Why Fox Wants You To Pay Attention To What David Levy Is Doing

It may not be possible to pinpoint the exact moment that media fragmentation reached its tipping point -- when more content was being produced than people had attention to spend with it -- but for some, the launch of the Fox television network 30 years ago was at least an important milestone.

Yes, cable TV’s multichannel universe had already begun splintering media consumption across an array of new channel options, but Fox fragmented consumer attention in an even bigger and more symbolic way, expanding the network television universe from the “Big 3” to the “Big 4.”

The explosion of channel options that would follow -- both linear and nonlinear -- over the next three decades arguably has been the No. 1 factor changing the way brands reach, engage and influence consumers in what some now believe is an “attention economy” that can no longer be valued on the basis of media exposure, but only on actual “engagement.” So it is probably fitting that Fox is the same company that is now leading an effort to shift the industry’s dependence from impressions-based ad exposures to attention-based engagements.

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It is why Fox agreed to acquire digital engagement startup true[X] two years ago, and why it has put that team in charge of so-called “nonlinear advertising” revenues.

“The connections between brands and consumers have continued to evolve within digital video environments,” CEO James Murdoch stated when he announced the acquisition. In the two years since, Fox has begun integrating true[X]’s methods  -- and importantly, its team -- in an effort to zero-base the economics of the commercial time it sells to its advertisers and presents to its viewers.

“The consumer has more choice than ever before, so the cost of getting their attention is going up,” explains David Levy, a co-founder of true[X], who was recently put in charge of all nonlinear advertising revenues for the Fox Networks Group.

In that role, Levy is developing new products, methods, metrics and advertising models that are all designed to achieve two corresponding goals: to increase the amount of advertising revenue per minute and to reduce the number of ads the average consumer is exposed to during Fox shows airing on nonlinear platforms.

While Levy’s portfolio includes inventory on digital and video-on-demand platforms, the work he is doing could ultimately portend new business models for linear viewing as the ad industry begins rethinking its historic impressions-based ad exposure metrics. Nearly half (47%) of advertisers and agency executives surveyed recently by Advertiser Perceptions for MediaPost said they believe time-spent exposure to ads will become a form of media-buying currency, while 27% believe it will become the ad industry’s standard for media buys.

While only 20% see the discussion surrounding time-spent measures of advertising as a “novelty,” few would argue that it has not become a major focus for Madison Avenue, as advertisers and agency execs are trying to come to terms with increasing choice and fragmentation and decreasing exposure to advertising.

Levy’s mission is to explore alternative solutions to simply increasing the number of ads -- especially ones that increase the yield for both advertisers and consumers, and as a result, for Fox’s programming.

Levy says Fox is developing a suite of new ad products that will be tested over the next year to learn which ones generate the best return for advertisers and views, but he acknowledges that shifting the ad industry to “pricing based on attention will be difficult.”

One of the problems, he says, is that it is difficult to scale pure attention-based models like true[X]’s “engagements” to the mass reach and frequency scale of television advertising.

The true[X] engagements are ad experiences that consumers explicitly opt into, usually because the brand is providing access to a premium content or gaming experience. Those engagements generally reap high CPMs, but they have relatively limited reach.

Fox has already begun to experiment with a variety of new formats and will introduce more over the next year, including ones that increase the yield of advertising by improving the relevance and effectiveness of ads via “advanced targeting” methods -- “where we will have better targeting so we can hit someone with a more accurate ad," Levy explains. "When we do that, we are likely to secure higher CPMs. We can then decide whether to reduce the number of commercials in that particular pod.” 

Levy says the strategy is part of a corporate mandate to improve advertising yield as well as consumers’ experiences with Fox shows, but that it will take time to find the right balance.

He says Fox researchers have been tracking the sentiment of viewers toward shows that have fewer commercials in them, and Fox has even begun to promote the benefit to viewers in nonlinear TV environments.

Recently, it began running ads promoting digital VOD viewing on Fox Now for the series “Empire,” which includes a message from sponsors such as GEICO noting that it is being presented with “limited commercial interruption.”

While the time-spent yield model is still relatively new, Levy says Fox can already point to some bottom line returns. In its fiscal first quarter 2016, “we were able to increase our revenue per view by 16%, year-over-year, while decreasing the ad time by 13% by implementing new ad formats.”

