Economics of the New Television Marketplace

"Digital is additive and actually drives television viewership," commented George Kliavkoff, Chief Digital Officer of NBC Universal. He noted internal concern at NBC that it would "cannibalize" TV viewership when it put primetime shows online last fall. But studies conducted by NBC, Disney and CBS all found that viewership actually increased. Fellow panelist David Levy, President of Turner Entertainment Ad Sales and Marketing and of Turner Sports, called for TV networks to consider aggregate audience. "On broadband, NASCAR uniques and impressions are up. Television is down. If you aggregate it you'll find more people are watching" NASCAR than ever.

Asked the biggest trends over the next couple of years, the executives said advertising would change in both its execution and ways it's bought and sold. "I don't think anyone knows whether it's a five-second pre-roll or an overlay or a fly-in, what's going to work and work the best," Kliavkoff said. Carl Fremont, EVP and Global Media Director of Digitas, echoed other future thinkers (Jack MyersMedia Business Report, Oct. 30) in calling for a change in ad pricing models. "We don't really have the right model yet for how media should be priced. It may be impression based, but it will also be action-based as well," he said. And Tim Armstrong, Google's President, Advertising and Commerce, North America, believes the new technologies will help increase the effectiveness of today's TV advertising, leading to bigger ad dollars for TV – an increase that he said could equal the dollars moving to online video.

For programmers and advertisers, using digital and broadcast media effectively is a question of finding the right mix, the four panelists said. For TBS, that means putting the right sports programming on TV and online. "We've been doing this now for PGA championships, where we televise the event on Thursday and Friday but also at the same time we are streaming live portions, we're streaming par threes, different content than what you're viewing on television," Levy said. "We've seen a tremendous lift in TV ratings as well as a tremendous amount of streams." Armstrong said that Google, rather than being what moderator Jack Myers called a "brand killer" – a mechanism by which small shops can level goliaths – is a way for brands to enhance and extend themselves. For example, a Hewlett Packard can use the Web to advertise its full line of thousands of products, something Armstrong called the "long tail of products in a company,"and NASCAR can solidify its position, as Levy noted. "If you have a big brand today and you're not distributing in that mentality … that's an opportunity to lose some of your brand essence rather than build it," Armstrong said.

Panelists also agreed that increased measurement data are not only shaking up the industry but also presenting opportunities. Fremont said that second-by-second measures of advertising viewership – something not universally utilized today – allow advertisers to learn at what point during an ad a consumer responds, for example by calling an 800 number. Kliavkoff confirmed a Wall Street Journalstory that said NBC would announce a deal with TiVo to offer advertisers second-by-second measurement of viewing patterns. And Levy insisted measurement would help the creative departments of ad agencies hold sway, as better ads were measured for better response. "Agencies used to win accounts based on their creative. Then somehow media buying took the cachet," he said. "I think creative is going to come back, be the differentiator." Kliavkoff noted that "buzz" in the blogosphere for upcoming NBC shows indicated very well what new hits would be and that networks could save a fortune if they use such data in program development. And panelists said behavioral targeting – when someone gets an ad targeted to them based on their demonstrated interests (Jack MyersMedia Business Report Aug. 6) – will make ads more effective once it becomes available for TV viewers.

One friction point to watch for will be mobile, where, Kliavkoff said, carriers are taking some 70 percent of revenues, and giving content producers less than 10 percent. While, he said, the mobile companies wanted to figure out a model that works, "we haven't broken the logjam yet." "As an industry we have to work with the companies to fix that or we have to go around them," he said. Crossing that gauntlet should only add to the disruptions in both the digital and mainstream advertising spheres.

The JackMyers breakfast was sponsored by content tracking company Teletrax, which presented findings from a research report produced by Myers Publishing LLC that was released at the event. A free copy of the report -- Tracking, Monitoring and Monetizing Video Content – is available at JackMyers.com.For more information on Teletrax, contact: Peter Winkler at pwinkler@teletrax.tv.