InteracTiVoty: How Broadcast Television Can Avoid the Fate of Newspapers - Evan Young - MediaBizBlogger

As we look at the demise of newspapers and other printed publications, it is worth noting how this trend may apply to the television industry. Prior to the web, newspapers used to be supported primarily by print advertising and user subscriptions. Making content available on the web for free (but supported by banner ads) served to undercut the user subscription base as well as the eyeball count that could be used to justify printed ad rates. But revenues from the banner ad model never replaced the revenues that were lost in the printed domain.

Now let's look at television. Prior to the web, broadcast TV was (and still is) supported primarily by 30-second spots and (in the case of cable) user subscriptions. Since video is much more "heavyweight" on the web than text, it's taken a little while for web-based distribution of TV to catch up to print. But now that it has, what's happening?

Eyeballs from the web (whether legitimate or pirate) are starting to cannibalize broadcast television audiences, impacting ratings. Ad revenues from web-distributed TV shows are experimental, and not (yet) at high enough volume to replace lost broadcast TV ad revenues. Sound familiar? Even worse, the cost basis for distributing shows on the web is much higher. Web distribution is cheaper than print, because there are no trees to cut down or delivery trucks to run; but with video, you're paying to stream to every additional viewer, instead of getting the benefits of broadcast distribution, where the marginal cost of additional viewers is basically zero.

At some point every analogy breaks down, and I don't want to belabor this one. But a major issue with print advertising is that it is only effectively measurable on a gross scale: circulation count, retained impressions, etc. Trackable calls to action, e.g. printed coupons, are merely a proxy when compared to the granularity of banner clickstream data, where it can be known how many were served, how many were clicked, and how many sales were generated. Save some massive re-invention of print distribution (e.g. connected e-readers), print ads will remain relatively "flat".

Now, the ads that support TV distributed on the web are all actionable. Ads that support broadcast TV, for the most part, are not. This is, of course, something we are working to change at TiVo. Unlike print ads, which don't really have the capacity to change due to their specific medium, broadcast TV ads can change, because the medium of TV is being upgraded all the time. Most TV viewers watch some form of digital television with a set-top box with backchannel capability, if not a DVR. Many new TVs have Ethernet built in. So there is no excuse for the ads that run on broadcast TV to remain "flat." This is a significant advantage that old-form broadcast TV has over old-form print media.

At TiVo, we pioneered DVR-based advertising, with solutions that include interactive tagging, video-to-video telescoping, and the ability to broker direct contacts and lead generation between viewers and advertisers. But we've taken it a step further, in being able to broker direct product transactions off of broadcast programming. Saw a book, CD or DVD on TV that you want? You can buy it from Amazon.com using your TiVo remote. Feeling hungry? Order a pizza using your TiVo remote. Excited by the :30 spot for the new Star Trek movie? Buy tickets on Fandango using your TiVo remote. These are some of the ways in which broadcast TV advertising can stand to be enhanced, if it is to compete or compare favorably with interactive ads for TV distributed on the web.

It is no surprise that the revenue model for TV distributed on the web, while innovative, continues to evolve. That it should challenge and in some ways threaten broadcast television distribution should not be a surprise either. But that doesn't mean that the broadcast television advertising model needs to stand still in the face of change; it needs to change too.

Gone are the days when program ratings were all that mattered. Ads need to be engaging, relevant, and actionable. The potential for revitalizing broadcast TV advertising is there. If we fail to capitalize on that potential, then viewers will continue to skip ads, or move to web-delivered TV, where ads can be more effective for all concerned, but at the cost of cannibalizing broadcast programming. And for broadcast TV to go the direction print media is going…that's something nobody wants.

Evan Young is Director of Broadband Services at TiVo Inc.