Needless to say, Fox’s results do not occur in a vacuum. The battle for consumer attention is being pulled in multiple directions, but at least insofar as it exists within Fox’s programming, Levy says the plan is pretty clear.

“As long as we’re maintaining or improving the revenue per minute, then we’re in a good spot,” he says. “As we do that, we are going to reduce the ad load that people have to sit through. Our belief is that in order to really compete with ad-free options that are out there from a consumer’s perspective, we have to provide better canvases for them to watch.”

6 comments about "Why Fox Wants You To Pay Attention To What David Levy Is Doing".
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  1. Jack Wakshlag from Media Strategy, Research & Analytics, December 24, 2016 at 3:28 p.m.

    Deja vu all over again. 

  2. Ed Papazian from Media Dynamics Inc, December 27, 2016 at 10:34 a.m.

    Joe, one small point before I comment on the time spent issue. Fox is not a full fledged broadcast TV network---it never was. Fox puts out two hours of primetime fare nightly plus sports, mostly on the weekends. That's about all---no early AM, no daytime, no news, no weeknight late night shows, no political discussion shows, etc. We can't equate a primetime effort, which is equal to two thirds of the nightly output of a CBS, ABC or NBC, to Fox being a full total day "fourth network". Fox has had numerous primetime successes over the years---"The Simpsons", "American Idol", "Empire", etc. so I'm not knocking that...but it is not a fully programmed broadcast TV network. Period.

    As for time spent, I assume that here we are talking almost exclusively about digital ads. In which case, it is clear, the longer the ad is in view---which does not mean that it is actually viewed----the better the chance that it might be seen. No problem with that. But the same kinds of data are not available for "linear TV", radio or print media, where the overwhelming bulk of branding ad dollars are spent---like 80-85% of them. So it is hardly appropriate to believe that time spent with the ad---again, not necessarily paying any attention to the ad----will be a blossoming metric or buying/selling "currency" for "legacy" media---unless all---or most--of their audience tonnage, somehow shifts to digital platforms---which, clearly isn't in the cards for the foreseeable future. Eventually---perhaps, but not in 2017, 2018, 2019, 2020, or quite a few more years beyond that.

  3. Joe Mandese from MediaPost, December 27, 2016 at 10:47 a.m.

    @Ed Papazin re. Fox's "full-fledged" network status: Your definition, not mine, nor Nielsen's, nor most people who plan and buy network TV.

    http://www.nielsenmedia.com/glossary/  Network – A program distributor interconnected with stations or cable systems for the distribution of programming.

    https://en.wikipedia.org/wiki/Television_network

  4. pj bednarski from MediaPost.com, December 27, 2016 at 11:35 a.m.

    I agree with you Joe, but I think when Fox first started, some complained that Fox owned stations were running off-network shows in the prime time access time period where first-run syndication,or local shows, were supposed to be. That would seem to be a violation of the rules. Fox argued that according to the FCC's definition of a TV network, Fox did not qualify, for most of the reasons Ed Papazian noted. It was not, by definition, a network. Maybe it still isn't. 

    Murdoch used a loophole. What do you know!!

  5. Ed Papazian from Media Dynamics Inc, December 27, 2016 at 12:10 p.m.

    Joe---and anyone else who might be interested----the evolution of the Fox network as well as the WB and UPN networks in the late -1980s and 1990s is covered fully in my book, "TV Now and Then", but the motivation of the parties involved was primarily to create alternative primetime access for shows their parent companies might wish to produce and crack the ABC/CBS?NBC monopoly in this regard. While some daytime and weekend childrens' fare as well as sports and some other types were added, the prime thrust was two- hours- a -night of sitcoms, dramas and, later, reality shows. That's all. As for the definition of a "network", I would think that we have many dozens of "broadcast TV networks" using the wording cited. For example, aren't all of the national TV syndicators "networks" using this definition?

  6. Craig Mcdaniel from Sweepstakes Today LLC, December 27, 2016 at 3:50 p.m.

    Actually "non-linear" has been around a very long time but just never been named before.  I have been in the online sweepstakes publishing business a very long time. Many of our sweep ads were originally created for TV ads then when the internet came along, sweepstakes exploded.  What no one talked about is up to 30 percent of all new ads have some kind of sweepstakes, contest, giveaway or promotion imbedded within the ad. Sweepstakes get acutal interaction between the brand and inputed into the advertisers database.  The sweep may sell a smaller number of products to begin with but they do start the interaction between the consumer and brand.

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