Tag: Online advertising

The 6 Letters Holding Back TV Everywhere

TV Everywhere– the ability to watch any televised program at any time on any device- isn’t a matter of ‘if’ anymore but rather a question of ‘when’ once you consider the evolving viewing habits of US consumers and the changing dynamics of the pay television business. The ‘when’ for TV Everywhere becoming a mainstream consumer experience though will largely be determined by the letters F, G, L, N, P and R. Let me explain.

GRP: The metric used to allocate more than $60 billion in television advertising spend each year is known as Gross Ratings Points (GRPs). This figure estimates the size of the audience reached for a particular commercial during each television program over the life of the ad campaign. Unfortunately traditional online metrics like unique visitors, clicks and video starts don’t capture online audiences in a manner that can be translated into a GRP equivalent so broadcasters haven’t been able to take the credit they deserve, in the form of greater ad dollars, for delivering audiences to advertisers through their own websites and mobile apps or those provided by aggregators like Hulu. The thinking goes that if broadcasters could get compensated appropriately for aggregating consumers for advertisers, regardless of the screen through which the content is being watched, more television programming would be made available outside of the traditional TV model in hopes of capturing the broadest audience possible for ratings and advertising purposes.

The first major attempt at addressing the disparity between television and online audience measurement was introduced last week by Nielsen. Dubbed Nielsen Cross-Platform Campaign Ratings, the multi-screen ad measurement service leverages Nielsen’s Online Campaign Ratings (OCR) with their established proprietary National People Meter TV panel to provide unduplicated and incremental GRP measurement. Nielsen’s OCR has gained momentum in recent weeks having been adopted by 15 online ad platforms as well as by the CW Network to guarantee online audiences to advertisers for the recently started television season.

Regardless of whether it’s Nielsen, comScore’s vGRP, or something else, bridging the audience measurement gap across viewing screens is an important step in bringing the discrepancy between digital ‘dimes’ and analog ‘dollars’ in advertising. This effort shouldn’t siphon money away from traditional television but instead reallocate ad spending in media to reflect the actual time being spent with media across different mediums, which will benefit the internet and mobile. The result will be an increase in advertising dollars for video across all platforms and the availability of more content to support this additional spend, which can most easily be made available to consumers via TV Everywhere.

NFL: Major League Baseball (MLB) has it. The NBA has it. Even the NHL, when they decide to get back to playing, will have it. The NFL? Not so much. What I’m talking about it the ability to watch any game live, in HD quality video across any number of connected devices. The NFL only offers its subscribers the ability to buy access to replays of games only after they have been televised.

With only 1/5th the number of regular season games versus both the NBA and NHL and 1/10th that of MLB, it is much easier for the NFL to package the sale of television rights at a national level for all of their games than it is for these other professional leagues (which rely on regional sports networks and local television stations to broadcast the majority of the regular season). Football’s reining popularity combined with the scarcity of game content versus alternative sports options has enabled the NFL to command $7 billion per year in total broadcast licensing fees from CBS, DirecTV, ESPN, Fox, NBC and Verizon Wireless to broadcast each and every NFL game (in comparison MLB generates about $1.5 billion in national broadcast revenues from a combination of ESPN, Fox and Turner). In the following chart you can see exactly why the NFL commands such a premium:

As you can see, the NFL is the only television program that can concurrently deliver an audience of tens of millions to broadcasters who in turn sell this reach to advertisers for more than $4 million for a 30 second sport during the Super Bowl.

Timing

The current agreements the NFL has in place with these 6 broadcast, cable, satellite and mobile providers run through the 2021 season so it could take another decade before the most popular content on television make a full foray across viewing screens (through the licensing of full content rights, including digital). NBC’s simultaneous live broadcast of last year’s Super Bowl on TV and the internet was a starting point, but without an economic model that can simultaneously grow revenues for the League while providing fans with additional access to content, the NFL has no reason to upset the current revenue apple-cart. When the time comes, expect GRP to play an important role in enabling this.

The issues surrounding TV Everywhere aren’t limited to just these two issues of audience measurement and content accessibility, but most other items, like user and device authentication, can be solved with improvements in technology. It’s the negotiations that will take place between content owners, distributors and advertisers that will eventually determine what user experience audiences are left with, which might not necessarily in the best interest of the consumer. If these three parties can find common ground with evolving consumer consumption needs though, not only will TV Everywhere become a reality, but the groundwork will be in place for the next evolution in television: unbundled, on-demand and IP-based program delivery.

Social Isn’t a Transaction

In late April Facebook celebrated a birthday as the ‘Like’ button turned one. The adoption (2.5 million websites) and engagement (250 million people) of the thumbs-up icon over those first 12 months has provided Facebook with a treasure trove of additional data related to its users’ interests. Combined with the social graph, this data can be leveraged by advertisers to target consumers on Facebook in a manner not available through any other web property or advertising medium. And with web surfers now spending more time on Facebook.com than any other website in the U.S., companies are taking notice, enabling Facebook to double its share of the online advertising spend domestically between 2009 to 2010. Beyond just delivering impressions though, marketers are looking for ways to stay connected with these users, which the Like button has enabled by allowing brands to re-message their ‘Likers’ within the Facebook News Feed. The goal of connecting with as many consumers as possible has led to the emergence of an entirely new sector of online advertising dedicated to helping corporations drive more ‘Likes’ to their brands’ Facebook Pages.

