Why I Am Optimistic About the Traditional Television Companies

We can see this today as traditional television companies are entering streaming -- where the puck and the audience are going -- the right move for these companies to make. Yet the economic profitability model they see in streaming is nowhere close to the way it was in linear for so long.

This can certainly get strong people spooked. It makes it appear that there is nowhere to go but down.

One reason why the model does not seem to be there in streaming is because of the light commercial load. Five minutes per hour is not 14 minutes per hour.

But we all know (hopefully) that viewers are willing to pay for great content, so AVODs (Advertising-based Video on Demand) should all offer free access (for up to 14 minutes ad load per hour), a low subscription rate (for five or so minutes per hour of ad load), and a moderate subscription fee for almost no commercials at all -- or some variation on this theme that works to maintain television profitability at the traditional levels.

Having not seen evidence that television companies are actually testing such things in secret test markets, it makes me optimistic to think that such testing will find solutions.

A second reason I’m optimistic that the creators of content (that is a level above user-generated content) will find solid footing for the future, is that current trends in media research are bringing in much more information than we have ever had before, as to how each media type works to benefit the advertiser.

For example, as seen in my articles here in MediaVillage, Nielsen ONE Ads is showing that the only way to get campaign reaches in the 80s and 90s is to allocate around 80% of the video budget to linear plus network television streaming. The traditional TV networks ought to be mining the heck out of Nielsen ONE Ads to ride this reach advantage and get the prices they need to carry on the business and make the best programs they have ever made. (As soon as they settle the strikes, this is something to get done ASAP.)

Take all the work that is now going on in the attention field for example. It tends to show that television -- the longform, lean-back, immersive experience -- greatly excels in attention and especially emotion.

Karen Nelson-Field was way ahead of everyone else in detecting the strength of the context effect of scrolling feed digital and user generated video shortforms. Those media such as YouTube, Facebook, Instagram, Tik Tok, et al can affect memory in the one to two seconds they have the user’s eyes on the ad, but you can’t tell a story in two seconds, and without a story you are unlikely to get emotion (other than annoyance).

These digital media are lean-forward experiences, quite different from switching gears and entering a fictional character’s story, identifying with the character to have a vicarious alternate life experience. As Karen says, this imposes a ceiling on how much attention to expect in feed and shortform digital.

In fact, in these media, the context effect actually exceeds the creative effect -- unlike TV, in which creative accounts for about half the ROI according to NCS. Shades of Marshall McLuhan! He said (writing about television) that the message has less effect than the medium itself -- and he was half right with TV but oh so 100% right about the digital media.

A biometric study presented at the Advertising Research Foundation (ARF) by Carl Marci and Fox’s Audrey Steele showed that television has 38 times the emotional engagement effect as rich media display ads in digital.

The networks ought to be doubling and tripling down on these sorts of studies. Not just to make the point about how much linear and network television streaming is worth, and why to increase its share, but also to learn how the get the most out of all media types. And not just to be statesmanlike, but also because there is nothing to stop the traditional TV companies from creating their own digital lean-forward media, but doing it even better than the existing first wave of digital media. Imagine actors and writers and others under the TV tent becoming the most powerful Influencers on the planet. Those altruistic actors and writers who go this way will have a very loud voice to make the world a better place.

These research studies, to have the most positive real-world effect, should be carried out in consultation with the ARF as scientifically as possible, for example, using random control trials. Otherwise, although the buy side and sell side can bring forth their own proofs, no one will know what to believe in the C suite until the research itself can be vetted by truly objective experts.

Finally, not that there might not be lots of other factors to make the traditional television companies feel confident in the future, there is addressable television. The original Next Century Media (NCM) vision of addressable television still has not been materialized: being able to buy the whole country, including broadcast inventory as well as cable/satellite and streaming/digital, addressably, programmatically, in a one-stop shop, against deterministic purchaser targets. NCM showed it was possible in 1997. No one has put all those features together since then.

Once done right, addressable will be an ROI powerhouse for the traditional TV companies. The ability to addressably deliver immersive storytelling spots to targets who are really the moveable middle purchase prospects who also psychologically resonate with the ad, that combination causing a leap in ROI, will be a boost to network profitability. As Byron Sharp would recommend, the buys would be allocated so that all prospects would be reached, with emphasis on the higher probability of yield prospects (Byron would probably not recommend that latter part, unless he has altered his thinking).

NCM taught (and the market has forgotten) that addressable means that both buyer and seller can share immense benefits. Both buyer and seller can increase their profits at the same time. As if by magic, but it is simple math. A car company buys at $10 CPM but that is a $50 CPM against new car buyers. If the seller makes addressable just to new car buyers cost $40 CPM, the buyer saves 20% of media cost and the seller quadruples the take on those impressions; and obviously both sides will negotiate to get that seesaw to balance more in their own direction, and a balance will be found that is still highly positive for both sides.

The Calamity Jane attitude that has set back the traditional TV players should be washed away as soon as they do the math on addressable, and set their armies in motion to set up the NCM version of addressable asap and globally.

What will this do to digital? Probably nothing. Brands and agencies will quickly learn to start campaigns in TV with 30s, move to 15s, move to 6s, and then move to digital (1-2 seconds). Those 1-2-second attention moments will bring back the punchline of the stories the user has already seen on TV, and at low CPM those digital campaigns can remind people of the original 30-second story and the emotions they felt when the first paid attention to it.

And of course, radio, outdoor and print will continue to offer other pathways into the cognition/decision process, maximizing the synergistic effect of all media together.

Carpe diem!

Posted at MediaVillage through the Thought Leadership self-publishing platform.

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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.