Changing Channels: The Future of Television for Marketers

Let’s face it. The shift away from analog isn’t the only signal television is going digital. Consider the changes in content development and distribution, audience measurement models and advertising, and you know marketers can expect more interactivity, personalization and portability as audiences increasingly consume TV entertainment on devices other than the idiot box in their living room.

The implication of these changes is so strong that its time to begin considering the future of television for marketers.

Adversity to Monetization

TV is already barely recognizable from the days of televisions that weighed a ton, rabbit ears, consoles and remotes connected by wires to the sets themselves. Heck, remember when color was a luxury?

And of course, DVRs and online video sites like Hulu, Netflix and Amazon have drastically changed how we watch. Making a plan to sit down at an exact time to catch the show I wanted to watch? What if another show I wanted to see was on at the same time? It was a matter of either/or, certainly not both—and then to sit through the commercials? Viewers can hardly conceive of that now.

It is expected that 50-60 million households will adopt DVRs over the next three years. Those viewers can (and probably will) fast forward past the ads which threatens the linear, appointment-based system of television viewing and create a breakdown in traditional TV advertising: a dream for some viewers but a nightmare for advertisers and media buyers.

As television becomes more niche in terms of both audience and programming, a long tail of channels is developing, creating both a need and an opportunity for farther-reaching and more targeted advertising. This generates a need for more accountability, better measurement and a revenue model that can be scaled to hundreds of channels.

Facing These Challenges Head On
In the face of these changes, networks must find other ways to monetize their content across all platforms of digital consumption, and marketers must learn how to take advantage of the changing tides. Let’s take a look at a few options that are available now to advertisers that take steps to answer these early concerns.

Google TV Ads
New platforms such as Google TV Ads seek to aggregate and monetize the impending growth of the fragmented television landscape.

How it works: This tool allows for psychographic contextual targeting by providing advertisers with detailed information used for programming and search tools. Advertisers are able to reach their targeted audience across hundreds of channels (rather than the typical 10-15 with traditional TV advertising buys) in a relevant context. Google then measures all channels and only charges the advertiser when the ad makes its way onto the viewer’s TV – whether in real time or time-shifted – and when the viewer actively watched, not when they fast forwarded through it. Google sends results back the next day, so advertisers can quickly adjust their TV buying, similar to online advertising

The significance: The ability to measure across all channels, and bill advertisers only for the TV sets that are tuned into the ad, allows advertisers to effectively employ the “long tail” of media.

The Birth of T-Commerce
What if you could order a Domino’s pizza from your TV, or get movie tickets from Fandango? What if getting additional product information on that hot new BMW were just a click away? TiVo subscribers already have those capabilities thanks to TiVo’s new deep functionality ad units.

How it works: Direct-to-consumer ads are created based in T-commerce (commerce conducted over TV) or in this case, TiVo-commerce. Advertisers who buy in this medium can capitalize on TV interaction and try to engage an audience that tends to fast forward through advertisements. It utilizes a real-time measurement platform that, like Google TV Ads, uses set-top box data to report actual audience views and interactions with ads.

The significance: It provides marketers with higher accountability in television advertising and greater insight in creating more effective ads. Additionally, it provides a direct-to-consumer channel that can be fully monetized.

Rethinking Prime Time with Social Media
The idea of appointment-based TV may very well be saved by the very medium that is driving the changes in television across the board—the Web. Social media has shifted “time-shifting” back to real-time for select events, and advertisers should take note.

How it works: Social media sites such as Facebook and Twitter are becoming integral to our television experience. Now, during major events, viewers are texting, IMing and tweeting about the events as they happen—with their friends or “tweeps” – which means they have to be watching the same thing at the same time.

The significance: As TV becomes more social this collaborative aspect becomes one of the best arguments for event programming. Social media capabilities bring a segment of viewers together at a certain time, to discuss and debate the content they are watching. Think American Idol finale, think the Superbowl, think Lost, think Facebook/CNN’s collaboration during the U.S. Presidential Inauguration—these events all represent spikes of activity surrounding a captive and, some would argue, more engaged audience than those in the past.

As the television ecosystem continues to expand and evolve, the TV set is well on its way to becoming a vibrant, social, interactive platform combining the most compelling aspects of the Web with that of traditional television. And, the ability to monetize the long tail of television gives the industry an adequate revenue stream to continue to produce compelling content that will drive audience preferences and reinvigorate the ad-supported ecosystem. But, the future of television is brighter than that.

In the coming weeks, we’ll explore the next steps for television innovations, including results from a brand new Razorfish study on television usage, and share a sea-change prediction of what television will look like in 2019.

Dave Friedman ([email protected]) is president of the Americas for Razorfish and a monthly contributor to Chief Marketer.