SMG's Muszynski: Online Video Could Kick TV in the Rear

One of the most influential media buying executives told players in the online video market Wednesday that even with appealing content and superior targeting capabilities, the industry is quizzically underperforming.

"How are you not kicking TV's ass?" John Muszynski, SMGX's Chief Investment Officer, asked.

After all, TV is charging more for less, which should be an opening to peel dollars away from it. On average, TV audience levels fell about 8% last season, Muszynski said. Yet, as the upfront marches on, networks are commanding notable price jumps.

"Despite those shrinking audiences, advertisers are signing up for 9% to 12% increases," Muszynski said. "It's ridiculous."

(In fairness, Muszynski's Starcom MediaVest Group pays those rates.)

While prices for TV rise, online video costs are flat to down, Muszynski said. Further showing online video's value, his team spends hours trying to find ways to turn TV into an advertising platform more like it, with the addressability and interactivity. "You have all those tools at your fingertips," he said at a MediaPost event.



That's when he wondered why a good boot hasn't been delivered right into TV's posterior. (By the way, Muszynski, who has bought TV for decades, would like nothing better than to land a good kick. His SMG team has been working aggressively to spark an online video boom.)

"The TV dollars are continuing to rise and they are there for the taking," the pleasantly ingenuous Muszynski said. 

But reasons for the slow progress -- even as data does shows ad dollars are shifting online -- include industry leaders failing to work together in ways that have worked in the TV business. Desperately needed, Muszynski said, is some sort of common currency.

In TV, Nielsen is sort of like the government: everyone needs it, but also bashes it. TV buyers and sellers are constantly prodding it to keep up with changing behaviors. Several years ago, Nielsen began offering "C3" commercial ratings and, after considerable disagreement, the industry coalesced around it as a currency.

Online video, Muszynski said, frustratingly hasn't made much progress with developing "clearly defined, industry-acknowledged metrics" that could allow buyers to better evaluate their options.

"And at the end of the day, that's what we're looking for," Muszynski said in his keynote address. "These standard metrics are needed to truly leverage all of the data out there, so we can measure impact against our objectives."

Seemingly calling for a summit at SMGX headquarters in Chicago, Muszynski also expressed a need for standardization in how the market works, "some type of agreement on what is going to be sold and how."

To be sure, there is a growing upfront market for online video, which largely involves deals with networks that meld their TV and digital inventory. Fox has made deals where a portion of TV make-goods would be delivered on one of its Web properties.

But outside the networks and some other established players, the online video market is a mishmash. With ad networks and other wrinkles, it can be as tough to meander through as the online display market  was several years ago, Muszynski said.

Coordination and standardization are needed before the hour gets too late. Online video's value is potentially unmatched, but it may only be realized if a successful market infrastructure that allows its unique value to flourish materializes.

Maybe ironically, as Muszynski expressed frustration with TV's pricing, he praised how its upfront market functions and suggested there could be a blueprint to follow there.

"(The) process is so streamlined and so efficient everybody wins," he said. "Marketers get better pricing, premium content and they get their added value. The sellers efficiently sell significant ownership positions in their inventory. There are very clear similarities between television and online video."

Not enough though. according to Muszynski. Yet.

5 comments about "SMG's Muszynski: Online Video Could Kick TV in the Rear".
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  1. Alvaro Saralegui from MediaSpan, June 8, 2011 at 4:56 p.m.

    If Ratings are viewed as supply, and ad dollars available for network TV as demand, then we simply have demand exceeding a dwindling supply causing prices to increase. This has been the case since the 80's when network ratings began to fall. Its not outrageous...its economics.

  2. John Grono from GAP Research, June 9, 2011 at 12:15 a.m.

    Totally agree Alvaro, but I would go so far as to say that it dates back to 1776 when Adam Smith wrote extensively about the laws of supply and demand. Tv just does it extraordinarily well.

    My favourite saying I have heard is that as media fragments into smaller niches, TV has the largest niche in town and charges the premium!

  3. Dan Ciccone from Tribal Fusion, June 9, 2011 at 4:14 p.m.

    Online is not kicking TV's butt because TV is a lazy medium where its entire universe is consolidated to a couple of hundred channels which are all easily searchable through the simple interface of an electronic programming guide. Out of 300 channels, most viewers actually only watch up to 4 or 5 on a regular basis.

    Video on the internet lives basically in an infinite universe which has a much more complex search structure to find what you like, and unlike TV, crappy video can exist huge quantities.

    And online video typically offers better performance when it comes to ad recall, brand lift, I would question why agencies are paying premiums for TV video when research shows that the online video viewer is much more engaged.

  4. John Grono from GAP Research, June 10, 2011 at 3:04 a.m.

    ... apart from the research that shows that TV is more 'engaging' (how I dislike that term!) than online video.

  5. Kevin K from Anonymous, June 10, 2011 at 2:36 p.m.

    TV audiences in decline, but upfront TV buys continue to flourish. Marketers and their ad agencies (creative) love TV because commercials are "still sexy." The Leo Burnett's of the media world love to showcase their TV reels. The same goes for the CMOs across the country, they love to say, "look at our TV spots, aren't we cool?"

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