Signal Through Noise A Discussion on the Future of Television and Advertising

Despite the title of this piece, I am going to come right out and say that I love my DVR. I love that it allows me to watch what I want when I want and I love that it allows me to fast-forward through ads (well, the crappy ones at least).

But, having said this, clearly if there is to be any future for advertising on television, marketers are going to have to figure out a way to coexist with the DVR, because the old model doesn’t stand a chance. Not when DVR penetration is already at roughly 18 % of US households, and not when only 1% of DVR owners aren’t skipping ads.

Numbers like this are scary and there will be certainly be whole sectors of the industry that will get destroyed because of them, but I am entirely confident that at the end of all of the turmoil, marketers will have come up with a model that is better at providing consumers what they want and better at maximizing ROI for their brands.

So, what I wanted to do, was to look at where we are at now in terms of beating the DVR. In 10 years time, Interactive TV will have taken over, and with just a click of the remote viewers will be able to order a sweater worn by a character on their favorite show – with all that this means for the traditional ad model - but, in the meantime, marketers will need stopgaps to get through the transition.

Here is my take on the most commonly utilized methods marketers have at their disposal today.

PRODUCT PLACEMENT –

As I discussed in an earlier post, I have mixed feelings about Product Placement and how it is currently practiced. It is not inherently bad, and shows such as The Office and Friday Night Lights have done a good job with it, but, far too often, products are thrown into shows in a way that disrupts the fictional world and degrades the brand in the process.

This isn’t to minimize the future Product Placement has, as with iTV it will be a huge part of the TV landscape, but until the products being show are transmitted in such a way that viewers can interact with them, it is a pretty crude practice. I am not opposed to the practice in the sense that it will inherently pollute content as the Brits seem to think, I just believe that without interactivity, Product Placement often doesn’t do much besides annoy people.

CWICKIES AND PODBUSTING –

Both Cwickies and Podbusting aim to disrupt the practice of skipping ads by blurring the lines between shows and the ads that surround them.

Cwickies attempt to do by being so fast – 5 seconds seem to be the normal practice – that the viewer doesn’t have time to recognize that it is an ad and fast-forward through it (more here).

Podbusting can take many forms but the underlying idea is to make commercials surrounding a show so similar to the show itself that the viewer will not notice a shift when the program goes into it’s commercial pod. The example that the New York Times gives is the CMT show “Trick My Truck,” where commercial breaks during the show feature stars of the program giving tips and advice that prominently feature, for example, Exxon.

With both of these practices there is some value but ultimately both seem to miss the point. An analogy might be a guy who decides to help out more around the house and does so by throwing the trash out the window. Yes the guy is listening to his wife and trying to pitch in, but he is sort of missing the spirit of the thing. People don’t like the way ads are being given to them and to respond by simply making the content more like ads or trying to trick people, well, it is just a bit cheap.

ADDRESSABLE ADS –

Now we are starting to get somewhere. The basic principle of Addressable Ads is that with data-mining and increased control over delivery, brands could start to get much more strategic about what ads a viewer would see. So, if two different households are watching the same show, they could in theory see different ads based on whatever data the advertiser has on them or their demographic.

Now, clearly this effort is going to take some major league data consolidation and infrastructure investment. Furthermore, a heck of a lot of players would have to come together to make a scenario like this function in a sophisticated way.

Still, what I like about this is that the technology is already pretty much there and the whole thing could take place without the viewer having to do much of anything (unlike with iTV where the process would involve a real investment on the viewers part to learn the technology).

INTERACTIVE TV –

As I mentioned above, true iTV is still a few years off, but already savvy marketers are starting to wade in.

For example, as I discussed in an earlier post, TiVO and Domino’s have recently struck a deal where viewers watching a Domino’s spot can click on a link on the tag and be taken to a page where they can place an order, all without getting up from their seat.

Although this is still somewhat primitive given what is around the corner with iTV, it is a nice step, as now viewers can receive something, perhaps a coupon, and then have the convenience of making a purchase without any real effort.

MAKE BETTER COMMERCIALS –

This last one is less a practice then an approach.

