Changes in TV advertising to be evident at upfront
EmptyCHICAGO -- The new value propositions and metrics marketers are embracing Google, Yahoo! and other points online are going to make this year's television upfront advertising market anything but routine as unrelenting reminder of the change that will one day grip TV advertising.
The substantial revenue generated by the broadcast and cable upfront is more a result of long-standing process than logic. The billions of dollars generated for the broadcast and cable networks persist on this imprecise practice of guaranteeing a reach of demographic viewers. Nielsen Co. and others are struggling to improve their techniques for measuring audiences for this medium at a time when television programming is extended to more digital platforms than ever before, and a click of a computer mouse can render a frighteningly detailed snapshot of a user.
It is those advanced algorithms and profile building in a new era of consumer targeting and e-commerce that Google, Yahoo! and others are slowly bringing to bear on the television industry and the powerful likes of Time Warner, News Corp., Walt Disney Co., NBC Universal, Viacom, CBS Corp. and other giants.
Surely with the help of trailblazers such as Apple iPod creator Steve Jobs and Microsoft co-founder Bill Gates, traditional media players eventually will find a way to retain the more than $60 billion advertisers spend annually on television by leveraging their branded networks not only across many new interactive media platforms but through a new interactive television-connected media hub that Apple, Microsoft and others plan to carve out of the average American living room beginning this year.
While the continuation of the upfront ritual is assured until there is a well-constructed business model to replace it -- which most likely will take years -- the logic behind the value proposition, metric and create bets on which it is based have never appeared more suspect given the kinds of innovative and constructive advertising and consumer measurement practices emerging on the Internet and various interactive media platforms.
To cite one example, a potential alliance between MySpace and eBay would provide an explosive interactive platform for taking transactional advertising to a first new level. And don't tell me Steve Jobs isn't going to find some way of making the iPhone, iMac and other iPod iterations advertising-friendly.
Despite its initial struggles to sell radio advertising (maybe the proposed merger announced Monday of satellite radio's Sirius and XM will help), Google eventually stands to be the big winner as the search advertising it masters and dominates is becoming the new gateway to a time efficient and cost effective use of interconnected media, if for no other reason than its ability to simultaneously counter and utilize viral marketing--perhaps the most potent force the Internet has to offer.
Such are the many ways Internet-related practices and values are fast becoming common place, and altering old media's business models and expectations. The rapid adoption of digital broadband media applications is bringing us to the tipping point. You don't hear much, if anything, about advertising resisting the change, especially when the giant likes of Google and Yahoo! are tripping over each other to quantify and qualify every legal and ethical detail about the individual users they are delivering.
And then there's everyone else. Among the newer options for connecting advertisers and targeted consumers in the Internet's overwhelming vortex the Podtrac service that matches ad agencies with relevant podcasts through a customized search, in anticipation of advertisers spending $400 million in podcasting by 2011, according to the research firm eMarketer. Comscore Networks, the online measurement service, has begun classifying ad networks by content categories. Jobster and Facebook, and New York Times and Monster Worldwide alliances are aimed at co-branded job sites that assure lucrative transformation of publishing core classified advertising revenues in the new media world which will play handily in a $5 billion local online ad market within five years when it is a small, but promising category in the overall $280 billion US advertising industry, according to Borrell Associates.
Google's search advertising and personalized matching of individual consumers and marketers will be an algorithmic foundation to it all.
In so many ways that are undeniably logical, and also because it has the advantage of building a sales system from scratch, Google's auction-priced advertising places the value on the connected relevance of advertiser and consumer instead of the mere location on any media platform. The flip side of that, of course, will be the eventual windfall of advertising-related revenue. One of the fallacies of the ongoing analog-to-digital conversion is the economic significance of paid access. As ever in the media world, advertising revenues will continue to pay the bills since online, interactive advertising will prove to be a more efficient, cost-effective link between marketers and target consumers in generating not only a single view, but a timeless connection that can be mined for transactions--a marketer's ultimate goal.
For now, Google is mimicking television where it makes sense, allowing advertisers to schedule their online messages in specific day parts, and a willingness to align with trendy online networks like MySpace to secure the traffic that keeps it dominant. It's a timid prelude to Google applying its complex and intriguing algorithms to YouTube and other streaming online video in what clearly is television's new age successor.
While the broadcast networks especially are talking about extending themselves more deeply into the interactive advertising space as part of the upfront -- whether through broadband channels at NBC Uni or DVR measurements at ABC -- it is still unclear whether any notable changes in upfront logistic will ensue.
The real kicker would be CBS emerging from its running talks with Google by giving the Internet search giant a pivotal role in selling not only its radio inventory but CBS' national and local television time. Even on a limited, experimental basis, the algorithms and auctions that are Google's sales tools would begin to have a profound impact on completely transforming traditional television ad sales, which is the medium's life blood. And that would make the online video advertising market that is projected to reach $4 billion by decade's end, according to the Yankee Group, to look like child's play.
In a bold play for relevance in an interactive media world, the owners of the TV networks could shift more of their resources and focus to newer business models and options on the verge of taking off. They could try collectively selling sponsored downloads, streaming video ads and even Google auction-styled placements for select content while eventually making 30-second TV spots the support unit sale.
What is required is a willingness to start fresh by redefining advertising as an opportunity to connect marketers with targeted consumers for their products and services, and make a sale, anywhere in the exploding interactive media universe that makes economical sense.
The smart advertisers simply doesn't care if frequent YouTube visitors watch less television because they plan to be on whatever media platform best facilitates their connection with target consumers at a cost-effective price. How much and how fast advertisers shift their spending around from television to interactive media platforms is the billion dollar question--a perturbing answer to which will give way to a slew of new advertising business models to go around.
The nagging dichotomy between advertising form, function and price on traditional TV and on the Internet is in the process of rendering a new hybrid standard to extend across all media platforms. But this year, it is much more than an "either-or" ad spending proposition. It is about reinventing the effective and innovative ways advertisers and target customers interface in a global marketplace on fire with interactivity. Even if traditional media's structural and psychological transformation don't occur fast enough, advertisers now appear willing to break from convention to follow targeted consumers into customized, niche spaces. That's the difference a year has made.