Fischer vs. Poltrack: Media in the Millennium IV
Originally Published: May 2 2005
CBS' David Poltrack and Turner Broadcasting's Barry Fischer, two of the media industry's most respected and intellectual observers and analysts, have, for the past month, been debating the comparative values and benefits of broadcasting vs. cable exposure, exclusively in <i>Jack Myers Report</i>. Today, Poltrack weighs in with a response to Fischer's commentary that appeared in Jack Myers Report on April 21 (see below: "Rely on Facts, Not Fiction"). For our readers, the full debate beginning with our column about Turner's Media at the Millennium IV study follows.
Originally Published April 5, 2005
Exclusive Look Inside Turner's New Media at the Millennium IV
Turner Sets Aggressive Agenda to Expand Cable's Share of Marketers' TV Budgets
Turner Broadcasting EVP Barry Fischer is intent on convincing marketers and planners that a dramatic shift of broadcast dollars to cable is not only justified but is imperative. It should not be simply a contingency option based on pricing, he suggests, but a necessary decision to improve their network TV advertising effectiveness.
"We're better than broadcast by far and we have the data to prove it," Fischer told Jack MyersReport during an exclusive preview presentation of Turner's ambitious new Media at the Millennium study. "If clients get the same [national TV media] plan as last year, they are looking at spending more for less and they have a disadvantage vs. competitors who are changing their [network TV] distribution model."
Media buyers, media planners and marketers acknowledge Turner's three previous Media at the Millennium initiatives have provided justification and legitimacy for budget shifts to cable. Fischer is leading the charge with a new and powerfully convincing fourth iteration arguing previous budget shifts from broadcast to cable have been only a fraction of what the data suggests they should be. Marketers and planners, he says, can now use the new Media at the Millennium IV T-Map planning software (developed with Nielsen Custom Research) to optimize reach and cost efficiency across all dayparts and to compensate for broadcaster's over delivery in lower income broadcast-only homes.
In its Upfront presentation last year, Turner made a case for a "One TV World" approach to media planning, an argument that has been co-opted by the Cabletelevision Advertising Bureau in its Upfront presentations this year. Turner executives continue to embrace the One TV World philosophy that viewers don't discriminate between broadcast and cable channels, with the new Millennium IV research offering hard statistical evidence that 60 percent or more of a marketer's national TV budget can be invested in a limited group of cable networks with no meaningful loss of reach and with significant gains in cost efficiency.
The new Millennium IV study addresses previous concerns and criticisms about the study's exclusive focus on primetime by expanding data to four dayparts, offering insights on how the impact of redeploying broadcast to cable in one daypart will affect total day schedule, and providing details on how extensively marketers can redeploy budgets from broadcast to cable without negatively impacting on reach or frequency metrics. The new study again enables planners to enter their own schedules for full Upfront budgets and brand-by-brand schedules to explore the affect of various redeployment options.
While Turner believes its detailed presentation, which Fischer and his team will make more than 100 times in the next several weeks, can have significant impact on planning decisions, the real value, they say, is the ability of planners to enter and manage their own schedules and options. While Turner's presentation advocates large shifts from broadcast network budgets to Turner's entertainment networks utilizing random scheduling configurations, planners can develop scenarios for virtually any combination of networks and dayparts using their own internal planning options and costs.
The Millennium IV study utilizes Nielsen respondent level commercial minute demographic and household ratings, equalizing broadcast and cable and providing reach and frequency performance based on specific viewers exposed to each individual commercial minute. This unique approach enables planners to review scheduling alternatives based on which deliver reach at the lowest and highest costs, placing a "cost-per-reach-point" for every schedule and schedule component.
"In the last four years," says Fischer, the middle third of the seven broadcast network programs, based on ratings, have lost 27 percent of their audiences and the bottom third have lost 12.5 percent. [Excluding WB, UPN and Pax the bottom third of programs have lost 24 percent of their ratings.] In Millennium IV, "we are offering solutions to enable marketers to maintain or increase reach, maintain frequency, and save money for investments in new media opportunities and features." While Fischer acknowledges there is positive buzz around selected broadcast network programming this year, he argues "there is no difference between last year and this year that would make me think anything is different. Net broadcast network gross rating points are down."
