• by David Verklin , March 28, 2011

I'm often left scratching my head by the nearly constant talk about the so-called decline in the importance of television among advertisers, agencies and, ultimately, consumers. The threat of DVR's, cord-cutting, "over-the-top" delivery, Netflix, declining ratings, the football strike, etc. all bear watching, but a plague of locusts they are not.

I actually agree with Jeff Bewkes, Time Warner's CEO, who noted recently that TV has entered its next golden age.

Yet for every Jeff Bewkes, there are dozens of columnists, bloggers, digital analysts and the like that predict television's not-too-distant dissolve into irrelevance at the hands of digital video pioneers. Let's not forget that TV is still the medium with which viewers spend the most time. Given the billions upon billions of dollars at stake, this subject is one of my favorites to tackle. At many cocktail parties, conferences and lunch tables, I am often asked a simple question:

"So David, how is TV doing these days?" My response is that it's actually in pretty decent shape.

For one, the business model of national TV has survived the recession quite well. My friends who are magazine publishers say, "We need to learn a lesson from TV: Make sure your subscription revenue is significant and in balance with your ad revenue."

They've learned the hard way that an ad-only model can be quite challenging; if you look at newspapers and magazines, their reliance on advertising while discounting subscriptions is a model they would like to change. If they could hit the rewind button, they would! The same is true for many of my friends looking to monetize Web content -- too often ads alone offer a slim meal.

By contrast, television enjoys dual revenue streams (subscription and advertising), and the cable TV model seems to have created a healthy, symbiotic ecosystem, in which content creator, distributor, advertiser and viewer all seem to be getting their share of value. There's nothing Faustian about it -- all parties seem to be deriving enough value to keep coming back for more.

A second reason to feel good about TV: The DVR has not ruined the power of the television commercial. Yes, this disruptive technology is at roughly 40% penetration of U.S. TV homes. However, the viewing public always had a commercial avoidance device: the remote control. Still, commercials continue to create watercooler conversation, irrespective of any technology that enables commercial avoidance.

Have you seen a Geico commercial? Or Flo from Progressive? Or the E-Trade baby? Fast-forwarding doesn't seem to have stopped them from becoming part of our popular culture, even though these campaigns were built in the time of the modern DVR-enabled television.

For another positive sign, I look back to my days running a creative agency and compare them to now. I'd say that TV advertising creativity has improved on a number of levels, and the evidence is found in the way ads developed for TV have taken on a life of their own online. Take Volkswagen's The Force/Darth Vader spot, which now had nearly 34 million views on YouTube, on top of the 110 million who saw it during the Super Bowl.

Creativity is also taking off in categories unexpected by some. Take the insurance as an example. One could argue that insurance is creatively challenging, given the subject matter. However, some of the ad industry's most memorable current work is being done in insurance: Geico's lizard, Aflac's duck, Progressive's Flo, Allstate's Mayhem.

What about movie ads? They've always been well-liked by viewers, but today, they have taken on even greater significance. Movie ads are now used as audience retention devices -- put in the A positions in ad pods to keep people from tuning away or hitting fast-forward. Creativity matters, and I think we're on a gentle up slope with creativity right now.

So, TV is not going away, DVRs are not killing commercials, and people actually are interested in watching creatively conceived advertising. Now, nothing's perfect in this world, including TV. So what could be done to make TV even better? In no particular order:

*As an industry, we can do a better job with metrics

The current ratings system just doesn't seem to be as accurate as it should be for an ecosystem of this size and importance. We've been talking about this issue for too long. You know something's wrong when a cable news channel's ratings with men 25-54 go down 15% because the two people in the Nielsen sample turned 55.

Set-top-box data is clearly the answer.

The industry needs to finally bring STB data to the marketplace in a cogent, orderly and disciplined fashion. There's no need to throw a grenade into the business, but we do need to move this ball forward so that we can all do business with better information.

*We can make commercials more relevant to the viewer.

Naysayers may claim that people hate commercials, but is it really that they don't like receiving irrelevant messages? Try an experiment. Watch TV tonight, and keep count of how many spots are irrelevant to you. (You know, a dog food ad to a cat owner, a diaper ad if you're a confirmed bachelor, a denture ad if you have a mouthful of pearly whites, etc.)

I'm guessing you'll find that about one-third of the commercials you see are exposures wasted on you. So how is this problem solved? There are two answers:

1) Add interactivity. This inherently makes advertising more engaging, utilitarian and interesting. See my column from last month.

2) Bring addressability to the national :30 marketplace. This will dramatically improve relevance, since we'll be putting more apropos commercials in front of viewers. We are getting there. Call a friend at Comcast, Cablevision, DirecTV or Dish Network and ask them about it.

*We can allow people to watch what they want when they want on the platform of their choice.

Time was, if you missed a show, you missed it. Then came VCRs and DVRs, which at least allowed you to record shows and watch them on your schedule -- but only from home. Today, as an industry, we are developing TV Everywhere, which really does give the consumer greater viewing flexibility. But that flexibility should also be more readily available on the TV itself.

Part of the answer to that is ad-supported video on demand -- an area where we need to continue to refine the consumer experience. We need to help the owners of content monetize VOD through dynamic ad insertion. We're making progress here, too.

If all these improvements and advances come to pass -- and they will -- the logical eventual outgrowth of making TV even better is a recommendation engine. When you reach the point of being able to watch what you want on the platform of your choice, you will need some assistance in wading through the vast library of content at your fingertips. Viewers may need to offer up a little information about themselves to get back a wealth of recommendations, but the payoff will be enormous. All that looms a little way down the road, but it will be pretty exciting when it gets here.

Gee, I love TV. Don't you?