VOD Closer to Reality

One more news for Microsoft this week. The launch of their VOD platform in the UK. Their PR department seems to be running their business these days, with one objective in mind: be in the news! (If nothing else, they would show up on top in Google search results!!).

Jokes aside, this is a significant move in the world of VOD. They have toyed with supporting other platforms through XBox consoles, but venturing into a platform of their own is a first.  They also have the scale to take this beyond the Computer screen into living rooms via XBox, and into portable of course. They also seem to have cracked one of the most important elements of this type of venture- a collaboration with GroupM. I am not going to comment on that deal, but having the backing of a major commercial player behind your platform is a critical factor.

The only other critical factor would be their ability to get content. iPlayer, C4OD, and iTV interactive might look at this as competition in short term, but truly they all know their content would be better off on a cross channel platform rather than being on properietary service. But it is going to take some time. Given that Kangaroo is almost dead, and Hulu might come in to the UK in October, they need to hurry up to pile up inventory of programming- both from the UK and perhaps source some from the US (which would be a tough battle given Hulu’s access to programmers at the moment).

One challenge that they world face is: How do they crack and standardise advertising effectiveness measurement on VOD? Good luck with that boys. It is a complicated area. Do not add yet another layer to it I would say trying to invent something of your own. Tap into an existing matrix.

Why should we take Google TV Ads seriously?

We, the people in the traditional media businesses, are strange creatures. Having been on top of 90% of the media revenues for years and years our beliefs are strong, we are dangerously naive, and our vision increasingly myopic. We still see the development and “digitisation” of media a phenonmenon similar to our young children wanting to hook their play stations to the TV,  while we want to watch our afternoon comedy.  Nothing to pay attention to here, the children will eventually get over it.

This is exactly the same attitude I came across in a recent discussion on IPTV, hosted by Alumni of a prestigious business school in France. This discussion took place last week in London and the panel consisted of speakers from two of the key broadcast organisations in the UK, and of some high energy start-ups in the area of internet video. One member of the panel, from a prestigious TV distribution platform in the UK, dismissed Google TV ads as something “just in the US, and not delivering on core fundamentals”. Crap!

Do we believe it “does not deliver on core fundamentals” because we have become the fundamentalists of the TV world ourselves? Google TV Ads is important, not because Google will take over the world one day, but because they are laying the grounds to change the rules of the game for traditional TV. This is how:

- It redefines the way TV is targetted- hence how it is measured, hence how it is traded. Their approach would deliver in the age of digital TV, and the traditional approach does not.

- It challenges the decades long incestual relationship of the research agencies and media owners. Google’s data is more transparent, more real time, and offers more analytics. If there is one thing you can trust Google to do, it is number crunching.

- It helps media owners maximise revenues and advertisers reach, in the age of fragmented on-demand platforms. Traditional models can not even cope with PVR/DVRs.

- Most of the big players in the media and research industry are likely to term Google’s work as something that has a limited scope but would then go and do something similar to Google TV Ads and use their scale to make it sound better. They will.

And if we still do not get it (and I have a feeling we perhaps would but not in the short-term), we deserve to live in a world where most of people still like to be told when they should watch something that they do not want to watch to begin with. We might as well.

I will Google you my TV Commercial

You have probably seen the recent news of NBC agreeing to let Google TV Ads sell some of its inventory through Google TV Ads platform. Seemingly harmless, what really is Google TV Ads and what are the potential implications of such deals? I am assuming that NBC is just a start for Google for such ventures.

To begin with, Google TV Ads is a wonderful application. It is the “TV Optimizer” of the modern day and builds on the Google search advertising schematic. The real basis for this breakthrough for Google is not the NBC deal but in fact their earlier partnership with EchoStar (or Dish Network), and Astound Cables in the US. Their new set top boxes of these two cable/DTH operators have the ability to track viewership second by second. Hence at an aggregate level, you can have the statistics on how many times a commercial was viewed, and whether it was viewed through to the end. Google uses this data to find relevance between certain types of viewers and ads and content, and has created a platform, exactly based on their search model, that makes use of this data to “serve” ads to the viewers.

This is a massive departure from our demographic targetting techniques, into a more “mindset” and relevance led placement of TV ads. Much like the difference between placing a newspaper advert, or placing an ad via Google search. It is going to require an equally big change of mindset within the TV buyers community.

