Commentary

Retrans Fees: No Long-Term Strategy

Retransmission, in my opinion, has injected much needed liquidity into the content marketplace. Currently broadcast groups are counting on retrans fees to make up for the advertising slide. This newfound cash infusion from content, however, could also be used as a bargaining chip to launch future services. Broadcasters should not just focus on the monetary gains of retrans, but also look to use this bargaining chip to forge new technical and data partnerships with cable companies.

For example, today tens of millions of cable subscriber homes have, or will have, the capability for interactive RFIs (request for information) applications. With these simple applications, once a consumer clicks the remote control the TV click response is then sent to the cable subscriber's account, and perhaps a coupon is then mailed to the house. In the same breath, the cable industry is also starting to roll out TV Everywhere to at least 30 million households. So now this same consumer, who got that mailed coupon, can also log-in to TV Everywhere and watch videos.

Since both innovations are pulling data from the cable subscriber record, I predict that within a couple of years the industry will streamline the fulfillment process so that I can retrieve that same "coupon" directly from the advertiser's Web site linked inside my TV Everywhere account. In other words, I should be able to click my TV remote and forward advertiser offers to my TV Everywhere account (or another portal of the consumer's choosing). Kind of like a giant Mint.com account linked to your favorite television programs and merchants.

Through this method, the ROI can now be calculated directly off the exact TV commercial and its corresponding Web site. This integrates the Internet seamlessly into the TV platform, and now media planners could plan directly off real customer data.

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Think of it. Tens of thousands of TV advertisers will be able to build cross-platform measurement statistics off the opt-in TV click and customer records. Media schedules can be built off these real customer insights. I call this the Continuous Loop Theory for Advertising: when the TV click data is sent from the TV platform into e-commerce engines, and once the ROI is crunched, the results are entered back into the TV platform via media schedules. Advertisers' efficiencies should improve across both the TV and the Internet on an ongoing basis if done correctly. Switched digital video, video on demand advertising, and network DVRs become very important in this ecosystem as these funnels can be linked to the continuous loop.

The continuous loop also provides stability to Erwin Ephron's recency theory, as each click will provide direct insight into when the message was most effective. If the loop method is implemented, I think TV planning and media software initially won't change that much -- especially at the start -- except that the planning data used will be cross-platform metrics tailored to each advertiser.

I also think it is best if the proprietary opt-in television clicks are also stored inside each advertiser's e-commerce platform. The greater the computing power harnessed for each company's analysis (across the tens of thousands of TV advertisers) the more relevant the media placements will organically become for all advertisers. New money will flow into broadcasters from the direct marketing and Internet advertising sectors.

If over the coming year interactive EBIF technologies begin to deposit TV clicks (in the form of Web bookmarks) into the TV Everywhere platform, it could be "the shot heard around the Internet world." But to be realistic, this proposed business model is not an overnight proposition. Broadcasters would need to be prepared to invest time and money in getting it off the ground. I believe that by implementing the Continuous Loop Theory of Advertising, the unrealized value that we know exists within every local broadcaster can finally be unlocked. The path to the industry's potentially bright future (under this proposed model) could probably be introduced into an upcoming friendly round of retransmission talks. I think this just might be the path to addressabilty.

3 comments about "Retrans Fees: No Long-Term Strategy".
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  1. Mike Cavender from Medialink Worldwide, March 31, 2010 at 3:44 p.m.

    Michael, your dead on correct. Stations need to finally get out front in this digital game...and without a strategy (and the money to put behind it) they will continue to be woefully behind the curve. I hope some finally listen!

  2. Douglas Ferguson from College of Charleston, March 31, 2010 at 3:45 p.m.

    Forging partnerships is what messed everything up in the 1990s. The cable companies rebuilt and built out their systems on the backs of broadcasters who "settled" for extra channels for their affiliated networks instead of cash. Broadcasters were much stronger in the early 1990s and should have fought the battle then, instead of waiting 15 years for their opponent to become nearly invincible. Enough with the strategic alliances. As the guy in that Jerry McGuire movie said, show me the money!

  3. Paula Lynn from Who Else Unlimited, March 31, 2010 at 4:36 p.m.

    Not every advertiser is Coca Cola. Coupon offers: not all products are available everywhere, not all coupon offers are offered for all regions or smaller geographical areas, not all advertisers want their coupons to be so pervasive, not all advertisers have the type of distribution of their product for everywhere or could ramp up production to satisfy redemption....enough for now. Advertising is one thing; couponing is another. I just see this article being too one sided.

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