Saving the TV Business Model

As the upfront finishes up, we not only see flat and declining sales being registered, we also see how this impacts media stock values. While I am no longer a TV network executive, I am an informed advocate of the industry as well as an investor in many media companies. So I have a vested interest in the health of the business and in the success of those working hard to make their companies profitable.   

So I say this with the greatest respect to my friends in the industry - I can’t help but feel frustrated by the pace of change in implementing solutions to the changing media business environment. There are many reasons why this stagnation occurs. Internal office environments can sometimes foster fear of change, luddite-ism, risk-aversion and myopia.  Competitive external business forces can sometimes discourage collaboration across corporations. And so we tread water until we either swim or drown.

The current marketplace demands that we take more concrete action. Here are some suggestions as to what those actions might be to invigorate the business model:

Agree to Universal Program and Ad IDs

Measuring audiences across all possible platforms in a failsafe, accurate manner is pivotal to maximizing revenue. But it is taking far too long to reach a consensus on standard universal content recognition IDs for programs and ads. Once we can all agree and apply these codes we can truly maximize the value of all content across all possible and potential platforms.

Janice Finkel-Greene, EVP Buying Analytics, Initiative MAGNA and a strong advocate of universal codes says, “We need to make an honest and compelling case for what we need and stop accepting subpar workarounds as the best we can do. Systems that were once facilitators have become impediments but it’s a situation that goes largely unrecognized because it has evolved so slowly. Now it’s something we live with like a morning traffic jam.” But she warns, “The universal codes are only the first big step in the process.  Once they exist we will have to capture and report them by media outlet for verification and audience analysis.”

Stop Negotiating and Selling on Age and Gender Proxies

There is nothing more frustrating to me than the continued use of the current proxies of age and gender to transact on television. Not only are they arbitrary breaks, (who came up with Adults 18-49 anyway?) they hardly reflect actual spending habits (which are based on lifestyle more than age). They also terribly undervalue inventory by discrediting and ignoring some of the biggest spenders of certain consumer goods which are often Adults 50+. Networks that are compelled to sell on the value of younger demos lose inventory value. Agencies who buy on these breaks are often not effectively targeting the true consumers of their products and services. Yes, I know about perception of brand by younger up and coming consumers but today with the availability of more addressable opportunities, why not sell and post television on behavior and lifestyle?

On the front lines of this issue is Hanna Gryncwajg, SVP Sales for RLTV whose network targets Adults 50+ (which now includes the first wave of Gen Xers). She says, “It has been well documented that the A50+ audience has tremendous buying power.  Boomers (the largest piece of 50+) represent 70% total net worth in America and account for 40% of total consumer demand.  With CPG, older adults represent 50% of the purchase power but only 5% of the advertising revenue is targeted towards A35-64.  I believe audience based buying, driven through purchase and behavior data, would be a win-win for marketers and consumers.”

Compensating for Declines by Increasing the Ad Load Only Makes It Worse

How many times do we “solve” for under-delivery by increasing the ad load? While it might be a short term fix, it can soon become a vicious cycle that only denigrates content quality, encourages more ad skipping by viewers and further erodes overall delivery. There are probably many solutions to this problem. A few years ago, I advocated for pod curation: Higher performing ads could be rewarded with better pod position. Pod lengths could be calculated more scientifically – perhaps by program genre. Neuroscience precepts could be used to improve promo performance in the “A” position and rank ads more effectively. If we can do this it may even help slow ad skipping.  

Steve Sternberg, former SVP Research at ION Media, and author of The Sternberg Report has conducted extensive pod research. He says, "Part of the problem is that Nielsen's C3 measurement does not measure commercials, commercial pods, or DVR fast-forwarding. It is really a pretense at measuring commercials.  C3 was designed as a one-year band-aid until exact commercials or commercial pods could be measured by industry post-buy systems. That was eight years ago.  We know that the first minute in a pod over-delivers C3 by 20-30% while every other commercial minute within the pod under-delivers C3.  So adding additional commercials to a pod should result in further rating declines." 

It used to be easy to kick the can down the road and leave the solutions to the next generation of television executives. However, at this business tipping point, we need to courageously act now to insure that there is a successful next generation.

This article first appeared in www.Mediapost.com