Group Chiefs Bullish On Automation, Impressions
Automated and impressions-based selling could reverse the long downward trend in national spot advertising, said three top executives at Nexstar, Gray and Meredith.
Speaking at TVNewsCheck’s TV2020 conference last week, Nexstar Media Group’s CEO Perry Sook, Gray Television’s co-CEO Pat LaPlatney and President of Meredith Local Media Group Patrick McCreery said the cost of automated selling platforms are not a major obstacle to their implementation.
In Part Two of a two-part record of the conversation with this journalist, the executives also looked at the long process of converting markets to ATSC 3.0. They noted that although it remains hard to pinpoint a date when business opportunities around the technology will pull into focus, the Pearl Group’s target of 2025 is a reasonable prediction. (Read Part One here.)
An edited transcript.
There was a lot of talk at TVB about automation and impressions-based selling. Can you quantify that at all? If we ever got the automation we have been talking about all these years and everybody deals on impressions, what would it do to your top line? Would your advertising top line grow by, say, 5% or 10%? More?
Sook: You can’t really quantify it. We have gone out of our way to make ourselves hard to do business with because our currency is different and the process is very manual intensive. So if we can eliminate those barriers, everybody knows that local television is a superior value proposition.
Well, Pat [LaPlatney], why has automation been taking so long? We started TVNewsCheck in 2006 and I remember the big issue then was automation. Here we are 13 years later and we still don’t have it.
LaPlatney: You know, I think there is some real energy and there is some momentum behind it now. It will happen. It is not going to take another 13 years. Let’s put it that way.
Is there something you could put your finger on that is really holding it back?
LaPlatney: We have to get the entire ecosystem to accept the TIP standards and make sure that whatever system we go to is something that is good for the industry, and ultimately that the industry is not held hostage by technology companies. That is something that might be slowing things down a little bit. But ultimately it is going to happen.
Going back to impressions selling: When you look at the distribution for a local television signal or local television content, you have got linear, a news app, a weather app, OTT apps. You have all these different places where you are gathering audiences. But we sell them in different ways. We can’t pull them all together. And by selling impressions we will be able to pull them all together and we may find that our audience today is actually bigger than it was 10 or 15 years ago, just spread out across different platforms.
When you say “held hostage,” that goes to my next question. With automation you make it easier for people to buy and you might get a revenue hit, but you also add another layer of people — the automation tech companies you have to pay. Is that going to be a problem?
Sook: There is a way for this entire ecosystem to work. Obviously if the rep process is automated, their costs have gone down so maybe the system can absorb an intermediary or there is a sharing of that expense.
We benefit if we grow the pie. Let’s focus on that and let’s not fight over money we haven’t made yet. Let’s figure out how to grow the pie and then we can talk about the spoils. But if the rep had to spend less time managing makegoods and more time on true business development, it would that be a benefit to my company.
There is an opportunity for this all to evolve, everybody to have a seat at the table and it is going to require compromise on everybody’s part. But I don’t think it is a zero-sum game.
It’s not a real obstacle, the percentages that the tech companies are going to take?
McCreery: No, the cost is not the problem. That is a negotiation. The real rub has been us being able to control and protect our value in that ecosystem. I am not eager to jump into a game where I am going to race to the bottom for pricing. Our spectrum, spots and advertising have more value than that.
Let’s talk about ATSC 3.0. Give me your quick take on converting markets to 3.0. How long is this process going to take? What is the critical mass of markets, the point when we will talk about the business opportunity?
LaPlatney: There is a lot of progress being made right now. It is a complicated problem to solve. I can’t pinpoint a date, but I do know that the guys on this panel and a lot of other folks in the room here are working on this every day. We will have 50 or 60 markets on air in two years, maybe. I think I heard [Pearl’s] Anne Schelle say that she thinks by 2025 there will be a real business there. That is reasonable. But there is a lot of work to do between now and then.
Sook: Now that we have a market under our belt [Phoenix], the next one will come easier and the next one after that. We are developing a transitional playbook for dummies. You know, the technology piece is relatively simple and relatively cheap. It is just the transition.
What we are doing — and what a lot of other companies are doing — is the FCC is reimbursing a lot of expenses to the repack and we are saying fine. If the FCC is going to pay for a tower climb and a new antenna, we will spend the other $25,000 to make it a V pole antenna so that we are ATSC 3.0 ready. Every forward-thinking broadcaster in the room is doing the same thing.
Anne [Schelle] has set the timetable pretty accurately as it is going to take a while. I mean the transition itself for the repack is 39 months and everybody believes it will probably wander beyond that a bit. That basically would allow half the stations in the country to be 3.0 ready.
The most important thing Anne said was our current system is not upgradable. Nobody knows what the business plan is, what the ROI is.
But what is the cost of not doing this? If we don’t, we have permanently deemed ourselves to be second-class citizens. We are not going to be competitive with 4K. We are not going to have conditional access. We are not going to be able to do any of those things that you can do in video today.
So the cost of not doing this is greater than the cost of doing it by a factor. Again, I believe it will be the biggest value creation driver of the 2020s in spectrum monetization.
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