At December's iMedia Summit in Arizona, two of the brightest minds in all things digital provided insight into the look of media in a consumer-controlled world. Rebecca Weeks, iMedia's Summit Content Director, started the session off.
Rebecca Weeks: Continuing our discussion about the redesign of old media (see Doug McCormick's keynote address on Lessons from Cable), we will now have a presentation entitled “All Things Video -- Key Lessons Learned From TV’s Battles," led by Tom Morgan, co-founder and CEO of DiMA Group (Digital Media & Advertising Group), and Tim Hanlon, Senior Vice President Director Emerging Contact at Starcom Media Vest Group.
Tim and Tom will discuss how new technologies such as PVRs, interactive guide navigation, and video-on-demand are providing consumer-controlled environments that go beyond the traditional boundaries of impression-oriented mass media. They will also provide us with an update on the state and promise of enhanced video, an example of their research lab’s findings as well as an overview of how their practices are shaping the modern advertising market place. Throughout these examples, they will prove to us that TV and the Internet are not simply converging; they are rather colliding into one medium.
Tom Morgan is a 20-year veteran of the world of interactive services with a focus on early stage business development and economic issues. In 2002 he organized an emerging digital media forum called Digital Spectrum where advertisers asked the pivotal questions that were addressed in the DiMA Group’s groundbreaking report. He served as the first vice president of Business Development and West Coast General Manager for America Online and led the initial launch and partnership with Apple Computer. He is a Founding Officer of Broad Vision where he worked on the ITB Initiative and in 1995 was recruited to serve as President of IDG Interactive Services, where he conducted early development work in the areas of innovative advertising and ecommerce.
Our second presenter, Tim Hanlon, is responsible for all U.S. client activity and agency initiatives in the field of Emerging Media Technologies. Not only has Hanlon had a decade of traditional and interactive agency media experience, he has also had a substantial journalism experience, having written for CBS News, Sports Illustrated and The Voice of America. Tim currently serves as Chairman of the Four A’s Advanced Television Committee; as a member of the Steering Committee of the Innovation and Digital Advertising Consortium; and as a Member of the National Academy of Television Arts and Sciences Advanced Media Committee. Let's give Tom and Tim a warm welcome.
Read part one of the transcript here.
Editor's Note: Tim and Tom both spoke throughout, and from time to time our audio had trouble distinguishing their voices. Once we have the video (to be hosted on AOL) we'll go back and insert the markers. In the meantime we want to bring you the content. So here's part two of the transcript.
We worked together on something called Adlab also. We have learned a lot about consumer likes and doesn’t in a video setting. Let me give you a couple of things that they do like that we have learned already. One, the consumer is in control. I call it a narcotic from which they will not be weaned. They like being in control. They will resist any attempt to eliminate fast forwarder user control. They get it; they love it; they want to be the programmer. At least they want to be in control of where they are and how they use the medium.
Relevancy and personalization are key. Television historically has been a broadcast-based medium. What we will show you is the kind of …
Be careful as you move to video in terms of clutter. The idea … have you seen those bugs now on television? They come over and try to promote a new show. It drives you nuts. Well if you start overlaying things all over your video sequences, much akin to the way that the banner ads and the pop-ups on the Net were present, you are going to have some major problems in terms of consumer acceptance and consumer push back. Time-shifting applies to ads as well. They like the idea of saying I am engaged by that ad, but just not now. I’ll move it to the end. I’ll move it to later. Vmail me something to my email account. There’s a variety of kinds of functionality in ad units that require you engage with the consumer and let them be in control.
The one thing that's also being challenged -- they get tired of repetitive messaging. So reach may not be a challenge, but frequency certainly is. It deals a great deal with your cost of production of your ad. I have seen that ad. I am going to fast-forward or skip it now because I have seen it three times. I don’t want to see it the 15th time. So the cost of production and efficiency and re-use of those assets and the currency … how fast you can change your units is very, very important.
