Every 15 to 20 years or so, television experiences a kind of identity crisis that redefines how we think about the medium and refines how advertisers and agencies spend money on it. We are now in one of those moments, as TV evolves from a static world of linear telecasting to a dynamic world of nonlinear, anytime/ anywhere video-on-demand that is threatening the very meaning of the word television itself.
TV was first conceived as a broadcast medium, rapidly expanding into nationwide networks of local TV stations featuring a mix of national and local programming, and, of course, advertising. Ever since 1941, when watchmaker Bulova aired the first TV commercial -- a 20-second spot that cost $9 and informed viewers that "America runs on Bulova time" -- TV advertising has targeted the masses. And that broad orientation influenced how media was planned, bought, and sold for years to come. Agencies bought "boxcar" numbers to reach millions of households and viewers at a time. "Gross" rating points became the coin of the realm on Madison Avenue. Media planning was all about reach and frequency, and the latter tended to be based primarily on broadcast frequencies.
In fact, Nielsen didn't even report demographic ratings, and agencies never targeted their TV advertising buys to specific viewers, until the late 1960s and early 1970s, when Ollie Treyz, then president of ABC Television, astutely realized that while his third-place network may have been trailing in Nielsen's household ratings, it had plenty of the young, major-market families advertisers were most keen on reaching. ABC convinced Nielsen to begin reporting demographic ratings, and demos like adults 18-49 and 25-54 became media's new coin for years to come.
Even with its shift toward more discrete audience targeting, TV remained a broadcast medium for at least another decade, until satellites and coaxial cable wires changed everything. Cable had first been popular in rural communities that had difficulty receiving broadcast signals for years. But it was little more than a community antenna service, piping broadcast channels to households that could not receive them over the air.
All that changed in the early 1970s, when Time-Life began distributing a new pay TV channel featuring sports and movies via satellite to cable head-ends and on to cable households. That service, HBO, initially was synonymous with cable TV for many Americans, but the real cable boom started when Ted Turner put a local Atlanta TV station up on satellite and transmitted it to cable systems, creating the first so-called superstation, and the first ad-supported cable TV network. Ultimately that channel became TBS, and it was followed by others, including the first 24-hour news channel, Turner's CNN. And the rest is history.
In its way, CNN was the first channel in a new era of what the cable industry initially dubbed "narrowcasting" -- channels focusing on niche programming and, for the most part, aimed at niche audiences. Most of the early cable networks -- TBS, USA, TNT, etc. -- were essentially wannabe clones of the major broadcast networks, offering broad interest programming for the masses, except they weren't as interesting and didn't reach the masses that the broadcast networks did. But a new generation of cable networks marked a push toward more niche programming, including ESPN, the Weather Channel, and Lifetime, which was created by the fusion of two even more niche channels -- Daytime and the Cable Health Network.
The narrowcasting of the 1980s was nothing like what cable would see in the 1990s, which spawned channels like Scripps' Food and HGTV, as well as those focused on niche content like arts, history, finance, outdoor sports, and micro-news channels, all tailored to suit the interests of much more discrete audience segments.
But even with the great programming segmentation of the 1980s and 1990s, Madison Avenue still planned TV essentially the same way. Nielsen developed slightly more refined ways of segmenting TV viewers, adding income to the age, sex, and geographic breaks. Along the way, Madison Avenue began asking for better data, including so-called single-source measurement systems that could link consumers' purchasing behavior with the programs and commercials they watched on TV.
Arbitron sunk more than a hundred million dollars into one such system, ScanAmerica, before pulling the plug. Nielsen and others also gave it a try. And they're back at it again, this time teaming up for Project Apollo, a system that would use ACNielsen's product scanners and Arbitron's portable people meters to measure how people are exposed to media, including TV, and what products they purchase.
Such behavioral targeting is popular with online media, where there is a steady stream of empirical data linking what people view on the Web with what they do as a result. The rise of interactive, addressable, and VOD TV services is expected to create similar data streams for targeting TV advertising based on viewers' behavior.
Meanwhile, others are pushing for a new currency for planning and buying TV altogether: engagement. So far, no standard definition exists for this buzzword, much less a method for measuring it, but the pursuit has become so urgent strong that Madison Avenue launched a high-profile task force to help develop them, calling engagement the "21st Century GRP." Ultimately, a common standard for engagement may prove elusive, but big ad agencies like Magna Global, Mediaedge:CIA, MediaVest, and Starcom, and TV networks such as Court TV and the Weather Channel have already begun striking landmark deals that guarantee audience delivery based on at least some measure of engagement.
VOD services, meanwhile, promise to make TV both more relevant for consumers and even more finely targeted. Mag Rack, a joint venture between magazine publisher Primedia and cable operator Cablevision Systems, has taken the niche content of special interest magazines and turned them into mini, part-time VOD networks. Instead of aiming at millions or hundreds of thousands of viewers, the Mag Rack programs are based on a model of reaching thousands.
It may be a harbinger for an even more "micro" era of television choice spawned by advances in cable VOD, as well as a burgeoning on-demand broadband marketplace spawning an incredibly niche-oriented array of narrow programming options.
But the ultimate fragmentation of television has come as a result of another online development: the emergence of consumer-generated content, everything from podcasts to video vignettes. This trend has spawned yet another new coinage, nano-casting, in which millions of individual users create and distribute their own video content, spawning a new generation of video aggregation services ranging from Google Video to YouTube.com.