SOON AFTER THE INTRODUCTION of TV in the late 1940s and early ’50s, came the 30-second commercial spot. It became the standard of television advertising and, despite complaints about its buckshot approach to hitting its intended audience, remains so today.
This celebrity of the television-advertising world feels ringed by metaphorical paparazzi, bobbing and clicking away. But there are other forms of revenue trying to nudge into the circle of stardom.
Product integration and sponsorship, a throwback from broadcast’s early days, is thriving. Online advertising, with its increased targeting capabilities is on the rise. And addressable and interactive ads—the 30-second spot on steroids—are gaining fans in the U.S. and the U.K., but in Canada, they’re still jockeying for attention.
“It’s fair to say that the TV advertising space significantly lagged behind technological progress,” says Mark Sherman, executive chairman and founder of Montreal-based Media Experts, an independent media buying firm. “Technology brought change to the landscape: 15 years ago Google wasn’t a factor. Today it is one of the biggest provider’s on the planet. But the face of TV is unchanged. I’m hungry for advanced television applications. I would buy that tomorrow.”
The question is not only what’s available, but how to push broadcasters and distributors out of their well-trod advertising furrows and wait-and-see inertia.
“Canadians don’t want to be pioneers,” says Sherman. “I heard an analogy: We’re second-tier penguins. Americans are first-tier—they jump in first and get eaten. And then we jump in and catch fish.”
Lack of Incentive
Is it merely inertia, then, or shrewdness? Why invest in a new idea, that requires additional technology and complicates a system that seems to be working just fine? TV advertising has enjoyed five years of growth, according to Deloitte Canada, and in its 10th annual TMT (Technology, Media and Telecommunications) Predictions for 2011, its crystal ball saw TV advertising increase by $10-billion worldwide (click here for a clip of its Montreal presentation). With numbers like these, dire discussions about marketing efficiency might be overrated.
“Advertisers are hungry for TV,” says Sherman (left). “Come June, there will be a feeding frenzy in prime-time programs. One reason the industry as a whole doesn’t move forward more aggressively is because they think they don’t have to.”
David Purdy, the vice-president of video and entertainment products at Rogers Communications, believes targeted advertising is coming soon. “We’re on the cusp of advanced advertising becoming a reality,” he says. “There’s not a lot of money being generated to date but there are interesting trials going on right now.”
First up, he believes, are dynamic ad insertion or ad refresh on video on demand. “Right now little money’s been generated by on demand usage off set top box, but this year you’re going to see the ability to generate advertising revenue because they can refresh and put in new ads that makes it easy to monetize.”
Need Harmonized Measurement and Standards
It’s not easy to execute a new system. Currently, there’s no standard for forecasting, booking and analyzing backend data for the various platforms. The industry doesn’t have harmonized measurement tools or a standardized approach, Purdy says.
“You now have four reports coming in on a multiplatform advertising buy. It’s very complicated and hard to explain to the client what exactly occurred. The entire Canadian broadcasting system is dependent on solving this riddle. Everyone needs to get in a room and figure out how to measure multiplatform video and advanced advertising. The faster we figure this out, the more readily available the content will be on demand, on mobile, and the less inclination to steal the content on piracy sites. Right now there’s some person of dubious character uploading the content.”
Better measurement will help monetize it, agrees Bruce Neve, the former president of media agency MEC Canada and who was just recently hired as CEO of Starcom MediaVest Group Canada.
“I’d like to be able to go to Shaw and say I want Glee on app, online, mobile, traditional, and social media conversation and buzz. They can’t do that right now. Traditional media has to invest time, energy and money to take leadership in social media as well. [Broadcasters] need to be able to provide better info about who the audience is for the program and quantify value versus demographic, attitudes and purchasing behavior. If they could, they could charge more for eyeballs.”
Uneasy Relationship
It’s hard to build a strong foundation for anything with your ‘frenemies’, though. Few say it out loud, but most acknowledge that’s long been the nature of the carrier-broadcaster relationship.
The past 18 months or so, however, brought about a cosmic shift in the Canadian television universe, vertically aligning the two main broadcasters with two main carriers. The result? A warming of the relationship.
Sherman says this is key for advanced-advertising options to take hold. “Moving forward to 2011, for the first time, programmers, networks and satellite and cable have a common interest so it’s a very important point in TV history in Canada.”