And context does matter. There are three types of television formats that are very resistant to DVRs. Can you guess what they are? News, sports, what’s the third one? Reality. Reality TV. Why? Because they vote and pull. You watch it in this timeslot. There’s a vote at the end of the show. You stick around to vote because if you can’t vote in the timeslot, you basically can’t vote. And that voting keeps all of the ads in their context and makes them so they can’t be fast-forwarded because they are seeing it in the period for which it was originally intended.
So you have networked television, just like you are going to have networked-based video. But you have to learn how to keep the consumer engaged with your messaging units. So context and programming type does matter. The comments earlier from Doug about the premium tier -- we will see certain shows like scripted, like CSI. You will probably see this migration of the classic television show up to the premium tier. There is going to be a lot more up there because the episodic things tend to be a little bit more susceptible to the ad-skipping phenomenon and certain kinds of formats like Emerils cooking show, which is great to telescope on and fast forward, deal with in that context, being down in what’s the basic tier.
Again, looking at tiering structures, service offerings and the rest are something this industry is going to have to deal with too. Let me give you a thing. This is a video out of the Adlab research that tells us that the consumer does get it. Why don’t you go ahead and play it.
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Having an on-demand visual medium that’s actually connected to other sources of information, as in the middle of this show, with the links to additional information would be awesome. And because it’s similar to the experience you get on the Internet, except in a broadcast sort of format, it’s something everybody can relate to. You talk to people like, "Oh did you see so and so? And did you follow that link to whatever on that thing? That was kind of cool huh?"
So, in essence, video across multiple touch points is where things are going and to be able to do some of the things we have been able to do in the online world in the television environment is pretty exciting. It’s also very challenging as again Doug alluded to, to the traditional status quo of how television is bought and sold. In essence, when you look at traditional television, the clusters of television, the Super Bowl type audiences, the tens of millions, I would argue that what television is effectively emerging to is tens of thousands of niches where very focused and targeted advertising environments can be brought into the mix of programming. Right, so if I am really interested in scrap-booking, I have got a number of places courtesy of my cable or satellite subscription that I can go to and actually take advantage of that. Okay, so I am actually coming out live and saying that I am a big scrap-booking enthusiast. All right, so there you go.
So now any advertisers in that marketplace know where to find me. Consumer control, obviously it’s talked about and sort of glossed over. But consumer control goes to the types of programs that I want to watch. And if given limited … imagine, if you think about it, but Nielsen says today, I think, on average, okay; this is the average U.S. household, gets somewhere between, I think it’s like 106 or 109 TV channels. So that’s everything from the most basic over-the-air television viewer to that with the most maximum satellite or cable subscription package. A hundred and six, 109 channels, that’s just linear channels. And it’s only growing seemingly by the week. There’s a new channel here, a new digital spin-off there. You add to that all of these video on-demand offerings. If you are on a cable system like a Comcast that’s literally promising tens of thousands of hours of content to choose from, there’s a whole raft of other video choices to think about there. And then, on top of that, you layer on these DVR decisions that you as a consumer have made; things that you really want to watch but can’t have time to watch in live and real time. That’s a whole ton, a mass of stuff, to sort of wade through and see what I want to watch and how I want to watch it. So the chances are pretty good that the consumer, besides being overwhelmed -- the guide to navigation has to get better -- is clearly going to be interested only in the things that they want to watch and essentially hopefully more attention. And the idea is if the ad messaging is more relevant in those environments, clearly that’s going to be a win-win.
We would argue, don’t be afraid of the fast-forward. It’s the deal. That’s it. Get over it. Move forward literally and work with that fact. All right. It stands to reason that given six commercials and a television pod, or seven commercials in a row, and the ability to fast forward through all of these, it’s no wonder people fast forward. I don’t think that the TiVo and the DVR is the issue. The issue is that there’s just too much video messaging going on in a short amount of time. We are killing; the television industry has effectively killed the golden goose. So what I would argue is to turn around that threat, that challenge and say, "Look, opportunity." Could I maybe create a long-form message that is the entire ad message, that’s hopefully more relevant to the program that’s being consumed?