Rather then trying to force viewers to watch the same old annoying spot, give them something of value – whether it is a smile, a piece of information they can actually use, whatever – and they will watch the spot.

Yes this means that advertisers might have to lose that 3rd product shot and the 12 seconds of VO that says something that the marketers feel is important but offers nothing to the consumer, but, in the end, I am confident that if we make spots that are lighter on the hard sales pitch and heavier on the entertainment, consumers will watch them.

The Superbowl is a good example of this practice as due to its history viewers have come to expect that the spots will be good and will entertain, and they respond by enjoying the ads and having a good time with the whole thing.

Although it would be naïve to think that viewer reaction while watching a rerun of House will ever be the same as it would be during an event like the Superbowl, I do think that if commercials get better and more fun across the board – and if media buys got a little less focused on saturation so that viewers don’t see the same spot 50 times – viewers will begin recalibrating their relationship to spots and engaging with them more.

CONCLUSION –

In the end, what the DVR has allowed viewers to do is to take control of a relationship that they were clearly not so happy about. Although this is scary for many people, it will lead to a better future, and as long as marketers avoid the temptation to put their fingers in their ears and hope for the best - and yes, the Networks arguing that people still “watch” the ads while fast-forwarding through them is an example of this – we will end up in a good place. Plus, it will be really fun and exciting trying to win this battle and that alone makes it worthwhile.

Although there have been roughly 7 trillion articles written over the past few years proclaiming that TV is on death’s door as a result of spiffy new things such as the Interwebs, Twitter, and whatever else the kids are getting up to these days, apparently Americans are watching more TV then ever before.

According to the US Census Bureau, Americans over the age of 12 watched 1,704 hours of TV in 2008, up from 1,502 hours of TV in 2000.  I shudder to think what this says about our reading habits, but at least it can give you some ammo to shut up Web 2.0 guy when he starts telling you Americans don’t watch TV anymore. (Shutting up Web 2.0 guy is always pleasant, but in this case it is particuraly sweet, as if there is one thing I can’t stand it is someone saying that us Americans are bad at consuming TV.  We might not be great at geography, weight-loss or nation building, but damn it, no one is better then us at watching, and making, television).

The news out of CES that AT&T is considering selling phones with the ability to receive free mobile TV – despite AT&T’s deal with Qualcomm for their $15 a month mobile TV service MediaFlo – is interesting in and of itself, but gains a particular resonance due to the history of AT&T and broadcasting (don’t worry, I will keep it brief).

As all those with an interest in the history of TV and Radio know, AT&T was one of the original broadcasters, as it formed, in the 1920’s, the Broadcasting Corporation of America (BCA).  BCA was a network of radio stations linked together over AT&T’s telephone lines and was a clear attempt by AT&T to monopolize radio broadcasting.  Standing in the way of this effort was rival broadcaster RCA, who was, at the time, at the mercy of AT&T due to the telephone companies refusal to lease RCA their land lines: an action which forced RCA to utilize the significantly less advanced telegraph technology to transmit their radio broadcasts.

Ultimately, fearing antitrust action and wanting to focus on telephone service, AT&T sold BCA to RCA.  Soon afterwards, RCA spun BCA into NBC, and the broadcasting world as we now know it began to take shape.

And now here comes the news that AT&T is getting into the free Mobile TV game.  Now, keep in mind that it was only in 1998 that AT&T acquired TCI and got back into the TV business in any substantial sense, so this move into Mobile TV can certainly be seen as part of a larger shift within AT&T’s priorities.  Of course, given AT&T’s deal with MediaFlo, this move would be contingent upon finding a way to make money.  As head of mobile markets Ralph de la Vega said at CES, AT&T would only get into the free mobile TV game if it can find “a good way to monetize our business…With all of these things, the thing that works best is if you do a revenue share model. It’s conceivable one could do a revenue share of the advertising or some other approach.”

How all of this will shake out is anyone’s guess.  According to the above qoute from de la Vega, the model that AT&T is considering would be an ad revenue sharing situation.  I could also see how if a proprietary bit of software that greatly improves the Mobile TV experience - ala iTunes - were made available exclusively to AT&T wireless customers, well, monetization might be possible there as well.   In any case, this whole thing is sure to be a bit of a spectacle and, given AT&T’s history with broadcasting, it will be fascinating watching how they position themselves in the battle.

