Adapt or Die! Pt. 1: TV Everywhere (TV 2.0)

[image produced by Adam Goldberg, Principal & Creative Director of TRÜF]

This is part 1 of a series of posts that will attempt to support the notion of 'adaptive' versus 'disruptive' methodologies and media theories... I sincerely hope you find them engaging and helpful, as well as an opportunity to lend your perspective.

Recently, Optimedia's CEO, Antony Young, wrote a piece in AdAge challenging the TV everywhere model, and more specifically called out Hulu's content and distribution strategy. Mr. Young's piece -- in my opinion and that of many who spoke out in a rash of commentary -- was very myopic and self-serving; clearly as a media buyer he is threatened by the prospects, when in fact he should actually embrace them.

Here was my response to Mr. Young:

Interesting post, Antony. Your perspective is well articulated. My question to you is (and with all due respect), should the networks revisit their strategy, or should you?

If I understand you correctly, you're saying that this is an all-or-nothing proposition that should either embrace the traditional media model, or, the more 'chaotic' digital model. Yet there is plenty of research that shows a healthy, symbiotic relationship between viewership online, viewership offline and social participation. In other words, viewers are getting exclusive shorter form content they can watch online, that they are compelled to watch in longer form in their living room... and then talk about it before, during or after programming times. What this ultimately means is that viewers will tolerate advertising if it means they have access to new forms of entertaining content. This is not the death of TV, but rather, its rebirth.

If I understand the networks correctly, this is a way of holding audience retention across platforms, not a means for cannibalizing one channel against another.

There is no question that consumer demand must be managed, and in some cases, mitigated. However, people are still very willing to pay for premium content, and further, different kinds of premium content. If you think about it, what the networks are doing with Hulu isn't so different than the subscription model cable nets have used... so one might ask, if I know I can watch a movie a few months down the road for "free" (or a part of my sub), will this preclude me from going to a theater? Probably not.

On another note, it's interesting that you use newspaper publications as an example of digital eroding the traditional medium. While many publications have undergone a slow death, the fact remains that those who have been earlier adopters in the digital realm have been able to salvage their print businesses -- just look at pubs like the NY Times. And while less people are advertising in print and circulation is way down, this was an inevitability in marketplace shifts and economic variables, not a result of pubs going online.

At the end of the day, we do have to respond to consumer demand, and we can manage it, provided that we give people ample choices in their viewing experience.

Following this was another piece from Andrew Hampp on the everywhere model itself, and detailed in 8 distinct ways what the ad and subscription model might look like.

A gentleman by the name of "J Rosen" wrote what I thought was a thoughtful response, that articulated the delicate relationship between consumer choice and paid content:

I have mentioned in previous posts that the key to survival for content creators is to focus attention on giving the audience options and knowing who your audience is.

Hulu has done a fabulous job of maximizing the audience experience. They have brand safe content, a sleek functional design and have some of the most coveted content in the media world.

The Internet provides opportunities for companies like Hulu to set a precedent. Content IS NOT FREE. But that said, we as consumers deserve choices.

A balance can be struck to provide options for subscriptions, PPV or ad-supported consumption of digital media without having a minority of viewers subsidize the majority.

The Fair Market Value of a performance to an individual needs to be determined. This can only be done through advanced audience measurement. Until a process is in place to determine this value, distribution and pricing of content is simply a guess.

I have worked very hard to produce a process that strikes a balance of fairness for each of the constituents involved; the creators, the audience and marketers.

Perhaps with a little luck and persistence, I will soon have the opportunity to present my process to the powers that be.

The funny part about this is that Mr. Young did not respond to the thread generated by his own post, but did have the presence of mind to comment in this one, in which he acknowledged the viability of the TV Everywhere model... and then referred back to his own article.

This TV Everywhere model seems to offer a sound proposition for consumers, content developers, advertisers and the Networks alike.

The key is building a sound revenue model across all platforms.

