"On TV And Video" is a column exploring opportunities and challenges in programmatic TV and video.
Today’s column is written by Bryan Noguchi, senior vice president and media director at R2C Group.
How will television improve over the next five years?
It’s not a fair question, right? Improve for whom? Audiences? Networks? Advertisers?
The reality is that it is transforming rapidly for each of these players, and advertisers need to figure out how this will impact our industry. So how can we position ourselves in such a way that it remains a business (which, by the way, is not a gimme)?
No Reason To Watch (Or Buy) Junk
So let’s pick off the easy one first. For viewers, I’d venture to say that the content has never been richer.
But I’d say that the value exchange for watching that content has never been in more flux. With over-the-top (OTT) on-demand platforms and the steady march toward converged DV and linear experiences, it’s hard to know as a viewer what things are worth your time. If I subscribe to too much OTT stuff, such as Hulu or Netflix, my monthly cash outlay could rival my cable bill. If I watch too much paid on-demand programming, I can get myself into the same situation. If I want live sports, I can’t get rid of cable or satellite (not yet, anyway), and I certainly can’t escape commercial advertising.
So what’s the price of my attention for the things I want to see? Is it better that it’s a financial exchange or an attention exchange? Or should it be more seamless than all of that – is some form of native advertising/product placement/integration fair to me?
I will say this: Great programming increases my cost and attention tolerances. There’s no substitute for compelling content, and the trajectory is that TV shows are going to get better. To which degree the costs of these shows are subsidized with inexpensive and increasingly uncompelling reality TV ad vessels remains to be seen, but as these costs rise and the cash exchange for the viewer increases, I think it is fair to let some advertising creep in, to help alleviate some of the cash burden.
Of course, this doesn’t mean that I’m going to see Game of Thrones’ Daenerys drinking a Coke while plotting her return to Westeros, but I could see a future where I might see a few “brought to you by” breaks in exchange for watching a week-old episode without an HBO subscription.
I think the long-term implication here is that networks will broker more in ad experiences than in spots. The currency of exclusivity will gain purchase. This preserves TV’s one great asset: scarcity. At the end of the day, the potential inventory is relatively finite, and exclusive or limited opportunity placements could command real value – both to the network and the advertiser. And if we do our advertising and marketing jobs correctly, it could be of value to audiences, too.
Right Audience, Right Message
The other currency – the one that I think more players are banking on – is targetability. As appealing as this is to me, there’s something about this that reminds me of mortgage-backed securities. Think of the 18- to 24-year-old demographic as the triple-A mortgages that once got bundled with a lot of sub-primes. I want to invest in the triple-As, and I want those exclusively. But the networks still need to monetize the rest of the audiences delivered by a given vehicle – the sub-prime audiences, if you will – and this remainder can be diced up in a million different ways, such as men over 65 or stay-at-home moms ages 25 to 35 years old. You name it.
The point is that someone is going to end up with inventory they don’t want or maybe don’t know they don’t want. Either that, or someone will pay an outsized premium on the most desirable segments to offset the perceived loss tied to the delivery of the audiences no one wanted.
The most common side effect of targetability is lopsided frequency, where a small audience is exposed to the same ad so many times, it’s as though negative impact was the goal of the campaign (don’t tell me you’ve never experienced this as a video-ondemand viewer). Basically, it’s still hard to cobble together scale from highly targeted campaigns without reaching the same people many, many times.
The other issue in this scenario is that advertisers will be tasked with improving the contextual relevance of their ads – more versions, meaning more production expense. I’m guessing there will be some way to templatize this, or that a technology for something akin to dynamic ad creation will emerge from the mist. That’ll actually be pretty cool, but I don’t think it’s here yet.
The Business Of Subsidy
At the end of the day, advertisers and networks are in the business of subsidizing compelling entertainment. In my ideal world, audiences derive as much pleasure or benefit from my messaging as they do from the content that it surrounds, and I think we’re on the path to making that truer than perhaps it’s been before.
Technology will help us match messaging to audiences and integrate better into viewing experiences. I’m excited to see where this leads us.
But there’s always a disruptor out there, isn’t there? How many of you have started thinking about how advertising works in a virtual reality environment? In five years, will this column mostly be about Magic Leap and Oculus Rift? (I kind of hope so.)