Over the past year, as HDTV has become much more widely adopted, my confusion as to why certain advertisers are still not making HD versions of some of their spots is increasing. Just today, while watching an HD broadcast of the NFL playoffs, I have seen a number of spots from major companies such as Southwest Airlines and Volkswagen that are in SD. Given that spots of this nature are invariably shot on film or in HD, why not make two versions? You could cut the spot in SD, take an extra day in post to on-line an HD version, and you are done. Why, given how cheap this is in the grand scheme of things, wouldn’t you do this?

The apotheosis of this madness was during the past Super Bowl when I saw numerous SD spots during the HD broadcast that I was watching. Especially galling were a few animated spots that were in SD. So you can drop millions on the media buy but paying an animator for a week to make an HD version of the spot is too much money? Absolutely senseless.

* Warning, the following article is both off-topic and seriously dorky. You can read it if you like but I can guarantee that halfway through you will sigh, look up at the ceiling, and decide that the author really needs to get a life. Don’t say you weren’t warned.

Recently I decided to try and classify the various narrative structures most commonly utilized in the contemporary television commercial (I told you, dorky, but what the hell, I find it interesting). Of course, no two commercials can ever be exactly alike, but, as we all know, there are basic approaches that are used again and again. What I wanted to do was to see exactly how many of these basic approaches there are, and then see which was the most popular among them.

My methodology was simple: watch a bunch of spots, see what categories emerge, and then rank according to popularity. In an effort to get a representative sample I tried, as best I could, to vary the channels, programs and times that I got these spots from.

After analyzing 760 commercials closely, I have concluded that there are four dominant structural tactics - as well as two popular hybrids – widely being used today. In fact, out of the 760 spots there was only one – “Fate”, a commercial for Nike Football – that was essentially unclassifiable (I will address this spot at the end).

Below you will see the groups, listed in descending order from most to least popular. I also will give a typical example of each category. Let’s begin:

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THE VOICE OF GOD
306 out of 760 (40%)

In a Voice of God spot, an unseen narrator tells a story and b-roll supports. Obviously most spots will have a bit of vo at the end, but a true Voice of God spot is one that is driven by the narration.

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THE SITUATION
147 out of 760, (19%)
In Situation spots, actors or celebrities play parts and read lines seemingly unaware of the camera.

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DIRECT ADDRESS
127 out of 760, (17%)
Direct Address spots are those in which an actor or personality speaks directly to camera.

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THE MUSICAL
75 out of 760, (10%)
The Musical is a spot that is based around its musical track (often a song composed explicitly for the product). Obviously nearly every commercial has music, so what makes a Musical spot what it is is that the spot is based around the song.

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THE VOICE OF GOD/DIRECT ADDRESS
68 out of 760, (9%)
The Voice of God/Direct address hybrid is one in which the spot is structured around a interplay between its narration and people speaking directly to camera.

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THE VOICE OF GOD/SITUATION
37 out of 760, (5%)
The Voice of God/Situation hybrid is one in which the spot is structured around an interplay between its narration and actors and personalities doing things seemingly unaware of the camera.

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NIKE “FATE”
As mentioned, the only one of the 760 spot’s that I watched that did not fit into any category was a spot entitled “Fate” for Nike Football. Although the score is extremely important, it is obvious that another track could replace it and the story would remain entirely intact, which makes the Musical category an incorrect fit. Once this possibility is ruled out, it is clear that this spot does not fit into any of the categories, which is mildly irritating from the perspective of this taxonomy, but fairly inspiring in the sense that one can see the possibilities of breaking out of the accepted modes. I do not want to condemn any of the categories as the reason they are so dominant is their utility, but it is interesting that this spot, this one outlier, was, in my opinion, the most effective that I observed.

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CONCLUSION

Although I had anticipated that there would be some commonalities, I was unprepared for just how similar the basic narrative structure is in most TV commercials, as almost everything I examined fit very neatly into one of the four categories or the two hybrids. There were a few interesting uses of these techniques - for example, this campaign for AT&T goes in a cool direction with the Direct Address technique - but, in the end, all the spots I viewed other then “Fate” were easy to categorize and, for the most part, similiar to one another.

