Saving The TV Business Model

As the upfront finishes, we see not only flat and declining sales, but also how this impacts media stock values. While I am no longer a TV network executive, I am an informed advocate of the industry as well as an investor in many media companies. So I have a vested interest in the health of the business and in the success of those working hard to make their companies profitable.   

So with the greatest respect, I say to my friends in the industry: I can’t help but feel frustrated by your slow pace implementing solutions to the changing media environment.

There are many reasons why this stagnation occurs. Internal office environments can sometimes foster fear of change, luddite-ism, risk-aversion and myopia.  Competitive external business forces can sometimes discourage collaboration across corporations. And so we tread water until we either swim or drown.

The current marketplace demands that we take more concrete action. Here are some suggestions on ways to invigorate the business model:

Agree to universal program and ad IDs. Measuring audiences across all possible platforms in a fail-safe, accurate manner is pivotal to maximizing revenue. But it is taking far too long to reach a consensus on standard universal content recognition IDs for programs and ads. Once we can all agree and apply these codes, we can truly maximize the value of all content across all possible and potential platforms.

“We need to make an honest and compelling case for what we need and stop accepting subpar workarounds as the best we can do,” says Janice Finkel-Greene, executive vice president, buying analytics, Initiative MAGNA, and a strong advocate of universal codes. “Systems that were once facilitators have become impediments, but it’s a situation that goes largely unrecognized because it has evolved so slowly. Now it’s something we live with like a morning traffic jam.” But she warns, “The universal codes are only the first big step in the process.  Once they exist, we will have to capture and report them by media outlet for verification and audience analysis.”

Stop negotiating and selling on age and gender proxies. There is nothing more frustrating to me than the continued use of the current proxies of age and gender to transact on television. Not only are they arbitrary breaks, (who came up with Adults 18-49 anyway?) they hardly reflect actual spending habits (which are based on lifestyle more than age). They also terribly undervalue inventory by discrediting and ignoring some of the biggest spenders of certain consumer goods, which are often Adults 50+.

On the front lines of this issue is Hanna Gryncwajg, senior vice president, sales, for RLTV, whose network targets Adults 50+ (which now includes the first wave of Gen Xers). She says, “I believe audience-based buying, driven through purchase and behavior data, would be a win-win for marketers and consumers.”

Compensating for declines by increasing the ad load only makes it worse. How many times do we “solve” for under-delivery by increasing the ad load? While it might be a short-term fix, it can soon become a vicious cycle that only denigrates content quality, encourages more ad skipping, and further erodes overall delivery.

There are probably many solutions to this problem. A few years ago, I advocated for pod curation: higher-performing ads could be rewarded with better pod position. Pod lengths could be calculated more scientifically – perhaps by program genre. Neuroscience precepts could be used to improve promo performance in the “A” position and rank ads more effectively. Taking these steps might even help slow ad-skipping.  

Steve Sternberg, former senior vice president, research, at ION Media, and author of The Sternberg Report, has conducted extensive pod research. He says, “Part of the problem is that Nielsen’s C3 measurement does not measure commercials, commercial pods, or DVR fast-forwarding. It is really a pretense at measuring commercials.  C3 was designed as a one-year band-aid until exact commercials or commercial pods could be measured by industry post-buy systems. That was eight years ago.

“We know that the first minute in a pod over-delivers C3 by 20-30% while every other commercial minute within the pod under-delivers C3.  So adding additional commercials to a pod should result in further rating declines.”

It used to be easy to kick the can down the road and leave the solutions to the next generation of television executives. However, at this business tipping point, we need to act courageously now to ensure that there is a successful next generation.

by Charlene Weisler
Head, Weisler Media LLC
Courtesy of mediapost