Cable and Internet targeting expert describes how to successfully establish a new ad medium.

Doug McCormick, chairman and CEO of iVillage, Inc., is no stranger to the parallels between the cable and online media industries. An early pioneer in cable, McCormick was president and chief executive officer of Lifetime Television at a time when the cable industry was considered new media. 

Charged with redirecting the flow of ad dollars, McCormick directly competed with more traditional and established media. During his tenure, he and his team established Lifetime as the ninth most profitable network (cable and broadcast) in the U.S. McCormick is credited with raising Lifetime’s market value by more than $3 billion in five years, growing prime time ratings by over 100 percent and quadrupling revenues.

Today, McCormick finds himself in a similar position as he fights for and shapes the online media industry and directly takes on established media again. In a keynote address on December 6th at the iMedia Summit in Scottsdale Arizona, he will present the challenges he’s faced in not just having to demonstrate the value of new media to users, but to advertisers as well. Drawing similar correlations to what he faced in the cable industry, McCormick will share his many lessons learned and discuss how we can apply them today, all while presenting the overlying drivers that he believes are changing the advertising industry today.

iMedia's Rebecca Weeks asked McCormick to describe how he overcame the obstacles in selling new media platforms.

iMediaConnection: What parallels have you found between the growth of the cable and Internet businesses?

McCormick: The Internet business is like the cable business in that neither are powered by their internal or existing structures. Cable wasn’t started by ABC, NBC, etc. It was started by a bunch of upstarts who brought in new sets of hearts, minds, eyes and ears to move the business to the next level. Since this medium was begun by a whole new list of names that had never been heard of before, it inspired more new people to come in and take charge.

The fight we faced to grow the Internet was not a new process. When anything is new, it's difficult the first time around to get sold. I remember when VHF competed with UHF, which people thought was a second-class citizen. There will always be a challenger to an incumbent and a group of smart people that will attack an existing infrastructure. This is not a new concept to the media business.

Some of the slow down in the beginning of both the cable and Internet businesses is due to the new buying process. In each case, professionals have to dedicate a large amount of time to figure out how to make it work.

The cultures of change in the Internet and broadcast businesses right now are similar. Cable became the perfect replacement product for broadcast, and now the Internet is becoming the perfect enhancement product for both cable and broadcast. In this environment when accountability and effectiveness rule, the Internet is a perfect addition to the mix. And not only that, the Internet is providing us with targetability and community. The audiences that the Internet can deliver are unique; television just can't provide them. iVillage's demographic is 34 year-old women, which is a very hard group to find in television. The Internet is a demographic dream.

iMediaConnection: What did you learn in your cable experience that you're able to use today?

McCormick: The lessons I've learned are lessons in human nature. I read a statistic that said when people are presented with a new concept, they will spend 80 percent of their time trying to disprove the concept. This happened to me when we offered television for women. In 1984, when Lifetime began, we told people that there would be a multi-media part of the landscape that would be geared towards women. People told us we were nuts, that women already accounted for most of the television viewing and that it would never happen! So, I've learned that you have to believe in your concept and not spend a lot of time appeasing others who tell you something can’t be done. It's a lot more productive to do something new than it is to argue with someone about it. I'm confident that the Internet is going to help our country, our world and the brands that live in it.

iMediaConnection: How have you demonstrated the value of new media to advertisers?

McCormick: When anything first comes out of the gate, it has to go through a hazing process. The hazing process for the Internet is finally dropping to a close as indicated by the fact that prices are rising. "Economic crowding out" is happening, allowing us to crowd out the lower-end players. Advertisers paying for audiences by cost per thousand have a higher net effect cost per thousand than those who have to deliver on a cost per action/acquisition, so they're being "crowded out." This shows that the Internet has evolved into the second stage of growth.

iMediaConnection: What does the Internet need to accomplish to earn more share of advertising budgets?

McCormick: Interactive executives have to become much more aware of and vocal about interactive's value relative to other media being sold. Broadcast television declares its value either based on its momentum or inertia in history or by showing that product moves after spending money on television. But this is all relative to what? Television's logic is not sound. Instead, we need to prove and translate to our buyers the relative value of our medium.

In pricing it's also important to show relevance to other values. Unfortunately, people in interactive media are much more familiar with cost than they are with value.

We also have to get away from the concept of selling everything that moves. This has plagued the Internet since day one. Technologists focus on supply but they don't understand advertising is focused on demand. Just because we have an available ad doesn’t mean we have to sell it.

iMediaConnection: At which company, Lifetime or iVillage, has it been more difficult to sell advertising?

McCormick: Lifetime was difficult because it was based on a new concept – a very targeted audience. With our initial numbers, it was challenging to get people's attention. I remember when a point two rating was considered non-reliable, and there we were trying to sell .2 ratings in our first week. Big ratings were what the industry was all about. So, in those years I had to use visual cues to show people what kind of audience they were buying. I would bring in a picture of a packed Yankee stadium to prove that our show "What Every Baby Knows" would deliver an audience of young parents that would fill Yankee stadium twice. I'd say, "Don’t you think you'd pay a thousand dollars to get your message to this audience all at once?" Sure enough, it worked. Also, surviving helps. The longer we stayed around, the more people knew about Lifetime. Targeting was a completely different concept 20 years ago. Thankfully, more people today understand it.