I don’t want to argue that using these conventions will inevitably lead to a boring and ineffective spot, as there is a reason that these forms are so commonly utilized. But, it is clear that much success can be had if a few risks are taken at this basic structural level; success that can be found in the “Fate” spot as well as here, here and here.

As a result of my post last week on Backchannelmedia, I got an email from Backchannelmedia’s PR team, Lois Paul & Partners, offering to send me additional info on the company. Being the pushy person that I am, I took this as an invitation to ask a number of questions; questions that were passed along to Eric Martin, Director of Marketing at Backchannelmedia. I have posted my questions, and Eric’s answers, below. In order to get a sense of why I asked the questions I did, I would suggest taking a look at Backchanelmedia’s overview, but this passage is the crux of it:

“Backchannelmedia’s technology allow viewers, through one click of their remote, to forward links related to specific television content – whether it’s an entertainer performing a song they like, a news story they may be interested in learning more about, or a product they may be interested in purchasing – to a Web portal of their choice, such as an email account, a Backchannelmedia portal or a television station’s own Web site; the viewer simply clicks on a small icon at the bottom of their screen.

The icon is rendered by Backchannelmedia’s Client set-top-box software when it detects a unique identifier encoded in the metadata of the program or ad’s digital transmission. On clicking ‘OK’, the viewer’s request for more information is automatically recognized, recorded and sent via an Internet return path to the viewer’s designated site. The users “clicks” can later be conveniently accessed via their personal computer.”

What Backchannelmedia is doing is quite clever. Recognizing that attempts to bring true PC interactivity to the TV have so often failed because of how complex the implementation of this process is – just think for a moment about how many discrete and competing interests have to come together to make this kind of interactivity work properly on a TV - Backchannelmedia has instead created a system that is less concerned with trying to get a TV to be a PC, and more concerned with trying to get the two entities to communicate effectively with one another.

To give a brief example that immediately came to my mind, imagine that a consumer is watching a spot for Pizza Hut that is advertising a new product. If the Backchannelmedia software is installed on the set-top, an icon will appear on screen that the interested consumer can then click on. The next time this consumer is on-line and logged into their designated portal, they will be (a) reminded of the product which sparked their original interest and (b) be given the URL info that will link them through to the Pizza Hut website where they can place an order, get more info, etc.

Now, of course this isn’t the full throttled interactive experience that makes marketers weak in the knees when they contemplate iTV but, then again, it has the extremely big advantage of being something that could work now. Also, it does offer up many of the benefits of true iTV in that it will enhance marketers abilities to get numbers on an ad’s effectiveness as well as allowing them to greatly enhance branding opportunities in product placement situations.

In any case, here were my follow up questions on issues that I was not entirely clear on from looking through the resources on Backchannelmedia’s site. As mentioned, the answers were supplied by Eric Martin, Director of Marketing at Backchannelmedia.

What exactly is the economic model that BackChannel is planning on using? Who pays for what throughout the monetary chain?

Backchannelmedia currently uses the Value Added Reseller model to market the TV-to-Internet Click Through to TV stations. Each TV station pays for hardware, software, training and support that creates a true added value to their advertiser clients. The TV-to-Internet Click Through introduces a new interactive layer of inventory for the TV station sales team and a new consumer experience for advertisers to experiment with. Both require a good amount of training and support for TV stations and their advertisers on how to best touch the consumer with this new experience.

I see that the BackChannel set-top-box is only for the trial and then viewers would be able to use any set-top-box that has BackChannel Client Software running on it. So, is the need for the BackChannel set-top-box solely for the TV Stations to evaluate efficacy? And, what is the installation process like on the non-BackChannel set-top-box, i.e., can the installation take place remotely without the consumers participation or would an installer have to come out and do it on-site?