And with that, I believe you will see new touch points. It doesn’t have to be a 30. Why couldn’t it be a five second? Why couldn’t it be a two and a half minute that a 30 second leads into for later viewing? There are a whole bunch of different video touch points that can come into play and I think our real challenge is, how do we engage the consumer accordingly?
So this is a chart that if you leave with nothing else from this presentation, you should clip and save. I am not saying it’s going to exactly look this way, but it clearly gets to some of the things we are learning in the Idea Project as well as Adlab and some of the other sort of things. So there is experimentation going on. And I think this is very relevant to the majority of this audience. On the top area, you look basically at that red zone. That is effectively the traditional zone of television, the CPM. There’s a big price for that and there’s a big expectation of audience for that. It’s historically how television has been based. And we will pay, in television, for bigger audiences accordingly. But what I think happens, courtesy of interactive technology, ala DVR, ala VOD, perhaps some virtual channel environments where there’s a click environment available. I am not saying complete Internet into TV, but some of those aspects into the television environment. We may start to get to some of the more concentrated audiences and delivery of audiences that can be monetized in a different manner.
Right. So for example, if you start going down the curve a bit so that that yellow zone, imagine, if you will, like TiVo does today, and assuming it happens on a large basis, a 30-second ad that has an indication that there’s more information available. You choose to click. Now whether you go to that video immediately or whether you decide to, if you will, bookmark it and go to it later, there is a longer viewing engagement. Maybe it’s a 60-second ad? Maybe it’s another 90-second ad that sort of tells more of the story than the teaser could in the 30-second environment. Through measurement, we should be able to actually not only get a qualified audience, but we should be able to pay, we should be interested in paying more for that. You are effectively giving 5 percent, 3 percent, 2 percent of the audience in the mass world a chance to go further. And those folks are actually registering their interest in doing so. So there is, maybe in addition to that CPM, the ability to get a little bit more for our money and actually pay for it accordingly. Sounds a lot like what goes on online, performance based.
Go down one further curve, let’s say that as part of that process there’s a name and address grab. A lot of cable systems and satellite systems … TiVo certainly does this today, with a name and address profile, with a button click, to get more information sent. Through the mail, maybe it’s more video sent to you on your set top box, whatever. That’s even a higher level of interest. And thus even more interest in paying for that audience. What are you doing? You are qualifying the audience down the curve. Sounds a lot like direct marketing and it sounds a lot like the optimization types of things we have been doing in the online world. The good news is, for most of us in this audience, that effectively is what happens with television in the years to come. Now it’s not going to happen overnight. But the DVR, the VOD, the converse of this sort of negativity of this, oh the ad skip is happening and the world is falling, or if you are in CBS’s case, hear no evil, see no evil.
The reality is that there are clearly opportunistic scenarios for advertisers and the programmers that deliver those ad messages to go further, deliver more targeted audiences, and by the way, allow people to make money on the selling side doing so. The problem though, and Doug sort of alluded to this before, the status quo of television sellers don’t deal with this very well. Anybody in this room has come in contact with a traditional TV ad salesperson, whatever level, this is death to them. This is anathema to them. Right. This is, oh my god we are going to be Internetized. We are going to be based on performance; we are going to be based on clicks. We don’t want to be judged on performance. But guess what? That’s where it’s eventually going towards. So the knowledge that you guys have accumulated thus far in online and now broadband video and other things is absolutely the skill set that needs to transfer into the television side. I am not sure all of the sellers are aware of that yet. Part of it is, show me the technology that allows us to do it; we’ll sell. We’ll see. I am arguing; it’s happening a lot faster than a lot of people think.
Tomorrow: Further defining touch points, and more.
