FRONT OFFICE BY MARY COLLINS

Digital Strategies Vital For Ad Revenue Growth

Media economist Jack Myers expects online originated video revenues to climb from $350 million to $14 billion over the current decade. Additional categories of digital ad spending that will grow dramatically over the next decade include social media spending, which Myers see climbing to $46 billion, and enhanced television. Simulmedia's Brian Weiser adds: “The focus for the majority of TV ad spenders is on protecting their market share and conventional video dwarfs new platforms for awareness. Digital is the second most important medium because it meets all of the advertiser’s engagement objectives.”

In a Media Finance Focus 2011 session on advertising and advertising strategies moderated by TVNewsCheck’s Harry Jessell, media economist Jack Myers reiterated his forecasts for a strong outlook for traditional media in 2011 and 2012. “Upfront is going to be very robust, with money moving back into upfront sales from the scatter market,” Myers told the audience of industry media finance professionals.

While that’s good news for our 2011 P&L statements, Myers, chairman of the M.E.D.I. Advisory Group, believes the best opportunities for ensuring continued growth for television is by expanding its reach to multiple media platforms. “Digital represents only 8% of total ad spending today, but it will be growing to a 42% share over the next decade,” Myers predicted.

He went on to say that much of the growth in digital media is likely to go to companies that are expanding their “digital originated content” offerings, such as Yahoo. Myers expects online originated video revenues to climb from $350 million to $14 billion over the current decade. Additional categories of digital ad spending that will grow dramatically over the next decade include social media spending, which Myers see climbing to $46 billion, and enhanced television.

Myers believes traditional television has as much to gain from the future as it has to lose. “The industry is transitioning from a mass, disconnected market to a dynamic, interactive market. When legacy and digital media come together, there is a great opportunity for strong brands with loyal audiences to deliver the market advertisers want.”

Myers went on to say that advertisers will be looking for brands that have strong management teams who are both well versed in legacy media and have a view of the future. He also warned that traditional media companies involved in marketing digital media need to adapt to its ability to provide advertisers with easy-to-use electronic ad exchanges and better audience measurement.

Session panelist Brian Weiser, CMO of Simulmedia, a targeted television advertising company, couldn’t agree more with the importance of improving the metrics for television audience measurement. Weiser, who until recently was a market forecaster for MagnaGlobal, said he wanted to move from analysis to a place where he could help the industry develop the structural elements Myers identified.

BRAND CONNECTIONS

Weiser also agreed with Myers’ assessment that the near term outlook for traditional television is positive. “The focus for the majority of TV ad spenders is on protecting their market share and conventional video dwarfs new platforms for awareness,” he said. “Digital is the second most important medium because it meets all of the advertiser’s engagement objectives.”

When the two elements are combined, television advertising can drive awareness of the digital immediate objectives for deep engagement and direct sales. “TV amplifies digital’s success,” Weiser explained.

However, “demos don’t buy the product; people do,” Weiser reminded attendees. “You know the audience you want to reach, but age and gender data isn’t going to tell you where to find it.”

Companies like Simulmedia are using set-top box data as a means of identifying the video programs that will deliver the audience each advertiser is seeking. Weiser sees these tools as being particularly beneficial for cable programming networks beyond the top 10 channels. Widely viewed channels, like their broadcast brethren, can be sold on their ability to achieve broader awareness. “Nielsen isn’t going away, but these other metrics will be complimentary,” he believes.

The opportunity for niche programming is its ability to support the mature brands that have less need for awareness and want to focus more of their investment into engagement and interaction with targeted consumers. Brands like Levi, Duracell and Nike have shifted more, or in some cases all — of their ad spend from traditional broadcast TV to digital media, according to Weiser.

Jack Myers added that the social media and other digital investments Weiser described encompass what he considers “below the line” spending on public relations, special events and other forms of direct marketing. These components are part of a company’s total ad spend and represent competition for traditional media ad buys.

When asked exactly how Simulmedia and others operate, Weiser said much of the initial proof of concept is being provided by tune-in campaigns that use viewer data to drive better results. An example includes the on-air promotion for increasing Hawaii Five-0 viewership. Simulmedia used its analysis of data from 16 million set-top boxes to identify the households most likely to watch TV programming in the show’s time slot, which amounted to some 40 million TV households.

The firm then looked for “viewer affinities” within that group, namely viewers with a historical preference in watching lighthearted crime drama. By eliminating the households in that subset of 18 million homes that were loyal to other programming competing in the same time slot, such as Monday Night Football, the firm determined it could attract an audience of 10 million to 11 million.

This data were then used to identify which TV programs should be used to reach the target audiences through a tune-in promotion. While the targeted viewers watched crime shows and other programming you would expect, there were some counter-intuitive TV programs identified by the data, such as Saved by the Bell reruns. But going with the data resulted in a promotion that was three times more effective and cost 23 times less than a traditional tune-in promotion.

“This type of viewer analysis can be used by inventory owners to make more money by providing greater value to their advertisers,” according to Weiser. He also believes that networks and stations can get into the game without having to invest in the technology. “The great thing about being in the business today is that there are vendor-funded companies that have warehouses of data and they want to work with you to fund these tests for proof of performance,” he told the MFM audience.

Weiser concluded by observing “we talk a lot about the problem, but there are solutions.” Media Finance Focus 2011 featured more than 60 sessions dedicated to identifying solutions for turning today’s challenges into money-making opportunities. I look forward to sharing the insights and guidance on strategies for “Empowering Growth, Inspiring Progress” — the theme for this year’s MFM/BCCA conference, provided by industry experts like Jack Myers and Brian Weiser, in my upcoming Front Office columns.


Mary M. Collins is president & CEO of the Media Financial Management Association and its BCCA subsidiary. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.