Turner Entertainment EVP Linda Yaccarino points out "some of the negative comments about audience erosion from leading cable networks are also misleading, since one large network [TLC] has had abnormal ratings fluctuations that impact the overall picture. Ratings for cable are up," she adds, "and this is the third consecutive year Turner's ratings are up. Cable and Turner have never been in such a strong position."
The primary difference in this year's Turner presentation, in addition to multiple daypart data, is an aggressive attack on the disproportionate influence of broadcast-only homes in most advertisers' media plans. These households, which still have access to only a handful of network and independent broadcast stations, should be identified and recognized in media plans because they deliver significantly reduced value to most marketers. "By over-delivering against broadcast-only homes," says the Turner analysis, "a client with too much broadcast in their schedule underperforms against the 'advantaged' 85% cable universe." Fischer adds, "even at parity costs with broadcast, Turner's audiences are advantaged."
Originally Published April 13, 2005
Broadcast Empire Strikes Back
EXCLUSIVE: New IAG Data Compares Broadcast/Cable Value
"Today, most advertisers invest about 30 to 35 percent of their national TV schedule in cable," points out David Poltrack, EVP of Research & Planning for CBS Television. "In the last industry study that measured actual return-on-investment from cable and broadcast networks for the major brands, if they invested 50 percent plus in cable it was a disaster. The most successful campaigns at that time were using about 20 percent cable."
Acknowledging the optimum broadcast/cable mix has probably changed, Poltrack would welcome an updated version of the 1996/97 "How Advertising Works II" conducted by Media Marketing Assessment and funded by CBS with several marketers. "The study identified the ideal distribution among network prime, network day and cable, and it would be relevant to run every schedule again today in terms of return-on-investment and not just reach. We'd welcome updated insights on how actual dollars invested in broadcast and cable correlate to campaign effectiveness based on sales."
While no industry-wide research has been developed since the 1997 MMA study, Poltrack points out several marketers currently do extensive R-O-I based analyses and integrate custom data into agency optimizers and media plans. "I can't imagine large media operations and marketers will continue to get learning out of Turner's Media at the Millennium presentations beyond what they are able to learn from their own research and optimizers," he comments, responding to Turner's fourth in a series of 'Millennium' presentations promoting the economic value of cable over broadcast.
Poltrack applauds Turner for "a very effective presentation," but suggests "when optimizers began to be the vogue in the 1990s, they generated the basic technique of building schedules based on a conversion of more to less expensive commercial inventory. These optimizers have been adopted by most agencies and have led planners to make a gradual shift to schedules that have an increasing percent of cable. The vast majority of advertisers have made that transition."
Poltrack suggests most major advertisers and agencies have progressed beyond reach models, are now integrating insights on sales effectiveness and environment into optimizers, and have gone beyond the reach and efficiency allocation models reflected in the Turner presentation. "You can't use these models without looking at qualitative and return-on-investment dimensions," argues Poltrack, "and these all point to the importance of maintaining strong broadcast network exposure."
In typical Poltrack fashion, he unfolded an array of third-party evidence in an exclusive interview with Jack MyersReport to support his point that Turner's Millennium presentation is effective but increasingly irrelevant. "Optimizers are used in planning stages because [hypothetical] schedules are not purchasable. Programs are bought in packages. The computer may say to get rid of a spot in "48 Hours" but keep a spot in "CSI." That's not the way the business works. Actual packaging has an impact on pricing and you can't cherry pick schedules the way they suggest or everyone would buy the same 20 shows." Mark Lazarus, president of Turner Entertainment, responds that media value improves when buyers pay premiums for high demand hit shows and avoid packaging them with lower value spots that deliver inefficient reach. "It's about finding the right value proposition," he says, arguing against traditional forced packaging of hit shows with "inefficient" lower-rated shows in the bottom third of networks' schedules.
