Pictures; "I Am Number 4" from Buena Vista/Dreamworks; and "The Roommate," a Sony Pictures Entertainment/Screen Gems. There was also one commercial each for "The Eagle," Focus Features; "Unknown," Warner Bros.; "Sanctum," Universal Pictures; "Drive Agency," Summit Entertainment; "The Rite," Warner Bros; and "From Prada to Nada," Lionsgate. Other advertisers in the second episode of the series included young-skewing soft drink Red Bull; blemish medication, Zeno Hot Spot; skin product (direct response), Celtrixa (direct response); Tax Act; DirecTV's NBA League Pass; and Playstation 3/Visceral Games video game "Dead Space 2." Media agency executives say consumer products companies are typically the most sensitive when it comes to content issues. But movies, video games and other entertainment-oriented marketers -- as well as direct-response advertisers -- are usually less concerned over content. Other executives say consumer product companies are easier marks when it comes to community protest over possible marketing and sponsorships. In "Skins," there is heavy suggestive sexual content. But there were other concerns -- especially whether MTV was breaking some Federal laws when it came to child pornography because many of the performers are underage. Reports suggest MTV executives have been concerned about the series content, and have made quick changes for upcoming episodes. MTV's "Skins" in its premiere episode took in a healthy 3.3 million viewers and 2.7 million in its key 12-34 demographic. "Skins" second episode's rating was half of its first outing -- 1.6 million viewers on Monday, down from a big 3.3 million. In its core demographic, 12-34, it also lost steam -- posting a 1.35 rating. A week ago it had a 2.87 rating.
Canoe Ventures CEO David Verklin said Wednesday that seven networks will offer advertisers an opportunity to run interactive ads in 20 million-plus cable homes in about 90 days. Comcast's E! and Style networks, along with Cablevision's AMC, are already selling a Canoe-developed platform allowing for request-for-information spots. Bravo, Discovery Channel, History and USA will be open for business by early summer, Verklin said. Separately, Verklin said Canoe aims to add households served by satellite operators DirecTV and Dish Network to its footprint of cable homes able to accept the ads. That would be in line with a new initiative led by NCC Media that has cable operators and DirecTV working together to offer inventory across homes served by both. Canoe has spent some time getting to the 20-million-home footprint that Verklin cited. It has had to figure out how to enable set-top-boxes with a common technology to send the ads into homes served by the six cable operators that own Canoe. Of the seven networks set to offer the RFI ads, four will be run by Comcast, which will also have a stake in a fifth (History). The networks license the ad-serving technology from Canoe. Comcast and Cablevision are co-owners of Canoe, along with the four other largest cable operators in the country. The RFI ads include a banner prompting a viewer to order a coupon or product sample via a remote control. The process is double opt-in, so a viewer has to order and then confirm. Verklin said at the NATPE event that by the end of the summer, an iTV polling application will also be in place, which would open the opportunity for sponsorships. A viewer could vote for the player of the game "instead of having the announcers tell you" who it is, he said.
Regis Philbin said he made a mistake when he announced that he would depart the daytime talk show he co-hosts with Kelly Ripa this year. He should have made it clear that he is leaving, but not fading into the sunset. "I'm not retiring from the business," the 79-year-old said at the NATPE convention. Making the announcement on "Live with Regis and Kelly" was obviously trying. So were the hours leading up to it. He was told not to tell anyone until the morning of his departure, including Ripa and executive producer Michael Gelman. Ripa was incredulous, and Philbin said she offered up a version of: "What is this about?" "It was kind of awkward -- it was not easy," he added. Philbin said his contract is expiring, and he felt that "it's just been so long and you reach a point in your life where maybe you'd like to do something else." He said he didn't know what he would do next, or who would replace him. One possibility for him: the Notre Dame grad said he shared a joke with NBC Universal sports chief Dick Ebersol Tuesday about doing sideline reporting for his alma mater's games.
