• by John R. Osborn , Op-Ed Contributor, May 31, 2012

Traditional television outlets have built tremendous profits over the years by adding more and more minutes of advertising per program in a marketplace where even excessive supply is still exceeded by demand.  The idea that television audiences in the age of the DVR and Netflix are willingly sitting through 20 minutes of ads in order to watch 40 minutes of a program is beyond ludicrous.  Meanwhile, no one on the advertising side of the TV business has ever gotten fired for spending money on traditional outlets.  Advertisers still want to believe that their message is actually reaching ever-declining audiences in traditional television and that C3 ratings (live viewing plus 3 days of DVR playback) reflect that reach. Impressions are paid for whether or not the advertising is actually seen.

Cliff Marks, President of National CineMedia, which sells ads that run before films in movie theatres, talks about other kinds of MIGA (make it go away) advertising.  In-theatre advertising was roundly booed by consumers when it migrated from Europe to North America in the 1990s, and yet it is now accepted by movie goers as a way to keep costs down.  The number of ads is limited and content is not interrupted.  There is a respectful exchange of value for viewers, advertisers and content providers.  There is no need (or technology) to “make It go away.”

With multiplatform, ad-supported T/V (television/video), consumers are empowered by technology and lifestyle as never before to avoid advertising (DVR fast-forwarding, remote control, channel switching, turning down volume to check email & social network accounts, even bathroom breaks).  These tools help consumers fight back when they are shown a lack of respect for the value of their time, money and attention.  The cat-and-mouse games continue,with some media providers trying things like disabling fast-forwarding to “force” viewers not to skip commercials. 

Another kind of disrespect in the current business model goes to advertisers, as revealed by Google’s Larry Page on “The Charlie Rose Show.”  He was asked how advertisers feel about YouTube users skipping ads.  Page said that skipping ads was good for users, and it’s on advertisers to make better ads that users want to stay with.  YouTube’s sales people meanwhile push advertisers to shift network/cable billions to YouTube. 

Finally Dish Network is offering its subscribers DVR technology to skip commercials automatically, “dissing” content providers and advertisers while trying to please and attract ad-avoiding viewers.  Content producers are up in arms, with lawsuits being filed -- and, as seen with Netflix, producers threatening to withhold content if Dish keeps bypassing the current monetization model.

It’s a Rodney Dangerfield world: Consumers, advertisers and content providers just “can’t get no respect.”

It’s clearly time for all parties to move to a noninterruptive and more respectful exchange of value through a quid-pro-quo model. (Quid-pro-quo is Latin for “this-for-that”).  Hulu has tested this concept by giving some viewers the option to view all commercials prior to the selected program. With fast-forwarding disabled, however consumers can still avoid this pre-roll by directing attention elsewhere.  This can be remedied by something like the Ultramercial model, where interactive technology is used to guide viewers through a passageway of choices, allowing them to create their own ad experience and voluntarily “paying” time and attention in exchange for content. (Full disclosure – I was formerly business development director for Ultramercial).

Here’s how the new, respectful quid-pro-quo value exchange would work:

• T/V consumers respect content production and distribution costs by agreeing to devote a reasonable amount of time and attention to advertising, usually mixed with a reasonable amount of financial resources through paid subscriptions or pay-per-view (PPV).
• T/V producers and distributors respect consumer time, attention and financial outlays by going to a non-interruptive, reasonably short “quid-pro-quo” trade of content for those viewer investments.
• Advertisers respect the cost of producing and distributing content and consumer time and attention needs by shifting to a cost-per-engagement system of payment and valuation, rather than relying on cost-per-thousand (CPM) impressions that may or may not ever be seen.

The idea of advertising paying for content has been an implicit “social contract” since radio sets were first sold in the 1920s and programming was free thanks to sponsors.  Now T/V comes to most Americans through a paid subscription, so content is not free, but still subsidized through ads.  In an on-demand, interactive, multiplatform world, a respectful common ground must be found between viewers, advertisers and content providers through a quid-pro-quo model. The exact form and valuations will evolve with the marketplace.

I don’t see traditional outlets like cable systems and TV networks moving away from the current business model any time soon, so in the end I think a new respect-based, quid-pro-quo business model will take root on emerging T/V platforms. Once success is established on newer venues for all stakeholders, the new model will be embraced by the old-school media companies as well.  All that’s needed, as Aretha Franklin pointed out so well, is a little respect.