Responding also to Sir Martin Sorrell's comments regarding broadcast network prices in Monday's Jack MyersReport, CBS' Poltrack comments, "Sir Martin complains about the high price of television time. However, he then goes on to say 'If you position products and services based on innovation and differentiated branding you earn the right to demand a premium. If you brand based on price, you create a commodity.' Premium' television programs are differentiated and innovative," says Poltrack. "That's why they attract such high audiences and resonate with those audiences. The approach we are using at CBS is to build popular television programs into program franchises. These programs offer the emotional connection that Sir Martin is seeking for the products and services he advertises."
Several research studies, Poltrack says, reinforce the premium prices broadcast television deserves for differentiated and environmental advantages. Marketers and agencies, Poltrack suggests, have already factored reach considerations into their media plans and are now advancing to metrics focused on qualitative custom and syndicated research and sales data.
"These qualitative dimensions need to be taken into account," he says pointing to IAG data accumulated between January 1 and February 28 for six broadcast networks and nine major cable networks (excluding live sports programming) on attentiveness, brand recall, message recall and message likeability among 18 to 49 year old audiences. (Household and 25 to 54 data is also available.) Measured cable networks include Discovery, ESPN, Lifetime, MTV, TBS, TNT, TLC, USA, and Bravo.
|(Provided by CBS TV)|
|for January 1 to February 28, 2005|
|Adults 18 to 49|
|Average Viewer Attentiveness|
|Six Broadcast Networks||72%|
|Nine Cable Networks||57%|
|Six Broadcast Networks||40%|
|Nine Cable Networks||32%|
|Six Broadcast Networks||32%|
|Nine Cable Networks||24%|
|Six Broadcast Networks||21%|
|Nine Cable Networks||18%|
Originally Published April 21, 2005
Turner's Barry Fischer Tackles CBS' Criticism
Broadcast Network Response is Skewed" says Fischer
"Turner has never said 'don't buy broadcast.' However, we are asking our agencies and clients to explore the upside of buying only what is necessary," writes Turner EVP Barry Fischer in a response to Jack MyersReport's recent interview with CBS' David Poltrack. "The broadcast network response to our Media at the Millennium IV study, as articulated by CBS' David Poltrack, is as skewed as the broadcasters' current price/value relationship," comments Fischer.
Here is Turner's full response to Poltrack's comments, prepared by Turner EVP Barry Fischer exclusively for Jack MyersReport:
1. A reach point in broadcast is currently 3-4 times more expensive than a reach point on TBS or TNT.
2. Commercial minute respondent level data (the basis for Media at the Millennium IV-as well as many agency and client media decisions) tells us exactly who sees which commercials and how real schedules build reach and frequency in the real world. By adding realistic cost data, we can see exactly what we get for what we pay.
3. The broadcast-only-home accounts for a disproportionate amount of the broadcast audience delivery. It's the "steroid" propping up broadcast ratings. This audience can't afford to buy most clients products and that over-delivering against the broadcast-only home means one must under-deliver against the cable-plus 85% of the country - a group that has considerably more purchasing power.
By substituting large amounts of broadcast, from all dayparts (daytime, late night, early morning, primetime, and fringe), with TBS or TNT, Adult Swim, or Cartoon, we can now prove that clients will not lose reach and not build expensive frequency in their plan against an audience that they probably would never want to target and certainly not want to over-deliver. Further, in doing so, significant funds will be freed up to sponsor or develop targeted promotions or add weeks to a media plan or improve on air weight levels.
In much of the CBS response, Mr. Poltrack describes "soft" values, derived from a current IAG study -- message recall, attentiveness, likeability and brand recall -- these are all important. And clearly, based upon the data cited by CBS, there is very little difference between broadcast and cable - certainly not justifying a 300% cost per reach point premium of broadcast over cable. But because of broadcast's high costs, a client will not be able to afford to stay on the air very long. Being off the air, with no advertising, is not a "soft value," it's a competitive disadvantage. Of course, with any mention of broadcast's "message recall" one must consider the excessive frequency delivered to the broadcast only home and the resulting under-delivery of message to the 85% of consumers that can afford the buy top brands.