This year, Kia is taking a page out of sibling Hyundai's big-voices, big-places strategy to promote its 2011 Optima and other vehicles. The Irvine, Calif.-based automaker is not just advertising in the Super Bowl along with Hyundai and getting vehicles in the new series "Nikita" on The CW Network. Kia also has the 2011 Optima on a Times Square billboard, a made-for-cinema, 60-second spot titled "Sweet Dreams," and is promoting the car as "Official Vehicle of the NBA" this season as part of its multi-year deal with the league. Optima will also be featured as part of Kia's sponsorship of the LPGA golf tournament at Industry Hills, Calif. With its sponsorship of the "Nikita" show, Kia will tout both Optima and the Sportage crossover, with product placement as well as sponsorship of a three-part digital video series about the show. There is also an app gaming experience and social networking program around the partnership. Kia will run an on-air and online series called "Undercover Operations: Interviews with the cast of Nikita." The online content, at CWTV.com will show the cast on-set talking about their characters, and show sneak previews of the second half of the season. The company will sponsor "Undercover Operations: with Maggie Q and Lyndsy Fonseca," a three-part video series starting Feb. 10 that comprises an examination of the show's main characters. The weekly program will run for three weeks in conjunction with on-air and online promotions. Michael Sprague, Kia Motors America VP marketing, says the Optima will also be part of the Nikita integration. "This was part of our upfront buy last year, and we have both passive and active integration," he says. "Sportage will be in this episode, then we will integrate the Optima into the rest of the season." The car was actually in some early episodes during the fall. Kia, which touted its Sorento SUV in last year's Super Bowl, is supporting the 2011 Optima this time with a 60-second spot via AOR Santa Monica-based David&Goliath. The ad is part of an integrated digital, print, social media and retail program that has an online-gaming focus. The TV spot, set to air in the first quarter of Super Bowl XLV, has such characters as a police officer, an international villain, aliens, and ancient Greek god of the waters Poseidon traveling through time to get behind the wheel of the Optima by any means possible. One of the game-centered integrated promotions dangles five Optimas to winners of "One Epic Contest," wherein consumers have to solve a series of online puzzles. The promotion, at OneEpicContest.com, challenges players to find answers to four questions, clues to which are in 15-second TV spots, print ads and social media postings. The clue to the fifth question will be in the 60-second Super Bowl spot. People who answer all five then have to play a final puzzle game. The first five people who solve it before midnight on game day, Feb. 7, get the new car. Sprague says the effort starts Monday with 15-second teasers on selected networks -- one of which teases the Super Bowl spot, the other the online competition. He says that each day starting next Tuesday, Kia will post one of the five questions, with the last one reserved for Sunday. "It's a great place for us to be as a challenger brand; we are talking to 100 million viewers, so it builds awareness both for Kia and the new product." The bowl game plan includes another gaming element that promotes a test-drive incentive. The program puts Optima in a "Big Game Tournament" on Zynga's "FarmVille," "PetVille," "Mafia Wars," and "Café World" games. The Big Game program lets players earn "currency" by participating in an Optima-branded virtual football game with a team of characters from different Zynga games. Players see Kia Optima content during game play promoting a test-drive program. On Feb. 4, Kia will begin offering a $25 Visa prepaid card test-drive voucher that consumers can download at Kia's consumer site. The coupon is redeemable after the holder visits a dealership and takes a test drive of the Optima. Sprague says the company is actually doing a lot more in terms of integration this year than last. "We took the playbook from last year, and looked what did and didn't work. We went down the path of integrating games because of the explosive growth of online gaming." He says the Zynga program is intended as a kind of alternative to halftime. "Our contest is meant to drive traffic and interest both before and during the game."
Google TV Ads executive Mark Piesanen said he would welcome a Facebook-style "like" button to be attached to interactive TV ads, allowing a consumer to express a preference for the spot itself or product. Technology for serving iTV ads being developed by Canoe Ventures could fuel the concept. The button "could turn into a signal for ad relevance or basic affinity toward advertising," Piesanen said on a panel at the NATPE event. Of course, getting viewers to take advantage will be a challenge, although an incentive could be offered. Piesanen, who works in strategic partner development for TV Ads, added: "I'd love to have Canoe-enabled 'like' badges, where people vote on commercials they like or dislike. That would be awesome." Canoe has a request-for-information system in circulation, in which an advertiser can run an ad with a banner prompting a click-through and a viewer can ask for a product coupon or sample through the mail. It was not clear whether Google TV Ads would offer advertisers using its auction-based system a chance to run ads with the "like" button, or iTV ads at all. The TV Ads system, Piesanen said, has roots in Google's search advertising model, where users only pay for ads that are clicked on. A pay-for-impressions system is part of TV Ads. Google's move into TV Ads involved immense focus on the type of spots that have been around for decades. "We have invested literally hundreds of engineering man hours in understanding commercial engagement and audience engagement with good old-fashioned 30-second spots on linear television," Piesanen said. "Within the engineering and product sales groups at Google ... interested in an expanded definition of television, our interest ... believe it or not, started" with traditional ads. Moving forward, Piesanen offered an expansive view of the need for granular metrics for viewer measurement. The end game? "How many commercial impressions did an advertiser get among the sort of exotic demographic of RV owners who make $250,000 a year and support charities across their viewing on the Web and television and mobile." However, he said there may be a move away from measuring program viewing. But Cathy Hetzel, president advanced media and information at Rentrak, said that even as commercial ratings become entrenched, program ratings can offer networks insight into effective genres and marketing strategies, while advertisers can obtain guidance. "It is really important to understand the viewership [for] specific shows," she said. "It is a currency and a basketful of currencies that exits today, that allow us to be able to think about what the likelihood of the size of an audience is for a particular program, which is a guide for advertisers to understand where to place their buys." She added that program ratings can then be intermingled with various databases to provide insight for advertisers into the demographic characteristic of specific audiences.
