AR&D - Audience Research and Development

WEDNESDAY, APRIL 4, 2007

INTERNET AD SHARE CLIMBS: SET TO PASS RADIO IN 2008 (Terry)
Internet ad spending in the U.S. is about to pass radio in terms of both real dollars and share of all media. According to a new report from ZenithOptimedia, that event will take place in 2008, a year ahead of what the same people predicted in December. This is an example of how quickly things are changing in the advertising world and how important it is that we pay attention.

Television leads all media but even TV is trending slightly downward in terms of ad share. The below chart was compiled using data from the study, and I've extended the data field by five years to put the trends in perspective. Any anomaly, of course, could exacerbate any of these lines.

Outdoor and cinema (not shown) advertising are also trending upwards, but the real spike is online.

These are volatile and changing times we're in, and I'm drawn to the words of Starcom's Rishad Tobbaccowala that we need to be flexible, adaptive, nimble and fleet of foot in order to quickly move business models in the face of such turbulence.   <Permalink>

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GOOGLE JUMPS INTO THE TV AD BIZ (Steve)
Google is making some quick moves to get into the TV advertising game, and these steps should make everyone take notice. This week, Google announced a deal with the Dish network to provide a service to place TV ads on satellite TV. In March, Google started an advertising pilot with a cable company in California.

An article in the New York Times from March 28 wrote that Google is posting a job opening for a head of national TV sales. The company wants to have 1,000 execs dedicated to selling ads - and that's just for radio.

And they are in the hunt for DoubleClick, the online ad-tracking company.

Put all that together with Google's fore into radio advertising, and you've got the idea. Google wants to be the national clearinghouse for all things advertising.

The model across all these platforms is, pretty much, the same. The process is automated. To simplify: advertisers bid on what they're willing to spend for a given slot of open ad space. When a station has unsold inventory, the Google ad system offers the highest bidder.

Google is already selling ad space in local newspapers. From the Times: "Google said the volume of ads sold through the system was double what it had projected. Some newspaper industry executives say early results have been promising."

We've been getting remnant ads for years. Nothing new there. But look at what's happening to your advertising operation as a whole. Now you have Google selling web ads and TV ads. They're opening local ad sales offices. And soon advertisers are going to catch on - they'll start to budget more and more money through Google because they're cheaper. There will be a whole tier of companies that couldn't afford to advertise before that will advertise now because the system is efficient and will let them squeak in often enough for their budgets. They'll take the leftovers, and the automated Google system will make it cheaper than ever for those leftovers to be served.

Essentially, Google is saying - if you don't want to sell this stuff, we will. They are long-tailing TV ads.

When faced with a radical idea - you have to come up with radical strategies of your own. Stations need to develop more creative ways of selling the web and television to maximize the possibilities their inventory holds. They need to stop alienating the large portion of the merchants in their community that can't afford to advertise on television. Those merchants are going to "sneak in" through Google. Give them the opportunity to walk in, instead, by developing great online products that feature them.

So let Google help your bottom line a little. But make sure they're not the crutch holding it up. I've been to stations where sales people tell me they are "sold out of inventory" and then I find out it's all remnant stuff which goes for about 20% of what the station should be getting. You're not in the business of making Google rich - they're doing that perfectly well on their own.   <Permalink>

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STOP THINKING PAGEVIEWS, START THINKING NICHES (Steve)
I've seen some press releases in the past few weeks shouting about how many pageviews various sites have been getting. These releases inevitably talk about pageview growth, month over month, year over year. They never seem to mention revenue, however. And we're in the money business after all. Despite the headlines and the shouting, pageviews are a dated metric.

It's the niche, not the numbers.

No site's goal should be "more pageviews!" The goal should be "more programs with more audiences!" Pageviews indicate nothing other than an aggregate audience. Selling in aggregate gets you the lowest possible advertising rate. Millions of pageviews is, certainly impressive. But if that's just one blob of information, what good is it to an advertiser who wants to hit a specific target?

What if, instead of that million pageview number, you had half that number and could make more money? It's possible - probable, even, if you think programming instead of mass audience.

This is not a new concept. You think programming in TV. You think demographics. You sell a cross-section of the audience. 18-25 year old males are more valuable to video game advertisers than 45-54 year-old women, right? And those women are more valuable to the travel and hospitality industry than they are to teenage boys, right?

The same is true with online.

There is demand in every city for local information, and local media outlets are ideally poised to provide it. TV stations simply have to stop thinking of your web presence as "a website." Think like a programmer instead. So instead of just having an "entertainment" section, you create a CityNameEntertainment.com site. It uses the entertainment content you've created, along with the entertainment reporter's blog and newly-created content. You brand it on its own - not as a subset of the TV station's call letters. You're in the programming business now, not in the brand extension business.

What you are doing is targeting your audience. You want to own the entertainment niche, the health niche, the business niche, etc. Think of a magazine stand - there are general interest magazines, but also niches and niches within niches (Golf Magazine, Putters Weekly, Golf For Guys Who Hook Right Magazine, etc.).

Then comes the sales play. Instead of those mass numbers you had before, you have a specific audience. A business-to-business advertiser is going to pay more for a business site than for a general interest site. The local entertainment businesses will pay a higher CPM for a CityEntertainment.com site if that's the place to go for local entertainment news.

You get the point. Once you free yourself from the notion of getting people to visit a "master brand" site, and think about all the wonderful possibilities you have with your content, the money multiplies. So instead of numbers, you can brag about the many niches you've conquered. And that would be worth shouting about.   <Permalink>

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NETS TO KEEP 90 PERCENT OF REVENUE IN NBC/FOX VIDEO DEAL (Terry)
The New York Times has provided a few details about the NBC/Fox web video deal. Quoting inside sources, the paper reported this weekend that 90% of the ad revenue will go to the networks with the remaining 10% going to the website serving the videos. YouTube, according to this report, was offering a 70/30 split with Google taking control of all the ads, so this deal is clearly about control and the revenue split.

The report asks several important questions including this one. "Will the main attraction (for online video) be existing fare distributed online, or new sources of original content like, say, the new video clips from The Onion, the satirical newspaper?"

Meanwhile, Mitch Oscar, EVP of the big ad agency CaratDigital, Carat North America, raises a similar point in a biting rant on the NBC/Fox deal for MediaPost in which he poses the Clara Peller line from the old Wendy's ads.

All the fast food algorithms (are) in place, except for one thing: Where's the beef? Ya know, the substance. The stuff you sink your teeth into. The addictive part that gets everyone coming back, again and again -- and is good for you, without a warning from the Surgeon General.

To my knowledge, no one is going to have a satisfying meal when the menu is comprised of a limited amount of short clips, repurposed episodes (broadcast, cable, teleco) that are already on everybody's menu (TV station affiliate Web sites, syndicated Web sites, video portals) and movies that are accessible from a variety of sources (theatres, premium channels, DVDs, and downloading services). The only people who seem to be digesting this meal are the press and the street -- both dependent on the Happy Meal for a living.