Opinion: The Future of Brand Delivery on TV

All of us can agree on one thing - audiovisual entertainment via television has the most impact in delivering a brand message. It's the backbone of a 200 billion dollar a year global value chain and has been around for over half a century.

What we may not agree on is how brands will be delivering that message in the future, when:

  1. Media stacking (second screen engagement) becomes a norm rather than a niche behaviour.
  2. Ad-skipping is on the rise.
  3. The old model of distribution with broadcasters delivering mass audiences to brands and agencies is over.

And the fact it's all going to change rather quickly.

Shotsberger (2000) reported that though it Radio took 38 years to reach 50 million listeners. TV took 13 years to reach 50 million viewers. The Internet took four Years, iPod took three years…Facebook added 100 million users in less than 9 months and iPhone applications hit 1 billion in 9 months. How long before 100 million Tablets and Smart Phones appear in front of 100 million Smart TVs? Not as long as you think…. 2013 most likely.

Like we changed with smart phones (remember phones were just for making calls a decade ago), we will change how we engage with TV in the future with smarter remotes (control tools) that are more sleek and simple tablets rather than legacy, remote button mazes.

© Richard Kastelein Agora Media 2012

David Martin from Forbes writes:

So while the second screen might be a great vehicle for creating deeper engagement with audiences, more importantly, it is also a device that steals their attention away from the most expensive investment a marketer can make to reach them.

Yes, we can serve ads within second screen apps that are clickable or that can show our videos. And we can do our best to serve those ads in conjunction with what’s being displayed on the first screen in order to mitigate the loss of attention. But we’re still trading dollars for dimes, hoping for a direct response from what are generally smaller, lower-impact ad formats.

The bottom line is that the more we drive consumers to the second screen, the harder it will be to monetize their time and attention.

So what’s the solution? At some point in the future we’ll start thinking more strategically about the marketing value associated with a second or multi-screen content experience. We’ll find ways to make sure that whether an audience is seeing ads on a big screen, a tablet or a smartphone, our advertisers are getting the same or equivalent value for their investment. As the number of options viewers have for consuming their favorite content increases, our greatest challenge will be to find new ways to deliver consistent and platform agnostic value to TV advertisers.

Graphic from From Nielsen Report: U.S. Media Trends by Demographic
Another Nielsen PDF Report: U.S. Media Trends by Genre available here.


But we just want to veg out in front of TV!

Forty years ago, the brilliant Canadian media theorist Marshall Mcluhan, the “patron saint” of Wired magazine, (who brought us Electronic Interdependence, The Global Village and The Medium is the Massage) metaphorically considered the TV to be an ‘electronic’ hearth – a collective and centralized event for the family on the cusp of it’s appearance in the home - mainly because it not only replaced the fireplace as the central part of the living room, it also destroyed storytelling and family interaction in many ways - and the way we used to live before radio and TV entered our realm. Where families played games or read books or shares stories - and were more interactive and social with each other. 

Passive TV viewing is unnatural, like a drug.  Let's face it - it's visual Ritalin for kids. It's pure escapism for the rest of us. And what we have on the tube now is largely drivel. Good drama is being guillotined for bad reality TV. Whomever commissioned Mike Tyson's pigeon training reality show needs to be put on the chopping block... but let me digress. 

The move to a less vegetative state in the living room via Social TV, Playalong TV, and Companion Apps is moving us back closer to a time before when we were more engaged with each other rather than a box providing one directional spoon-fed entertainment pablum. My personal experience was growing up with a father who considered TV to be unnecessary and would not have one in the in house until I was 14. I read more books and listened to more old blues and jazz than most of my friends and grew up playing Chess, Othello, Cribbage, 31, Checkers, War, Trivial Pursuit and scores of other games after dinner with my family. The advent of TV in our house changed the social engagement dynamic. Is the future of TV is aimed to bringing that back.