Local television continues to be strong for TV station operators: Meredith Corp. posted a 30% increase in local media revenue in its most recent fiscal quarter. Meredith earned $97 million in its fiscal 2011 second quarter, helped in large part by $22 million in political advertising. Overall, company revenues rose 9% to $367 million, with advertising up 14% to $214 million. For the last six months, revenues were $711 million -- a 6% climb. Advertising revenues increased 11% during that period to $420 million. Net income more than doubled during the second quarter -- to $40.6 million from $19.0 million. Meredith says political advertising at its stations rocketed up 50% from the most recent comparable election cycle -- mostly with its Fox affiliates. In particular, its outlets in Hartford, Las Vegas, Portland and Kansas City registered strong results. Non-political advertising rose more modestly. Meredith says those categories climbed by low-single-digit percent increases. However, current third-quarter numbers are up in the high single digits as compared with a year ago. At its magazine group, National Media Group, there was advertising revenue growth of 5%, including more than 30% growth in online revenues across Meredith's national Web sites. Meredith Integrated Marketing revenue improved 14%, led by more digital and customer relationship management services for national clients. Brand licensing revenue climbed more than 35%.
With all the sports on television, you would think TV critics, viewers and journalists would have their fill. But we all bore easily. Worse still, familiarity breeds contempt. Apparently, there are aspects of TV sports that might be called dull. Examples include the current number-one player in women's tennis and the length of NASCAR races. Seems Caroline Wozniacki -- the top-ranked tennis pro -- has been a bit boring lately, especially in press conferences. So, following a recent erroneous report about Wozniacki being hit by a kangaroo at a public park during the Australian Open, she appeared at her next press conference wearing boxing gloves and accompanied by a large plastic kangaroo. In another press conference, looking to overturn her ho-hum perception, she playfully turned the tables by blaming reporters for asking dull questions. To help the reporters out a bit, she brought up some lighthearted subjects -- her taste in men, her family, her piano skills and how to stop global warming. Still, I'm not sure this is enough for scandal-craving, on- and off-the-court needy journalists. On the other side of the sports spectrum, Fox Sports Chairman David Hill believes three-hour-plus NASCAR races go on too long and need to be cut back. He didn't say it, but you could imagine him using the word "boring" at some point in his thinking about the subject. This comes to light in the wake of NASCAR's lower TV ratings over the last several years. (Mind you, other sports have seen ratings drops as well). One remedy: Fox could just air the last three-quarters of a NASCAR race. Typically, when TV airs road bicycling live, it airs only the last two or three hours or so of a four to six-hour bike race. With 24-hour sports on cable, radio, and now, growing digital networks, the drive for content -- hopefully original -- is in high demand. TV executives and journalists fear the "dull" patina that may be grabbing some sports -- on and off the court, field and racetrack. Today's sports viewers want athletes and/or cars in conflict, as well as the usual marital scandals and name-calling. The end result is just that -- how the event ends. If we have to cut one area, it would probably be the beginning of any sports event. We want to know who wins. Still, we also want to see crashes, even those during a press conference.
