• by Phil Antonson , December 10, 2007

As the cable and broadcast networks strive to improve audience retention given the currency of commercial ratings they may want to take a page from the book "Moneyball"by Michael Lewis. On one level, it's a book about baseball. Since I'm not a huge baseball fan I procrastinated buying it. My boss extolled its virtues and its application to the television industry. I heard others compliment it, including an executive vice president at a major cable network who made it required reading for his entire staff. So I read it.

"Moneyball" tells the story of the Oakland A's general manager, Billy Beane. While his team had one of the lowest payrolls in baseball, he repeatedly outperformed teams with much higher payrolls. During his seven years as GM, his winning percentage was better than the Red Sox and almost as good as the Yankees -- the two teams often regarded as the best in the American League. Amazingly, the cost per win for the As was a fraction of these other teams. People were incredulous that he kept winning and made the playoffs four times. How could David keep beating the Goliaths?

Billy Beane took an entirely new approach to running a baseball team in the face of ever-increasing irrational economic behaviors on the part of other team owners and general managers. He didn't rely on instincts or his own observations. He challenged the conventional wisdom of baseball strategies and evaluation of players. Instead, he relied on nontraditional baseball statistics and analytics based on a wealth of historic game data. He relied on advanced analytics to determine the validity of various approaches to more efficiently invest the A's payroll in order to maximize their probability of winning. Once revealed, his approach was adopted by other teams and even other sports.

Cable and broadcast networks should take note. The currency yardstick is evolving. In the past year average commercial minute ratings has been adopted as the metric of choice. How long until minute-by-minute or second-by-second metrics become the driving currency for television advertising? As happened in baseball and other industries, a deeper understanding of the true drivers of attracting and retaining audience will be vital for the continued growth of television advertising. The types of changes that networks are or should be evaluating are often non-trivial and carry a cost. What is the best time to schedule a given program? Is there an advantage to having more programs of a given length? Should I schedule more and shorter pods, or fewer, longer pods? Where should I place my pods? Should I worry about scheduling spots within a pod a certain way? How should I structure these audience retention tactics? What should I schedule in the "A" position to maximize retention and revenue?

A few words of additional caution to networks planning to make decisions based on what might seem like conventional wisdom. Recent industry articles often cite conflicting results. The results may be correct for the specific combination of program genres and audience makeup for the given network but could have a negative impact if applied to a network with different programming and target demographics.

 

Before applying strategic changes, take a page from "Moneyball" and make sure to prove whether that change will have the intended impact for your given network Some initial first steps should include:

 

1. Ensure there's sufficient historical variation in the variables you plan to study (e.g., number of pods per program, pod length, items per pod, etc.). You can't study something and develop actionable insights if there isn't variation -- and sufficient sample size.
2. Analyze a very broad set of data to establish statistically significant results.
3.  Use statistical techniques that control for a range of independent variables. For example, you can't really tell if a retention tactic is working unless you control for things like "A" position.

While it's important to understand the drivers of retention today, it will be even more important to develop and grow a knowledge base as the industry evolves from C3 to exact commercial (EC) or whatever. When that happens, and it will probably be sooner than many people want, the networks with a granular understanding of the factors impacting commercial retention will have an advantage. Those who've taken advantage of in-depth data analytics will understand the individual and combined impact of things like pod length, number of pods, number of items per pod, program genre, product category, advertiser, brand, and copy.

A number of networks are pursuing the three steps above. And some are going a step farther and working directly with their clients in order to develop actionable insights. I think Billy Beane would agree that those organizations that succeed in developing and deploying these insights will outperform their competitors.

 

"Moneyball" Quote: I do not start with the numbers any more than a mechanic starts with a monkey wrench. I start with the game, with the things that I see there and the things that people say there. And I ask: Is it true? Can you validate it? Can you measure it? How does it fit with the rest of the machinery? And for those answers I go to the record books...What is remarkable to me is that I have so little company. Baseball keeps copious records, and people talk about them and argue about them and think about them a great deal. Why doesn't anybody use them? Why doesn't anybody say, in the face of this contention or that one, "Prove it"?" -- Bill James (baseball analyst and author)