Alternatives exist today. TBS and TNT's pricing, relative to broadcast, is highly advantageous. Our reach substitutability is proven. Our programs are among the best television has to offer. Our promotions and client service are regarded as tops in our field. And the respondent level data, along with today's agency and client tools to manage the data, offer clear and unambiguous ways to find the best balance between reach, frequency, weeks-on-air and efficiencies. All of this allows our most creative thinkers the financial flexibility they must have to build new and innovative ways to use the powerful television medium.
The continued movement of national monies away from broadcast to fully distributed cable continues to be the best way to add weeks, weight, promotions and sponsorships to a media/marketing plan. In doing so, a client reduces pressure against an audience that can't afford their products while adding weight against an audience that has the needs and resources to purchase all manner of goods and services.
Robert Louis Stevenson said, "It is the mark of a good action that it appears inevitable, in retrospect." Last year, $600 million was reported to have moved to national cable. At least the same should happen this year.
Originally Published May 2, 2005
"Rely on Facts, Not Fiction" argues Poltrack
CBS Responds Again to Turner Assertions
Turner's assertions involving the performance of the broadcast networks in Broadcast-Only Homes, as is their tradition, attempts to refute by inference what has already been established in fact.
They would have you believe that because the Broadcast networks have a greater share in Broadcast-Only homes and Broadcast-Only homes have a lower-socioeconomic profile, the Broadcast network audience also must have a lower socioeconomic profile. That is the Turner inference. The fact is that all four broadcast networks have higher primetime ratings among adults in upper income homes while TNT and TBS, as well as most of the other major cable networks, have lower-than-average ratings for adults in these affluent homes.
Chart two goes here
Chart three goes here
Basic cable hasn't had an upper economic skew since it passed the 60% penetration level.
The folks at Turner seem to be bewildered by why the top broadcast programs command a premium. Perhaps an example will help.
A movie studio is releasing a new film. It opens on Friday, February 18th. The goal is to drive the weekend movie goers to the studio's film. Thursday night, the night before the weekend begins, is the critical night. They can run two ads on that night, one in CSI and one in SURVIVOR, and reach 17 million different Adults 18-49. Or they could run one spot on each of the 61 measured basic cable networks and reach just 15 million different Adults 18-49.
Before studios can get moviegoers to watch the movie, they have to get theaters to carry the movie. Which schedule do you think will better sell the movie to the theater owner, a spot in both SURVIVOR and CSI on Thursday night or a schedule consisting of spots spread over a hodgepodge of cable channels on that night? The SURVIVOR/CSI combo delivers two million more young adults. And to get the 15 million for the cable schedule, the spots on all the cable channels would have to run simultaneously.
The broadcast networks not only deliver reach, they deliver it when that advertiser wants it. The hit programs on the broadcast networks also provide an element of merchandising that enables the advertiser's sales and marketing team to more effectively sell the product or service through to the key distributors. This is why hit programs command a premium.
But Turner executives should understand the power of these top programs. After all, LAW & ORDER SVU repeats represented 41% of TNT's Primetime Adult 25-54 circulation in the First Quarter of 2005. EVERYBODY LOVES RAYMOND, FRIENDS, and SEINFELD reruns represented 28% of TBS's Adult 18-49 audience during that quarter.
Let me use an automobile market analogy. Buyers are willing to pay a premium for the superior quality of a Mercedes Benz. They are also willing to pay a greater premium for a new Mercedes than they are willing to pay for a used Mercedes.
The television advertising market is driven by the demand for the hit programs. The broadcast networks have always controlled those programs. That is why they can demand a premium price. This is especially true this season, a season in which the broadcast networks introduced an extraordinary number of successful new programs and the cable networks had little success with their new product.
If advertisers are searching for the hot programs with the most buzz this season, that will bring them to the broadcast networks. If an advertiser wants to be where the action is this year, that advertiser will be moving money into broadcast television and out of cable television.