It was my intention today to provide a rationale for the "convergence" (there's that word again) of the key elements of direct-to-consumer marketing with today's fully functional, data-driven digital platforms. That was my intention. For years we've seen the larger marketing community become aware of, and then enamored with, the notions of precision targeting, relevant messaging, offers (Groupon anyone?), measurement, and ROI accountability. Or, as we used to call it, direct marketing. So it was my intention today to describe those elements, what we refer to as the variables of response, in some detail, and relate them to the level of instantaneous executional capability and wider applicability that we see in today's marketing platforms and marketing mix. But I'm not going to do that. Instead, consistent with my belief that we toil happily in the MediaTech business, where devices are key, but content is king, I happened to run into some content that gives even a fully clothed emperor a bad name. "Skins" is a show, you'll pardon the expression, that one local newspaper says, provides "racy storylines" and "exposes the truth about teens." The Truth. Hold that thought. With origins in the U.K., now here on MTV, the show portrays heavy drinking, lots of (underage) sex, and drug use among teens, with the clear inference that this is the norm ("the truth"). It has recently come under scrutiny since child pornography laws may have been broken, according to at least one Parents group, the Parents Television Council. And that in turn got the attention of several major advertisers who have pulled their advertising from the show. By the way, my favorite headline in this train wreck of a story is "MTV may be in hot water for alleged child pornography." Hot water. My sense is that the big picture may be missing in some of these reportorial observations. But let's be fair. The show's creators have responded to the criticism with a strong statement that "'Skins' will continue to connect with the audience it was created for." I'm wondering just who is that audience? For whom exactly do you create a show portraying and glamorizing an illegal and amoral lifestyle among the underage set? Personally I've seen the show, I've been to the website where one can delve deeper into the "story lines" (once again, you'll pardon the expression). And I find them both banal, poorly written, real least-common-denominator stuff. On that basis I can dismiss it. But with all the talk about the technology of today's TV, are we losing the central point: that it continues to have the power to persuade, to provide acceptance? Where is the responsibility to our kids, and to ourselves, to be better than this? Over the years, as media has become fragmented, so has it too often become sensationalized -- and therefore marginalized -- as content. Desperate to attract an audience, TV has been dumbed down under the guise of "this is reality" or some other made-up, look-at-me attempt at ratings. One can say that it's wrong, but it's also sad. With "Skins," we see a part of this community of creative talent reduced to talking down to our youth in order to be noticed. TV can be uplifting, inspiring, informative, entertaining. When we see it at its best, why do we tolerate the worst of it, especially when its persuasive power is aimed at our kids?
It wasn't called The KOTV News Network: Keith Olbermann TV. But no single news personality was more associated with MSNBC than Keith Olbermann. Brand association? MSNBC = Keith Olbermann. Recent ratings data may suggest otherwise, but for much of MSNBC's ascent, the network rode on Olbermann's back to big ratings, notoriety, and, yes, controversy. Olbermann was obviously outspoken and seemingly always having run-ins with management. This wasn't new. Fox News, ESPN, and CNN reportedly had issues with him as well in his previous assignments. But you get what you pay for. And Olbermann gave MSNBC a singularly distinct, unapologetic, strong voice for the liberal side of politics. Passion is key among cable news network loyalists on either side of the aisle. "They have GOT to be kidding! Olbermann IS MSNBC!!!!," wrote one blogger. "This will NOT stand! Keith has MILLIONS of loyal viewers who would not miss a minute of his program. MSNBC is asking for TROUBLE! There will be PROTESTS! There will be a BOYCOTT! This is OUTRAGEOUS!!!!" It is the kind of TV engagement advertisers want. No doubt, fans of O'Reilly, Beck, and Hannity have similar connections. But NBC News has something Fox News -- right or wrong -- doesn't have. That's a long straight-ahead, journalism legacy. To many older established NBC reporters/anchors, Olbermann's spiel never jived well with the established network's longtime ways. They continue to see MSNBC as an uneasy success. If you advertise on MSNBC, you're probably wondering what's next. Olbermann's exit would seem to mean the loss of some existing rating points. And that can't help -- especially as new owner Comcast walks in the door. The good news is that other MSNBC "personalities" are putting up Olbermann-type numbers. The bad? His over-the-top commentaries, which generated big headlines and PR buzz, will be hard to replace.
When brands, businesses, marketing executives and agencies consider developing and launching an online video marketing initiative, the assumption is often that the video or videos will be launched on their own, independent of other departments or media. There is often little or no budget or inter-team cooperation for promoting the campaign other than a press release, a tweet and some emails to coworkers and friends. If the video doesn't perform as well as expected, many executives don't evaluate the bigger picture but rather decide that other factors must have been involved, including: