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

Five Fearless Television Predictions for 2015

After attending a range of fascinating and provocative conferences all through 2014 and hearing what the industry experts are predicting for the future of media, I have decided to jump into the fray with my own set of television predictions for 2015. Some are based on what I have heard and some are what I see happening in my own consultancy work and research.

No Dramatic Change Will Occur in the TV Model in the Next 12 Months But … Cracks Will Appear

We are an industry that, despite its advancements and cutting edge innovations, often pushes back against change. Part of this reluctance is a fear of destroying a solid business model that is forecasted five years ahead. As Richard Zackon of the CRE explained at the ARF this summer, we get stuck in “legacy systems and legacy thinking.”  But change is not only inevitable, it is now almost uncontrollable. And with that recognition, companies are beginning to grasp the consequences of inaction. I believe that there will be no wholesale changes in traditional media this year but there will be more emphasis on digital cross platform development and a more standardized measurement for it so it can be better monetized. 

TV Programmatic Will Be a Hot Topic and Will Begin to Advance But …. Slowly

The ability to automate portions of sales inventory is enticing for companies with excess hard-to-sell digital inventory. But what about small unmeasured-by-Nielsen networks that are challenged to quantify the performance of their inventory to facilitate sales? These media companies may see the benefit in segmenting their audiences and offering them via programmatic-like solutions. Even larger national networks can benefit from segmentation. Turner’s Howard Shimmel noted at the PeopleFronts this past year that “CPMs for W18-49 could be $10 but for heavy soup eaters it could be $50.” Local is arguably closer to TV Programmatic than ever before. MAGNA’s Janice Finkel-Greene announced an application with WideOrbit a few months ago enabling “local TV programmatic on a national scale that offers the ability to buy all broadcast across the US.” I predict we will see advancements in this area in 2015 but will still be posting on age/gender proxies. Sigh.

Scripted Content Will Reign in Television But … Not Necessarily in Digital Video

Traditional television currently offers a range of content formats from scripted to loosely scripted to reality to unscripted. Digital content lends well to unscripted with the continued popularity of YouTube, for example. As the competition for attention continues to apply stress to the traditional television model, more effort will be directed into differentiating and branding content platforms and distinguishing traditional TV with scripted series. Bravo, E and VH1 have al recently announced forays into scripted. Expect to see more networks doing so in 2015.

Cross Platform Measurement Standards Get Closer to Acceptance But … Discussions Will Continue

Agreeing on industry standard measurements for cross platform continues to be a heated discussion but the need to find a conclusive solution to quantify multi-screen content consumption has never been greater.  We recognize that the next steps should include “creating common GRPS that are measured across media… validate impression measurement and agreeing to common ROI effectiveness measurements” according to the ARF’s Gayle Fuguitt at their conference this past year. Discussions are sure to continue through 2015.

There Will Still Be Traditional Commercial Pods But … We Will Start to Get Creative

Commercial pods as we know it will not disappear in 2015 but with the ever increasing use of DVRs, networks need to find creative ways to entice the viewer to view and engage with ads. More nuanced research using neuroscience has enabled advertisers to better pinpoint the highs and lows of second by second viewing. Greater implementation of these tools by advertisers coupled with more pod curation by the networks could ameliorate pod erosion. In addition, the ability to dynamically insert ads will move forward enabling better targeting and value to the advertiser. “That is where we are going as an industry” according to CBS’ David Poltrack at the DMW Future of Television conference, “We are making our medium more effective.” Maybe starting in 2015?

This article appeared in full in www.mediabizbloggers.com

The Next Big Step Towards Local TV Programmatic

There is a lot of talk about programmatic moving into television but there are few experts in the industry when it comes to programmatic specifically in local TV. Magna’s Janice Finkel-Greene is one of those experts. She knows local broadcast and her collaboration with Wide Orbit in the area of local broadcast programmatic has led to a transformative new initiative called “Wide Orbit Central” which has been announced this week. 

I sat down with Finkel-Greene who filled me in on the details in this video.

She explains, “What we are trying to address with this new application is to improve the local buying process as we introduce elements of programmatic buying to it… It puts the buying process into an automated framework.”

Currently, buying local broadcast is time consuming. It is bought by individual market and tends to concentrate in low value inventory. There is also the issue of local television measurement which is challenged by low sample, large relative error and therefore performance bounce. This new application, available to all agencies and broadcast stations and affiliates, is considered “programmatic in spirit” in that it is console to console with near real time buying and reporting. It is connected directly to a traffic system (Wide Orbit) as opposed to connected to a source of inventory like other local sellers in the space. Finkel-Greene describes the application as “local TV programmatic on a national scale offering the ability to buy all broadcast across the US.” While it does not include cable at this time, there are plans to expand into cable as a next step. 

The stations decide which inventory they want to sell by DMA. Finkel-Greene says that the system is transparent in that it surfaces “markets, stations, times and dayparts. Currently, programmatic TV is a dark pool arena for local TV – there is not a lot of disclosure.” What Wide Orbit Central offers is a data driven solution, according to Finkel-Greene who notes, “We overlay qualitative data and if a station offer meets our criteria, we can buy it. It is data driven, not whimsical.”

Finkel-Greene concludes, “The transparency and speed of the Wide Orbit Central platform creates the feedback loop we need for continuous optimization.  It makes insights actionable by providing the opportunity to place buys nationally while targeting to the local market specifics.  It’s the best of both worlds.”