What is so unique about it is that this model of TV advertising breaks away from ratings, and yet is highly measurable. Logically, this system should even work for on-demand content. By virtue of this, it creates an alternate trading currency in the market. The fact that the measurements are highly accurate and relevant, Google is potentially able to trade inventory at higher margins and minimum waste (buys cheap, sells cheapish), or pass on the advantage to the advertisers. What are you media agency giants of the world doing sleeping on your laurels, wake up!?

Once this model picks up popularity, there is no stopping all sorts of advertisers to sign up to such deals, though NBC have optimistically said that this venture would attract “an entirely new group of clients”.

What are the disadvantages of it…? It is just US based at the minute, and that too only on Dish Network/Astound homes. Unless the same set-top box technology is exported to other cable/DTH operators, and markets, it is going to remain a limited venture.

Today’s reality, tomorrow’s myth…?

So we all know that PVRs/DVRs (TiVo, Sky+) owners watch less TV. In fact this has been the main theme of one of the most heated debate in the US TV industry in the past week- Cable Vision’s network DVRs and how they would lead to mass errosion of ads viewership. (For more details on this, please click on: http://www.mediabuyerplanner.com/2008/08/12/court-ruling-paves-way-for-ad-skipping-increase-delays-radio-royalty-decision/

But guess what, in a recent UK based research it showed that PVR/DVR owners watch 5% more advertising. According to the research, the increased TV viewing offsets the potential to fast-forward through the commercials. I wonder if it is today’s reality confronting yesterday’s myth, or a myth in the making itself.

I think some of this can be attributed to the UK’s commercial environment in media. There is a regulation on the amount of advertising that can be shown per hour, and the “irritation” or “fatigue” levels of TV ads are generally lower in the UK. This is compared to the markets like the US where during a live-broadcast of a major sporting event, they stop play to give time to the insane clutter of advertising to be shown to the consumers. If I were them, sitting pretty without the knowledge of how long a damn commercial break is going to be, I would skip ads… wouldn’t you?

Another interesting insight from the same study is that the likes of IPlayer, C4OD, or ITV.com have not eroded the traditional TV viewership. The web-based viewing actually leads to more time being spent infront of the traditional TV. The overall audiences have actually increased by 4% over the same period last year.

Now we all know that increase in supply of content leads to a very limited the increase in advertising revenues- that only very initially. The real increase is only tied to delivery of audiences. Ultimately the increased content leads to fragmentation of advertising revenue into showing of ever more number of commercials. According to this study, a total of 2.4 billion commercials are shown every day, or a massive potential of commercial vieweing of 42 per person!

Happy planning your TV! If I were you, I would invest in high potential and growing area of web-based TV viewing (mind you that is almost on the traditional TV screens now with Wii’s Iplayer, and XBox 360’s BT Vision), while being careful about not losing audiences through the good old idiot box.

Ratings…?

According to an estimate by e-marketer, about 25% of the TV content would be watched via either on-demand TV, over the internet, digital HD broadcast, or even on mobile devices by 2012. Whilst this figure is for the US, I would imagine it would well represent quite a few other markets that are spending huge moneys on modern broadcast infrastructure (UK’s Freesat for instance) and the markets with fair broadband penetration rates. These rates are catching up quite fast in markets that represents most of the world’s ad spend growth.

Globally, the TV advertising spend is estimated to be about US$ 200 billion. Do we see 25% of it going into other newer form of TV viewering? We hope.

The major hinderance for this change in ad spending would perhaps be the trading currency for TV advertising, and the de facto measurement matrix- ratings. Unless someone comes up with a way of measuring all TV in an integrated manner.

Just last week, ACNieldon, the world’s biggest provider of TV viewership data, held a client survey to determine the need and demand for a TV audience research that would measure “all screens”. I am amazed at the fact that they thought this demand needs researching! Anyway, Nielson also need to prepare for broadcast over the digital spectrum, and of course the rise of the on-demand and interactive TV. It would be interesting to see how they really mould and modernise themselves to deliver this target.

One thing is for sure, the ratings would not exist in the form and manner they do now. Simply because of the basic premise: Ratings measure the “potential delivery” of a message. How many people are likely to have watched a piece of programming at a given time. Whereas in the modern TV schematic, you are not only a bit more sure of the delivery of the message, you also do not watch a piece of programming at a given time. Also, you perhaps watch the same programme via a diverse range of devices.

In this need for “integration” of TV measurement, which way do you think the wind is going to blow? Would the new ways of watching TV be incorporated into “ratings”, or do you think the ratings would give way to more modern way the advertising on internet is measured? Watch-through rates of sorts perhaps?