I'm not sure Hulu is giving that to NBCU, FOX and Disney. bit.ly/3oksZ6

Antony Young
CEO, Optimedia

There are some insights to take away from these exchanges:

* Saddled by abject fear, hubris and management inertia, media companies have a tough time seeing the light in a multi-channel offering.

* Further, the complexity of content offerings and their distribution channels seems daunting to these companies in developing a transitional model.

* As J Rosen intimates, creators, audiences and marketers can and will exist in a symbiotic and harmonious way, it's just that media companies and agencies will have to 'monitor' and 'contribute' rather than try to 'control' this discourse.

* Ultimately, with better content, more channels and more dynamic forms of measurement, the revenue opportunities for brands and agencies alike will be tremendous, that is, if the agencies can adapt their models to consumer markets, as opposed to disrupting them.

What are your thoughts???

The Theories Behind Connectivity - On Production & Products

On production and products...

You may know your product better than anyone. But what you probably don't know is what that product means to everyone.

Perception is key, and ever-changing.

Production is the art of understanding your audience.

Producing content is about aggregating ideas and reshaping them perspective and context.

Producing great content is about the experience you associate with that product, and one that you can share in perpetuity. 

33% of online Americans sat they engage in product research to help them make a purchase decision. (Insight Report from MarketTools, September 2008). Forrester estimates that almost $400 billion of store sales - or 16% of total retail sales - are directly influenced by the Web as consumers research products online and purchase them offline. This will grow at a 17% CAGR over the next five years, resulting in more than $1 trillion of store sales by 2012. Affluent visitors (with annual incomes of more than $75K) are most likely to research products online before buying (43%). (Insight Report)

Can Behavior Really Be Predictive?

Google's announcement that it will be releasing two new behavioral targeting products begs the question as to whether we're still holding onto - and whether we should hold onto - the notion that consumer patterns are predictive in nature. It's an interesting move by Google, when you consider the fact, among other things, the search goliath has its own cookieless browser (Chrome), which is optimized for video/rich media delivery but not the more standard ad units the behavioral model currently uses. Perhaps given its sheer size and market capitalization, Google is looking to expand a few different slices of the pie and see what gains the most traction.

But let's first look at the nature of marketing and advertising in general, particularly as social media becomes more of a focal point in outreach and analytics. Advertising has been largely based on the idea that we can somehow calculate meaning. Marketing has been driven by the idea that we can somehow predict behavior. Media have traditionally sat in flux, waiting to blur the lines between them. And this is precisely where meaning gets lost, at least when it comes to "personalizing" ads.

Social media has taught us that "fixed" targets and "fixed" messages no longer have any real impact, and as such, there seems to be some significant value in the behavioral approach. The idea here is to effectively "retarget" or "remarket" a message or story based on user preferences. So I frequent a page, and based on browsing history and other factors relating to purchases, I will be fed ads that personalize or customize the experience to my needs and interests. If my interests change, so do the ads.

What we tend to forget, however, is that these preferences change at an incredible clip and change dynamically. Our sphere of influence - those people that we crowd around, converse and collaborate with -  can also change instantaneously, greatly affecting the environments we visit and how often we visit them. So will that same ad and its related content then travel with me? 

Preference-based environments are great provided that they provide great content, but as we've seen, display content for the most part is sub-par, which is also why CTRs are still abysmal. Further, as we as consumers seek more and more utility in the ad content we engage with, portability is almost always a sticking point. We've already witnessed this struggle with ad-supported content through the likes of platforms such as Joost and Slingbox. Hulu - which seems to have a much firmer grip on this ad model - also faces inherent challenges, especially with the decreasing demand on inventory and a greater demand on free, premium content.

Perhaps one way to reskin this cat is to adopt more of an online WOM (word of mouth) approach. When you look at the dynamic of word of mouth - in which you have the real-time ability to course-correct messaging based on direct consumer intelligence - it organically seems to work in concert with the retargeting concept. So, in theory, you garner feedback as an ad network or 3rd party vendor, redirect that flow of information, and based on mechanisms like meta- or microtagging, you then index and deliver the appropriate ad content. There are also platform providers/networks like TruEffect (not a 3rd party) who are levering consumer intelligence and "delivery visibility" to create a 1-1 relationship between the ad unit (brand) and the consumer.