Skipidee do dah

PVR advertisement skipping we have seen for a number of years - such as TiVo, and services like Sky+, which allow the recording of television programs onto a hard drive, also enable viewers to fast-forward through advertisements or automatically skip commercials of recorded programs. But now, instead of doing that on a drive, it's going to be done in the cloud, in real time. That's a game changer. Startups like Bong.tv are testing the system by offering connected TV applications that offer an online video recorder (OVR).

The BBC iPlayer has a new feature which enables viewers to rewind and restart live TV. Both Freeview and Youview in the UK are aiming towards a backwards EPG. Big Cable in the USA has been working on network PVRs for years already - but have been battling in the courts over copyright issues. Network DVRs have already been launched in countries like Hong Kong (Now TV), Singapore (recordTV.com), Italy (Faucet PVR), Germany (shift.tv), Finland (tvkaista.fi) and other European countries.

From Television Remixed: The Controversy over Commercial-Skippingby Ethan O. Notkin:

If there is one thing that viewers of network television would agree on, it is likely to be the annoying nature of commercial advertisements. One study found that 65 per cent of the consumers polled “feel constantly bombarded with too much marketing and advertising.”

In addition, 69 per cent of those polled were interested in “products and services that would help them skip or block marketing.” Part of the problem is the advertising industry’s use of the widely accepted “saturation marketing” model, which calls for massive increases in the number of advertisements. The emergence of “spam” in the last decade has also contributed to the growing perception of advertising in general as untrustworthy and disrespectful to consumers.

Scarcity as a commodity, numbers as a game

Aggregate share of audience in the past was enormous. Find one show here in the top 46 American network prime-time telecasts ever, that was shown after 2000 (other than a Superbowl). Brands simply cannot reach their audience with fragmentation of viewer taste, the plethora of new content and other entertainment (gaming for instance) competing, and more TV gatekeepers in the living room via connected TV. One-to-many is not the future anymore. Many-to-many is here. And it's only going to get bigger.

I give TV spot advertising another five years before will be eliminated altogether except for live events such as the Superbowl, World Cup, Olympics, news, concerts etc. Hulu is getting it wrong in the US by requiring viewers to watch shorter advertisements with some changes like a countdown timer and 'tailoring' to the viewers interests. Youtube is getting it right by offering opt-in prerolls with TrueView.

Youtube is the number one application on all connected device app stores on game consoles, TVs, and Blu-Ray players. Rumours have been rampant since the WSJ reported in April 2011, that Google is overhauling Youtube to push more aggressively onto TV screens to compete head-to-head with broadcast and cable television for ad dollars.

With Half a Billion or a fifth of global TV sets slated to be connected to the Internet by 2016 - it's not a far leap of logic that Google will perhaps dominate this new realm by tackling from both side - Google TV and Youtube.

Does Google want to take on Big Cable and Pay TV? Sure. They want to:

Google was planning a YouTube movie subscription service in UK, that Google was reaching for brand sponsorship of new 'Youtube Originals' - moving into video production, the wildfire rumour that didn't happen with Google to buy Hulu for $2 Billion?, and even going as far to Negotiate to Stream Live NBA, NHL Games on YouTube. Google acquired New Networks for this very move.

Let's stop from differentiating between Google TV and Youtube... they are merging and will be very much part of the same ecosystem in the future. Right now, Youtube is by far the most popular TV App on Connected TV Devices (...even a YouTube 3D Video App on the Samsung Smart TVs). It's lean-back, short form, and very compelling to the masses - the UK Internet population made more than 785 million visits to online video websites – an overall increase of 36 per cent year-on-year and YouTube accounts for 70 per cent of that. Justin Bieber recently passed 2 billion views of his Youtube channel.

The Wall Street Journal came out with an article describing Google's aspirations in offering offer paid cable-TV services to consumers - which is a move that could unleash a new wave of competition within the traditional TV business. And a move that will fit very nicely with Google TV Advertising platform - a project that has been quietly running for a couple of years behind the scenes. Not only is Google stealthily moving into the value chain via the cable pipes, it appears they are not thinking small when it comes to fiber networks either.

