TV Is Still Bigger Than You think

On 1st August 1981 a new channel called MTV started beaming its controversial content. They tee'd off by showing the music video called Video Killed the Radio Star.Thirty years later, it is time to ask the question if the Net killed the TV star.The Wall Street Journal's year-long What They Know investigation into online tracking has exposed a fast-growing network of hundreds of companies that collect highly personal details about Internet users—their online activities, political views, health worries, shopping habits, financial situations and even, in some cases, their real names—to feed the $26 billion U.S. online-advertising industry. So is that resulting in online advertising replacing advertising on Television? We certainly know that data mining techniques on the net make it way easier for companies to track your personal information. If you have not read this article in the latest issue of TIME magazine, you must (click here)I asked Eric Fisher (read his bio here)Adjunct Professor at Arizona State University’s Walter Cronkite School of Journalism if Online Video has killed the TV Star? He should know. He is a veteran having worked at some of the largest media companies -  Clear Channel, Disney, Fox, McCann-Erickson Worldwide, MGM and the National Basketball Association (NBA).  He has partnered global marketing leaders such as Coca-Cola, Dell, JC Penney, Microsoft, Nestle USA, Sprite, Taco Bell and T-Mobile to market them across  TV, online, radio, outdoor and print. During my conversation, I was quite intrigued to see how confident he was about the continuing dominance of TV in the face of all what one reads about the growing power of digital advertising. Eric's argument is that there is still a large number of people out there who do not have smart phones or iPads and all the fancy gizmos. They continue to watch television and that is their most stable form of entertainment. This unyielding base will ensure TV still remains the 800 pound gorilla in the room. Here are excerpts of our conversation:

Abhijit: In the first nine months of 2010, spending on Internet advertising rose nearly 14%, while the overall ad industry only grew about 6%, according to data from PriceWaterhouseCoopers LLP and WPP PLC's Kantar Media. Will Television become irrelevant with the rise in new media like online video?Eric Fisher: Television is alive and thriving - at least in US. Take the TVB media Comparisons Report for 2010, (click here to see the slides) you will see that Television reached 89% people above 18 yesterday. 68% through the Net and only 18% people above 18 were reached through through Mobile. While the 18+ people spend approximately 156 minutes per day on the Net, they spend almost twice the time 319 minutes watching the TV. Not surprising that TV advertising has the best perception among adults. 85% people found it to be the most influential, persuasive and engaging. Most people still turn to TV for getting the latest on news, weather or sports."Watching TV" as the #3 activity (in terms of time spent) for American adults as per the Bureau of Labor Statistics - click here.The Price Waterhouse Coopers Global Entertainment and Media Outlook: 2010-2014 (click here to read report) talks about spending forecasts and still massive power of the TV medium.The pace of consumers' migration to new digital platforms is running well ahead of the industry’s expectations—and yet non-digital revenue streams will still account for two thirds of total global spending in 2014. Changing consumer behaviour is impacting on all segments of the entertainment and media industry, as companies search for the right role and positioning in the digital value chain that is now taking shape.The Nielsen "Three Screen Report" which quantifies video consumption of both linear and digital platforms still points out to the overwhelming supremacy of television. Abhijit: How will TV have to adapt to retain its position given that so many viewers find ads intrusive? Will the business model change?Eric Fisher: TV will continue to remain the dominant form of media and the first place marketers go to reach a broad spectrum of consumers for the considerable future. While online video is a recent phenomenon, from a revenue standpoint, it barely registers on the landscape compared to TV. TV is where the content is developed, and primarily monetized. Without the content from TV, there is no online video marketplace as marketers tend to shy away from sites that focus on user-generated content (UGC). The current TV ecosystem (producers of programming and linear distribution outlets) are thriving like never before. Content will always be king, and those who create it still make far more money within the "traditional" model than the new digital framework. Until that changes, online video will always be a distant second in terms of revenue compared to the current revenue streams.Abhijit:  Since TV viewership is getting fragmented with so many general channels and special interest channels, how are advertisers supposed to pitch their products to a larger consumer base?Eric Fisher: No doubt the fractionalization of audiences has made it more difficult to reach millions of people at a single time. We have seen those numbers start to stabilize over the past 2-3 years however as most cable systems and consumers have absorbed the flurry of new cable channels in recent years. For marketers, while it's harder to reach a large audience, TV still represents the best way to do so. While there are hundreds of TV channels there are millions of websites so that audience is even more fractionalized, and while online video is rising, it is still a small fraction of TV viewing. The proliferation of channels has often times made it easier for marketers to reach their audiences. For a male audience, you can buy ESPN, Versus, Spike TV and Comedy Central, and know you are reaching a concentrated male audience. For females, you can buy Desperate Housewives on ABC, Biggest Loser on NBC, and also Lifetime, Oxygen, WE, Oprah Winfrey's new cable network, OWN. So while fragmentation has made it harder, with all these specialized channels, it's also made it a bit easier as well.a)  Believe pundits/ bloggers often fail to recognize the emotional and psychological role linear TV plays in our livesb)  Myopic view discounts the fact tech savvy people are a fraction of the overall pie, not the pie itselfc)  Some people just like to sit and "unitask", in this case just watch TV and be entertainedd)  Content has always been \ is \ will be king.  In an ad-supported model of video consumption (linear or digital), you will monetize that content through the number of people who want to consume that content.  If you're not creating content, you will always be at the mercy of those who do (ex:  Google TV & networks not wanting to do business with them)e)  There will not be a quantum shift in ad dollars moving from linear to digital until digital can provide scale, in terms of the numbers of people consuming that content.

When we look out at the next 3-5 years, in terms of how viewers consume video and how marketers spend dollars against the platform, my estimation is the landscape will continued to alter slightly, but there will be no quantum shift as it relates to advertising dollars flowing from linear TV to digital.

Again, all I hear is my friends at broadcast and cable networks laughing as they get higher and higher pricing for their linear TV inventory, and keep exceeding their budgets, and cashing those large bonus checks.

----------Nielsen's Three Screen Report click here