This does not solve the redistribution problem (such as having affiliate options for placement based on "new" environments the user visits), but it does provide a window into the possibility of looking at ad content as something truly personal, and, potentially offers more options for a consumer within a particular online environment.  Cross-marketing (and cross-pollinating) messages has been one method to compensate for the devaluation of premium and remnant online inventory, but it is a discipline that is often debilitating to brands and cannibalizes the relationship they carry on with their advocacy bases - it is similar to what sites do when they try to upsell the crap out of you before you've even had the chance to make a simple purchase. So, we'll need to look for affiliate solutions that extend outside of an immediate environment, and media companies can explore new opportunities to "redirect and gather", not only ad content but sources of information as well as monitoring intent to purchase.

So is behavior still predictive? Maybe. But perhaps it is more adaptive than anything else. Remember that you can course-correct a message, but not necessarily a conversation - that is simply not up to you ("you" being a brand), it is up to the consumer. In a peripatetic world, committing to conversations versus set ideals seems to be the most logical means of existence.

TV 2.1 (or something like that...)

Time Warner CEO Jeff Bewkes' announcement of a "TV Everywhere" plan raises an interesting debate over the claim that people should pay to have access to content through multiple channels of distribution. So basically, you pay a single fee to enjoy content streams over the web, phone and/or a cable box, regardless of frequency or in most cases, amount. While one can understand the need to produce a viable revenue model to support content development (after all, ad dollars have been paying for content), are media execs like Mr. Bewkes drastically underestimating the power of The Mid Tail? 

Let's start with share of viewership. Mr. Bewkes asserts that with this subscriber model, 85% of households would essentially be getting this access for free. But let's consider a likely scenario, which is that viewers will more often opt for a web-only or broadband service in lieu of a cable package. When you look at services like Hulu, and preference-based platforms like Slingbox, the numbers don't lie -- Hulu is now the 4th largest video service on the web. You also have to consider that video networks probably represent a larger captive base that most of the prime cable networks combined. There are rumblings that this is certainly the case with YouTube.  

Now let's look at the value of the content itself. There's a reason why people have been paying for premium channels, HDTV and on-demand services: because there is a greater demand for hi-fi content when the marketplace is saturated with mediocre channels and mediocre content. However, as the Tail extends and more concentrated pockets or niches of quality programming emerge, it seems that there will be less of a "direct" demand for hi-fi content simply because it will be readily available to you. Watch any show on VH1 or The Food Network, and you not only have great programming options, but plenty of options for interacting with that content beyond your TV.

Now we can consider the ramifications for an ad model and the demand on inventory. TV advertising is flat. Why? Because viewership is transitioning to a more "holistic" experience. This means that while people are watching more content on multimedia devices, they're also activated to watch more in their living room - recent ratings analyses support this correlation. In essence, the interactive hand is feeding the traditional hand and vice versa. This is a true form of convergence. So, there still seems to be a loyalty of sorts to ad-supported content, and it seems that the demand on inventory will continue to be, in many ways, dictated by the experience more so than the placement of content itself.

Which brings us to video advertising. Remember that adoption rate in households? Let's assume that the percentage of web-only services, per Mr. Bewkes's assumptions, trumps the 15% mark to something far more substantial - say 25% or 30%. This scenario begs a few questions, the main one being that if browsers are optimized to stream better and more interactive video content (Google Chrome, for example, is optimized for video streaming), then why charge for access to that content? Don't forget that people are willing to deal with ads if they are entertained. And as video platforms get better at delivering ads, and more importantly, integrating branded content, the ad dollar opportunities seem more and more promising.

So is Mr. Bewkes cannabalizing his own future for the need to control the access to content that is already readily available? Perhaps this may be the case. But there also may be some value to his thinking, which is that it will give the cable nets a chance to finally vet out their revenue models, as well as provide more viable options, within a media landscape that seems to be changing daily, if not hourly.