Instead of 500-odd channels on TV, it appears Google TV and YouTube are making a play for the next 10,000.

Google said last week at I/O, it has reached content agreements with several TV studios, including NBC Universal, Sony Pictures, Disney, Bravo, Paramount, Virgil Films, and Sundance. Youtube and Google TV are about to make the leap from kitten videos and Charlie Bit my Finger to well-produced, longer form video. And it won't be that long before we see the BBC open its archive of more than a million programmes to the web.

So what happens when scarcity is reduced? When Scheduled TV is out and 'Tapas TV' or 'a la Carte TV' is in? We all want to watch what we want to watch, when we want to watch it on what device we want to watch it on, without being bombarded by overt propaganda that has nothing to do with what we are watching. We want our content available on connected TV’s, smartphones, tablets, computers, and game consoles with consistency on all our devices and a seamless pause-resume functionality allows us to start watching on one device and continue from another as well as recordings that can be initiated from any device. Our settings, favorites, wish lists and user preferences need to port to all devices.

The big problem is how will the value chain in it's current state adapt to the above?

What we will see emerge is more branded content, more synchronous and asynchronous interactive engagement via smaller 'second screen', and more product placement.

Red Bull's ability to actually create an entire lifestyle around it's brand (or wrap it's brand around an entire lifestyle) has all other brands salivating and wondering how they did it so fast and so effectively? How are we at the stage where we find a global brand not only creating it's own content in-house (over 1000 episodes), but also selling that content to other traditional distributors at MIPTV and MIPCOM? You can shoot HD video on a Nokia phone. Professional Video editing software like Final Cut and Adobe Premiere is being mastered by kids in their basements. CGI is not beyond reach anymore. 3D computer graphics and 3D modeling software such as Maya, 3D MAX and the open source and free Blender 3D content creation suite are doing the same for CGI. Are you surprised that brands are not creating their own content?

As I wrote last year:

I also understand that brands need to fund quality formats via broadcasters for some time into the foreseeable future. But their minions, the agencies, are going to have to get a lot more creative in how they engage consumers in the future – and the ‘old’ easy way of simply throwing 30 seconds at a public that wants to watch, what they want to watch, when they want to watch it, on any connected device, anywhere they want to watch it, preferably without being interrupted – is a dying proposition.

Branded Content is a solution. Preferably subtle product placement will be another way. Game mechanics with calls to action on a second screen will be a winner. More targeted engagement is undeniably more likely to get attention. Accessorizing my lifestyle works... feel free to give me added value to things I own. Freemium is pretty cool. Micropayments I can live with. Affordable subscriptions for content I really get a kick out of are nice. Let me have the chance to win something. Give me more compelling reasons to like the brands. Let me socialize what I like to my networks. Challenge me. Engage me. Give me some buzz.

Where's the money honey?

So who's going to pay for content? There are hundreds of people on Youtube making over 100,000 dollars a year. As noted above, Google is spending over 150 million on fresh content and cutting new deals with major players. They also own the Internet rights to broadcast Indian cricket live. Amazon, Netflix and Hulu are all producing original content.

And brands will continue to create more and more of their own content like Red Bull:

...Red Bull didn’t pay someone for this product placement. Its content arm, Red Bull Media House, made the film for a reported $2 million--then directly reaped the benefits when Flight reigned atop iTunes’s sports, documentary, and overall movie sales charts for a week, at $10 a pop.

Now that there’s no longer a firm line between content makers and the brands that glom on, every company, from American Express to Burger King, seems encouraged to consider itself a media company. But no one has taken the mandate as seriously as Red Bull. It launched Media House in Europe in 2007, and expanded stateside last year. In 2011 alone, it filmed movies, signed a partnership deal with NBC for a show called Red Bull Signature Series, developed reality-TV ideas with big-time producer Bunim/Murray, honed its own web and mobile outlets, and became a partner in YouTube’s new plan to publish original content. It also expanded its magazine, Red Bulletin, into the U.S., giving it a global distribution of 4.8 million.

