• by Kathy Sharpe , August 31, 2007

This fall advertisers will face a new reality

In many ways, this year will bring a fall TV season like any other: new shows, the NFL and the World Series.

But in some ways, the coming fall season will be unlike past years. Will I catch the Steelers game online? Check the score on my cell-phone in the grocery store?

Then there are questions about timing:

Exactly when will I watch the first episode of "Heroes"? Premiere night in December in real time? From my DVR?

I'm not the only person facing these questions. Across the United States, people will watch shows on a variety of different platforms.

The coming season's ads will be re-distributed across channels, devices, times and viewing experiences. This re-definition of the scatter market is the antithesis of the old "Must See TV."

Here is where defenders of the status quo step forward and argue that these problems are understood. They claim the industry experts know that TV shows will appear online; they have pre-roll under control; they have a task force in place working on inserting ads into the DVR experience and cell-phones are next. In fact, they say, we will be able to sell ads that will follow our content everywhere.

There is one central assumption that bears closer inspection. All models assume that the ads on TV carry the highest CPMs and that ads on all other platforms are priced at a discount. This is why the advent of online video has been viewed as simply another place to run TV commercials instead of using video to create effective marketing messages.

Consumers who download a program or pay for cell-phone access to shows have clearly demonstrated a desire to engage with the programming. They've sought it out, not just happened upon it when turning on the TV. They've invested time in a download and accepted the advertising. And often they've paid for it in a much more tangible way than writing a monthly check to their cable company.

This process is experientially and measurably different than the consumer's Nielsen measures. So why are the eyeballs, hearts and minds of the consumers who have downloaded or clicked on programming worth less?

The reason is simple. To begin to debate issues about the quality of consumers' engagement with advertising opens a can of worms that threatens the very valuation of the unit we have built our business on: the cost per impression.

If we subscribe to the notion that an active or even paying consumer is more engaged with the programming and advertising, then inversely, we must logically infer that those who do not commit the time to the download, seek out the programming or pay - in other words, the entire television viewing audience - is less valuable. The value of the television ad tumbles versus all other broadcast media; in other words, the '07 fall season brings you the devaluation of the television CPM.

It all hinges on the connection between engagement and action, particularly payment - a connection generally understood as compelling. Why else do most of us ask at the end of a research session, "Would you pay for this product?" Here I'll defer to a higher authority: the financial community.

Recently I attended a major investment firm's annual Internet conference, where keynote speakers included the CEOs of Google and Microsoft. Attendees wanted to know about engagement with content, advertising and consumers.

These professionals, not caring about the ad industry's problem with television CPMs, have already moved on. They know about the implications of redistributing broadcast content.

We should listen to them. There isn't time to cling to illusions. Force-fitting illusions onto a new reality just won't work. The cracks are already showing. The longer this goes on, the more time is wasted that would be better spent figuring out how to measure engagement and monetize content in line with today's consumer behavior.

Kathy Sharpe is CEO of Sharpe Partners, an independent digital marketing and media agency. (kathy@sharpe-partners.com)