The result? Contests, giveaways and promotions of all types are requiring ‘Liking’ the company as part of the entry process. So what began as an opportunity for brands and fans to find and connect with one another in a social setting has turned into a competition between entities to see who can compile the most Likes in a 24-hour period. So thank you Frito-Lay, you’ve helped turn social into a transaction.

The socialization of the web was the most important development to come out of the web 2.0 era. The advent of blogging platforms and social networks allowed the internet to evolve from a read-only medium to a read/write experience for consumers who quickly became comfortable with blogging, posting and tweeting about every topic imaginable in the process. Inevitably some of these conversations turned to discussing experiences with, and opinions about, products and services, which corporations were not prepared to deal with, since advertising had traditionally been broadcast through a channel that didn’t allow for real-time user feedback.

To justify the time and money being allocated to understanding and managing this social activity, corporate departments, along with their agencies and social media consultants tasked with this job, have turned to quantitative measures such as number of friends, followers, Likes and subscribers as a way to validate their respective effectiveness in addressing the social web. As a consequence, advertising across social environments has quickly become a $2 billion business according to local media advisory firm BIA/Kelsey, which also forecasts that social media-related spending will grow to $8.3 billion in the U.S. by 2015.

The problem with this approach, as Steve Rubel, SVP of Digital at public relations firm Edelman, pointed out at The Next Web Conference earlier this year, is that social isn’t an industry, it’s a behavior. So instead addressing consumers at a personal level, web users are being treated as a metric by advertisers looking to fill their social media quotas. The difficulty for most companies in trying to adopt a customer service-oriented approach to social is that they don’t know how to quantify the return on investment for this type of activity (if you are interested in understanding the right approach to communicating with consumers on the social web I’d suggest reading The Thank You Economy, the most recent book from author, video blogger and wine enthusiast Gary Vaynerchuck, or watch him speak, as I recently had a chance to, about the ROI of his mother).

Worse yet, from an advertising perspective, these user metrics can be easily inflated, as there are plenty of companies that can acquire social connections in bulk for brands to show high Like counts. With the amount of time being spent by consumers in their Facebook News Feed, the ability to re-message these fans and the viral potential of content distribution through the social graph the Like has started replacing email as the most desirable means of communicating with potential consumers. Combined with low open rates, spam filters and unsubscribing options in email, the Like also become more valuable to marketers, leading to pricing of up to $1 per Like from social ad networks.

Buying Likes is the wrong means to building relationships with consumers though, as it is akin to offering kids on the playground gum to be your friend- it makes you feel good about yourself at that particular moment but doesn’t actually change the dynamic of the relationship. Certain users will use the Like button because they generally appreciate the brand, while others will use it in order to receive discounts and promotions, so paying for these types of fans doesn’t make sense, and in the long-term, could end up damaging the relationship between brands and consumers on Facebook.

Many consumers migrated from their initial ISP email accounts because of email spam resulting from signing-up for free services or giveaways, rendering these accounts unusable. By cluttering users’ News Feeds companies risks annoying consumers in the same manner and potentially causing users to leave Facebook over time for newer, less spammy social networks.

So where are the investment opportunities in social?

While Likes are a form of social currency, the business models being built around driving social connections are highly questionable. That’s because the continued growth and success of companies providing social cost per action pricing is predicated on finding the next great social action to arbitrage before advertisers lose interest in paying for Likes because of the lack of quantifiable return on investment.

Salesforce’s acquisition of Radian6 for $340 million earlier this year, to tackle social CRM, does highlight the value of being able to decipher the conversations occurring across the social web. Beyond just monitoring consumer chatter, start-ups need to help brands understand the sentiment of these conversations (both positive and negative), the change in velocity of the discussion associated with the sentiment and the influencers behind these topics. Only then can start-ups provide real value by automating some of the activity around information gathering and distribution across social platforms.

A couple of companies with recent announcements are trying to address this need for clients on the advertising and distribution side of the market as well. Taykey, which just came out of stealth mode with its $9 million Series B announcement, provides advertisers with ways to reach audiences across the social web in real-time by identifying users who are displaying an active interest around a product, service or topic at any given time. SocialFlow, which recently hired an online industry-veteran as President after raising $7 million in April, focuses on solutions for publishers and media companies who want to increase engagement with their audiences by putting new content in front of consumers at the appropriate time.

The automation being provided by these types of companies is intended to deliver better value to consumers and not de-humanize the social experience on the web (which is a risk for Taykey since they do provide cost per action Likes as part of their offering). Since the Like is here to stay, my only hope is that advertisers and consumers both engage with the button at the right time, and for the right reason- like in this ad.