Any Port in a Storm

In increasingly treacherous digital swells, a rowboat might be just the thing

Who's got time to worry about the end of analog? Charged with reaching huge audiences for his boutique media-buying agency's film studio clients, Geoff Robison, senior vice president of national television for Palisades MediaGroup, in Santa Monica, Calif., is definitely not fixated.

"Because we're trying to reach a mass audience very quickly, anything that changes the way we've been doing things is very disruptive," he says. For media buyers like Robison, that's a long list.

Take Nielsen's "C3" rating, the new coin of the realm at the broadcast upfronts last spring. In their first season using the commercial metric - which accounts for DVR viewing up to three days after broadcast - the networks mostly under-delivered on total ratings points, resulting in rampant make-goods.

"A show that normally does a 10 does an eight with C3, and it's tightened up the scatter market to the extreme," Robison says. "A lot of shows that we rely on buying every week are just not available."

Besides new metrics, Robison is also consumed with new digital methods of transaction, such as Google TV, which currently performs online auctions of local spots on the DISH Network. "It's interesting," he notes. "They can tell you how many people saw each and every ad you run; the accountability is my favorite part. But it's such a new way of doing business. We haven't had any of our clients bite on it yet."

Finding his way through the forest of the digital revolution, Robison isn't that interested in the government's mandatory conversion of the broadcast spectrum from analog to digital. "I honestly don't think it will make for a huge change right off the bat," he says. "For the most part, the people we're really trying to reach get their TV through cable or satellite already."

"There's not an awful lot of focus on it," agrees Bill Abbott, executive vice president of ad sales for Hallmark Channel. "Overall, it will increase the quality of television, but at the end of the day, the impact to the bottom line will be marginal."

Indeed, the estimated 30 million U.S. TV sets that currently receive analog signals via antennae tend to belong to viewers who are a little older - and perhaps a bit less wealthy - than the demographic advertisers typically covet.

Ultimately, the conversion's significance isn't about what happens to a disenfranchised viewing minority. Rather, it marks a crucial step toward an interconnected, all-digital TV advertising environment in which viewers can be better counted, targeted and served by advertisers.

 "It's not going to necessarily happen in 2009, but it will happen, and it will continue to grow in the following years," says Aaron Cohen, chief media negotiating officer for Horizon Media. He estimates that the mandatory conversion should swell subscribers to digital cable programming services beyond the current count of around 60 million. "It changes things because the consumer is going to have to react," he says. "If they're a cable subscriber, they'll need a new box, and this new box will have enhanced capabilities from their old box."

First and foremost, with all cable and satellite systems delivering content digitally to a significantly enhanced subscriber base of next-generation boxes, media buyers see an opportunity to count their audiences more accurately than ever before.

"The biggest thing for advertisers is that it really opens up census-level data collection," says Tracey Scheppach, senior vice president, video innovation, Starcom USA. "It might not be sexy, but it's really, really important for advertisers to have info on their biggest single expenditure, which is television. The days of 12,000 Nielsen households determining what is on TV should be long gone."

Horizon Media's Cohen agrees. 

"I'm waiting for the MSOs who control 60 million homes on their wired systems to organize themselves into a national sample and produce overnight ratings down to whatever granular level is usable," he says. "In terms of measurement, they could put together a sample of a quarter million homes and give you a much more accurate read on what's going on, especially when you have a television universe that's been flattened out to 700 channels."

Last year, the major MSOs began to work together to establish the kind of standardized, interconnected, next-generation infrastructure needed to support such national sampling, among other capabilities. The collaborative project - code-named "Canoe" and buzzed about ever since it was first written up in The Wall Street Journal last fall - would establish common interfaces and systems across cable and satellite service providers, which advertisers could more easily navigate.

Although details about Canoe remain sketchy, the emergence of a standard cable advertising infrastructure could yield a number of other benefits to marketers, including interactivity and addressability. Interactivity, for example, would allow advertisers to offer viewers a gateway to long-form messages via an icon that would appear in a standard 30-second spot.

"If I were into home remodeling, I could click on that and watch a half-hour show from Kohler about remodeling my kitchen," Scheppach offers. "A car manufacturer could put up an entire library of brochures on their cars, and when I'm ready to buy a car, it's ready for me."

Addressability, meanwhile, would allow advertisers to far more precisely target their spots. "So dog food ads only go to homes with dogs," says Scheppach, adding that Starcom has experimented with each of these concepts on a regional basis with specific MSOs.

 "We've worked with EchoStar, Cablevision, Time Warner, Comcast. Everybody has tried a little bit of something at this point, and that's why Canoe is so necessary," she says. "We can't buy 200,000 homes in Phoenix and then have to come up with another plan on the East Coast without some kind of standardization."

For their part, cable and satellite providers understand that their advertising partners now crave the precision of the online world and are eager to share their infrastructure and databases to provide a standardized, next-gen marketing environment.

"They recognize that if TV doesn't become more accountable, money will move to where it can be accounted for, and that's the Internet," Scheppach points out, adding that all of this functionality should be ubiquitous within the next five years.

Beyond next-gen services, Cohen believes the spectrum conversion is an important step toward "the homogenization of broadcasting and cable into one category called national television." More homes will have access to a broad spectrum of high-definition programming on cable, and ratings points will disperse right along with that.

"The conversion is suddenly going to open up a whole new universe of high-definition channels for people who previously weren't seeing them in an analog world," Cohen says. "In the process, it's going to further flatten out ratings between broadcast and cable to the point where we see very little difference in performance levels. And it will also affect how much money the broadcast networks put behind their programming - more money won't necessarily draw larger revenues."

Of course, any projection about the future of digital television is subject to debate. Lori H. Schwartz, senior vice president, director of Interpublic Group's Emerging Media Lab, questions what impact the mandatory conversion will have at a time when many in the under-30 marketing demographic already consume TV on broadband and mobile platforms. 

"I don't know that it will have an effect on the marketplace," she says. "I think you have to redefine your notion of TV. It's not just cable and satellite anymore - it's content that you watch."

For his part, Cohen dismisses the long-awaited induction of TV into emerging media, noting that the usage schism between 61-inch DLP home theaters and tiny mobile devices is bigger than ever. "Where there had been all this discussion of the confluence of the two pieces, if anything, consumer behavior is driving that away," he says. "People continue to have a PC laptop life and a TV life."

Digital or analog, Robison hopes the platform of national broadcast television survives the mandatory spectrum conversion - and the broader digital revolution - intact.

"There are a lot of people still dumping money into broadcast for a reason: It still generates the biggest audience you can get at any given time," he says. "The industry has been doing things the same way for 40 years, and the faster things evolve, the more difficulties there are."

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