In 2010 Wal-Mart teamed with Procter & Gamble to produce Secrets of the Mountain and The Jensen Project, both family-oriented, television films which feature the characters using Wal-Mart and Procter & Gamble- branded products.

Panel: Branded Entertainment as Alternative Finance Source | MIPCOM 2011

Economics of Second (small) Screen

From an excellent paper on Second Screen written for Crowdpark by Richard Gras:

  1. The decrease in the perceived efficiency of TV ads, the inexorable obsolescence of certain formats and the rapidly-changing viewer habits are bound to gradually open all kind of new opportunities in the 2nd-Screen content area.
  2. As we await how the 2nd-Screen trend will evolve, it’s starting to be clear that devices such as the iPad (and perhaps the rumoured upcoming Apple Television set) are ideally placed to become for the TV sector what the iPod became for the music industry.
  3. New play-along shows, gamified TV and interactive documentaries will popularise across the board, eventually fulfilling the creative potential of 2nd-Screen utopia.
  4. Once the current consolidation phase is over users will demand valuable content and experiences which at the moment most current 2nd-Screen apps are not yet providing - the next phase in 2nd Screen needs to be a creative one.
  5. The present situation, filled with some degree of confusion, might soon give way to a new state-of-affairs where “watch-along” 2nd-Screen apps will be organically and fully adopted both across the industry and embedded into all kind of genres and other types of media.

Place my product

As for product placement. PQ Media estimates that product placement is projected to be a $6.1 billion market by 2014. But product placement in movies and television has become so ubiquitous that it has led to widespread parody:

... faux product placement (the invention of fictional products/brands such as Kwik-E-Mart in The Simpsons), reverse placement (the rebranding of real-life 7/11 stores as Kwik-E-Marts in 2007), and product displacement (where Mercedez-Benz asked the makers of Slumdog Millionaire to remove their iconic logo from scenes featuring their cars in slum settings).

In 2011, a whopping 577 occurrences in 39 episodes were found on the reality talent show “American Idol,” making it No. 1 for product placement. It was hard to miss the product placement with judges sipping from large cups emblazoned with Coca-Cola logos, contestants waiting in the “Coca-Cola” lounge, and overt urging of viewers to text/call from their AT&T wireless phones, as well as Ford showcases weekly “music videos” that feature contestants driving their vehicles. According to Variety magazine, product placement in the show has become more expensive over the years and the official sponsors, Coca-Cola, AT&T, and Ford, currently pay up to $50 million to $60 million a year, compared with $25 million to $35 million that was spent in the show’s earlier years.

In the US, product placement is worth roughly 5 per cent of all TV advertising revenue but it's been only recently been opened up in Europe - and it's got some tighter rules.

But the numbers are going up? The future looks good!

Despite TV Ad spend is going up as well as viewership, it's a demographic short spike due to baby boomers retiring. Baby Boomers (47-65 years old) control half of all U.S. consumer spending and watch a disproportionate amount of TV (55-plus group spends the most time watching TV, logging about 6.5 hours a day). The first baby boomers turned 65 in 2011, and a projected 72 million - about one fifth of the U.S. population - will be that age or older by 2030.

From The Demographic Bomb:

In 2010, Generation Y passed the number of Baby Boomers and 96 per cent of them have joined a social network. Most of them have smart phones and are creatures of the web, and ample studies show their TV viewing is spirally vortexing’ downwards. Long form entertainment, chopped by distracting irrelevant advertising is just not cool anymore. Not when their multitasking minds are growing up in a news nugget world where reading a book over 100 pages appears as a tome. Or busy revamping the English language – morphing it into an unrecognizable, chopped down pidgin… in a Twitter world that has created an acronymic, smilied-out, syntactical nightmare.

Infographic from Hightable