Although the tension has sometimes been overstated, according to 20-year media veteran Walter Levitt (formerly chief marketing officer at Canwest Global and now CMO at Comedy Central), he does acknowledge that it’s the first time they’ve had to work together.
“If anything is going to stall this, this will be it. There’s an unrealistic expectation that money is going to flow into the system. This is often a missed point when cable companies say they can do this today. It’s easy to say this is going to be a game changer, but most times they’ve introduced in an evolutionary way. Everyone has to be committed to testing it,” said Levitt (pictured).
There’s hope. At Rogers, Purdy already sees the benefits of the carrier-broadcaster consolidations. “We talk about how do we get the best shows on demand whether it’s on the set-top box or tablet,” he says. “We’re working together in a way that we didn’t a year ago.”
While the technology is solid, the revenue model is still in flux. There’s no standard at this point, he says, and the splits vary. For Rogers on Demand, for example, in some cases they do ad sales and keep the revenue, but generally there is some exchange of value for the broadcaster and distributor. Purdy believes with an initial ad, the buy should include VOD, linear, on demand, and mobile all together. “We’re both trying to keep away the pirates.”
Addressable
The well-worn cliché that goes “half of my advertising is wasted. I just don’t know which half” is a fitting metaphor for television-ad buying. This has always been the problem. National ads might reach 50% of the intended audience but what about the rest? That’s like money just being chucked.
Addressable tries to minimize the waste by targeting spots to specific households, and even set-top boxes. “For the most part, people switch channels because the commercial has no relevance to them,” says Bil Trainor (pictured), president of Capital Networks which, among its many lines of business, also represents the Invidi addressable advertising platform, Advatar, in Canada. “The stickiness comes from the usefulness of the ad.” He points to the increase of product placement during the past decade as an indicator that TV wants to make ads more relevant.
If addressable is successful, it’ll make the industry rethink the way media is purchased and priced.
“The digital set-top box has the intelligence to record keystrokes of what channels you’re watching,” he says. “That data is useful. If the box sees I’m watching news and golf, they see ‘geezer’ and then based on where I live, they start with that premise.”
Take the Super Bowl, for example. It attracts a large TV audience—from 8-year-olds to 80-year-olds. “You might see a different commercial than I do,” says Trainor. “Think how much money you can make with the same 30-second spot. Ford could split it eight different ways with different car commercials for different neighbourhoods.”
For him, however, addressable’s geo-targeting abilities offer the most excitement. If a broadcaster’s signal is carried coast to coast but a city car dealership buys an ad that also airs in another city far away, that’s inefficient. “Now, you can sell to the Ford association and you can have 20 different Ford dealers playing in their market….Advertisers get more value for the spot.”
Multiple commercials during a single commercial break — a media-buyer’s holy grail. Then why is it taking so long to take hold here? Regulatory hurdles, and relationship issues mostly, says David Downey, the CEO of New York-based Invidi Technologies, a leader in addressable TV advertising solutions. The fee-for-carriage battle dampened the ability for new technology to move forward at a more rapid pace.
In the U.S., over the past few years, Invidi has signed on with distributors serving 42-million homes and it’s already up and running with 3.5-million subscribers.
Shaw Media has said is testing addressable this fall. “We’re looking at addressable and interactive and talking to a couple of BDUs. We’re going down this road but we’re not ready yet,” says Errol Da-Ré, senior vice-president, sales. “….You’d think it would involve more people, but not in the traditional traffic department—more BDU level. It’s backend operations.”
On a limited basis, could a cable company do addressable? Levitt thinks so. Addressable advertising has gained a toehold in the States because of cable’s leadership but there, cable companies are allowed to sell ad time on the two minutes per hour made available to them by cable channels.
But if it became the norm, addressable advertising would indeed be challenging, he says. “Cost per thousand would have to go up dramatically. The way advertising is sold would have to change. You have to split by sub-rating. Then advertisers have to deliver enough creative. You must set up the computer trafficking systems. You might have to deliver 20 different streams to the cable company. It goes from linear to master control. Right now there might be one person doing the commercial log. You might need 10 people.”
Trainor believes it’ll be a “crawl, walk, run approach….What is the risk if they don’t do this? Look out five to 10 years. Does traditional broadcast model still work when you see erosion to other media?”
UP NEXT WEEK, WE LOOK AT THE ADDRESSABLE ADVERTISING TRIAL GOING ON IN CANADA, PRIVACY ISSUES AND INTERACTIVE ADS.
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