The Backchannelmedia Player that is currently used in Market Trial homes is for technical validation and functionality purposes. In addition, by using set-top boxes that utilize the over-the-air spectrum, we have taken the path of least resistance in implementation both technically and in terms of the business agreements required for deployment. The Backchannelmedia software application that resides on the set-top box itself to provide interactivity is incredibly lightweight, and according to our research, would be able to be implemented easily into tens of millions of homes today. On a standard set-top box in a standard cable environment, for instance, the software could be downloaded to each set-top box in minutes without the need for Cable company personnel to visit a home for installation.

If this technology takes off what happens when we get to the point where advertisers and brands want to enable interactivity for something like the sweater a character on a show might be wearing? So, for example, if a character is wearing an Urban Outfitters sweater on Gossip Girls, would it be possible for Urban Outfitters to “tag” the scene so that someone who liked the sweater could get info on it later on?

Absolutely—this capability exists today on our system. The power to utilize the TV-to-Internet Click Through rests in the content producers, whether that content is traditional commercial spots or programming. In your example, the content producer would just configure the icon to appear when the sweater is on screen, and the link sent to the Backchannelmedia Portal could be configured to point to a web site where the sweater could be purchased.

Lastly, what is the degree of technical difficulty for the TV Stations themselves? It seems like a fairly easy integration process, but what kind of feedback are you getting from the engineers and production personnel on the Station side?

So far we are getting extremely encouraging information from the engineers at TV stations. Currently, making a broadcast TV station interactive only takes a few hours, and the hardware required is a small investment. We did a great deal of research about the automation, traffic, billing, video and broadcast systems that are in place in TV stations in the United States today, and believe we have developed an extremely flexible solution.

Great news on a deal between TiVo and Domino’s Pizza that will allow TiVo subscribers to order pizza through their TiVo boxes.

Orders can be placed whenever the consumer wants, but the exciting thing is clearly the thought that if a couple of guys are watching a game on Sunday, they will see an ad for Domino’s and without ever having to get up and find a phone, order a pizza for delivery. Subscribers can order Domino’s Pizza from various entry points on the TiVo user interface, including via “tags” spotted during live ads.

Given that one of the issues for Interactive TV has always been the set-top box itself, I love the idea that a company like TiVo - which is all about the box - is taking the lead on something like this. I also think spearheading this kind of interactivity with a brand like Domino’s is brilliant, as above and beyond the fact that consumers are already comfortable with the idea of ordering things for delivery from Domino’s, I have noticed that the company is very keen on promotions, and in my opinion this sort of interactivity is tailor made for promotional activity.

Finally, there is something excellent about the thought that TiVo will play a part in saving TV advertising.  Next up, Philip Morris cures cancer while Napster charts a new course for the music industry…

Interesting article on a Boston company called Backchannelmedia that has a novel approach to interactive TV.

Essentially, the way it works is let’s say a spot has a URL directing viewers to a micro-site. What Backchannelmedia does is give broadcasters the ability to insert an icon during this portion of the spot and if the viewer pushes “OK” on their remote they will receive an e-mail - or they can go to a customized portal set up by Backchannelmedia with everything they have clicked on - which will have that URL contained within (thus removing the need to scramble to find a piece of paper in order to write the URL down).

I am not all that moved by the whole “eliminating the problem of not writing quickly enough to get the URL” as Google solves this issue, but I do think that receiving an e-mail later will help reinforce ones initial interest; interest that might have waned in between the viewing of the spot and the next time they are on-line. For some reason I think that this could be particularly powerful tool for political campaigns as I can imagine that after viewing a spot for a particular candidate that moves a viewer in one way or the other, getting that e-mail or checking into their portal later on could motivate them to take the next step.

Having said that, as always, I would love a more sophisticated version of this where, for example, if I see a pair of jeans I like during a show, I could push a button on the remote and, later on, when on-line, get the brand name and website of the retailer who sells them. No mention of when something like that would come along - what I am asking for is entirely interactive content rather then simply an interactive component to traditional advertising - but I see no reason why the technology couldn’t work in this situation.

All in all, this is an interesting concept and it seems to remove a number of the technical impediments that have kept Interactive TV from arriving for so long now. The first trials of the product are taking place in New England as of this posting so I am keeping my fingers crossed that it goes well and acts as a cataylst to moving the concept of Interactive TV forward.