The media landscape continues to evolve, the 2010 Consumer Electronics Show from Las Vegas highlighted 3D video screens and e-readers. Additionally, consumer electronics are getting smaller, more multi-functional and environmentally friendly.
The recently concluded decades brought out some of the industry’s greatest innovations such as iPods, smartphones, social networks, blogging, YouTube, Twitter, e-books, portable GPS devices, the transition to digital TV and the emergence of Google to name a few. The upcoming decade promises to be even more innovative with each year offering new and exciting opportunities for consumers and marketers fueled by technology.

While the overall adoption of 3D TV (and other screens) is perhaps several years away, if indeed it ever does become a commodity, there are some trends to look out for in 2010.

2010 will be another banner year in sports. With such regular events as the Super Bowl and World Series joined by the Winter Olympics originating from Vancouver and soccer’s World Cup, televised sports will continue to attract viewers when most TV shows are losing viewers. One reason for the popularity of sports is HD television. Nielsen reports that in 2009n ratings in HD sets for sports were 21% higher. The number of HD sets capable sets is 47.4 million and will grow boosting sports ratings further.

Set top boxes will become the currency (for some). With well over the half the households subscribing to digital cable or satellite TV and upwards of six companies analyzing the data, second-by-second viewing information is now readily available. Many smaller ethnic and regional cable networks as well nationally unmeasured cable networks will begin to use digital set top boxes with advertisers as the currency, potentially challenging Nielsen.

Cars becoming Media Centers. Cars are also benefitting from digital technology. Many applications familiar on cell phones as well as websites and social network are now are also available in new cars. For safety reasons these media centric capabilities will be either have steering wheel controls, activated by voice controls or touch screens. As the industry rebounds in 2010 expect automobiles ads to not only tout fuel efficiency, low prices and safety features but also their media capabilities.

2010: The year of mobile mid-sized screens. Last year 33 million netbooks were sold to consumers proving there is a market for mobile screens that are smaller than laptops and larger than cell phones. Another example is the popularity of e-readers from Amazon, Sony, Barnes & Noble and based from the all the exhibits from the CES, numerous others. Looking ahead 2010 could be the long awaited year of the wireless tablet (e.g., Apple iPad) as well as the Linux based smartbooks. All these mobile devices have a screen of 5” to 10” in diameter. Furthermore these mobile devices will help move newspapers and magazines migrate to a digital platform (already Wired and Sports Illustrated are beta testing tablets) also offering readers and advertisers interactive capabilities.

Cell phone application will lead to behavioral marketing. With over 100,000 mobile applications to choose from and over 3 billion downloaded since July 2008 consumers are now providing valuable information about their preferences and interests that have marketing implications. Expect marketers this year to gain some access to this information and, coupled with a mobile component, begin to provide relevant advertising information to consumers on there smartphones.

Improved Search: Search engines led by Google will continue to improve. In 2010 look for more real time search as posts on Twitter and Facebook becoming readily available. Also in 2010sSocial search will provide more relevant information based upon user profiles and Google goggles allow users to find relevant information based upon a photograph.

DVD’s on the way out? While Sony’s Blu-Ray HD DVD Player was one of the fastest growing consumer electronic products in 2009, DVD sales, an important profit center for movie studios, slipped for the second consecutive year (dropping 13.3%). Expect studios in 2010 to look for streaming movies as the next platform for consumers. Companies providing online rentals include Netflix, Disney’s Keychest and even Blu-Ray which is expected to launch an online video service in February. These products also have the capability to work with portable devices as well.

Mobile TV: With Google entering the smartphone market with Nexus One the industry will be more competitive than ever. Mobile TV will benefit greatly from the digital transition of June 2009 allowing for TV stations to broadcast in real time on portable devices. The number of TV stations broadcasting to handheld devices will grow from 30 to 200 by yearend. Furthermore, GPS enhanced mobile devices can allow marketers to target consumers geographically with relevant ad messages. Nielsen and Rentrak plan to unveil an audience measurement system in early 2010.

While the recently 2000’s were evolutionary, in all likelihood the upcoming 2010’s will be revolutionary. The media opportunities for both consumers and marketers will expand exponentially in the upcoming decade with personal devices at the forefront.

badgate Uncategorized 2010, Predictions

In the early days of the Internet, the cost and availability of broadband access, led to the so-called digital divide. The digital divide was the gap between those geographic areas that benefitted from high-speed Internet and could afford it, with those mainly lower income areas that did not have access to the fledgling web.

Since that time the U.S. has fallen behind several nations in broadband penetration and connection speed. Strategy Analytics reports that the U.S. in 2008 ranked 20th among all nations in household broadband penetration with 60%. By comparison, South Korea ranks first at 95%, the Asian nation benefits from a highly urbanized population and a government supported broadband strategy. In fact, many of the leading countries in broadband penetration tend to be small and mainly urbanized such as Singapore (88%), the Netherlands (85%) and Denmark (82%). However, residents in larger geographic nations (albeit with a small population) such as Canada (76%) and Australia (72%) also have a higher broadband penetration. The report estimates that the U.S. will drop even lower to 23rd place in 2009.

Moreover, according to Wired magazine, the average broadband connection speed in the U.S. is less than five Mbps, much slower than the average connection speed in Japan which is 63.3 Mbps. Japan’s broadband penetration is also higher than the U.S. at 64%.

One of the campaign promises of President Barack Obama was to provide broadband penetration in underserved regions across the U.S. to strengthen the economy and provide jobs. As part of the economic stimulus package, $6 billion was allocated to improve the availability and infrastructure of broadband.

Even if broadband becomes ubiquitous, it is doubtful that everyone would subscribe. A survey by the Pew Internet & American Life Project released in January 2009, found broadband penetration is about 60% however, a total of 91% of all U.S. homes do have broadband access. The report also found that about one-third of Americans, if given the opportunity, would still not subscribe to a broadband connection due to the cost. Many dial-up subscribers would prefer not to spend more than their current monthly cost for a high-speed connection. A few analysts estimate that for broadband to become widespread, a monthly fee of no more than $10 would be required. Hence, since cost remains a factor the digital divide while smaller still exists.

Meanwhile as more eyeballs migrate to the Internet, several media companies are grappling with a strategy that would better monetize content from the web. In July 2009, The Walt Disney Co. announced plans to introduce movies, television shows and video games on a subscription basis. Disney management indicated that consumers would be willing to pay a subscription fee if they believed they were getting value. The New York Times has reportedly been mulling over the possibility of charging subscribers a discounted $2.50 monthly fee to access their website. Non-subscribers would pay $5.00 per month. Other newspaper publishers are also exploring various revenue opportunities with their websites, including The Hearst Corp. and E. W. Scripps. Both are reportedly looking at their website as a potential revenue source. The Wall Street Journal, owned by News Corp., does charge for some of its content. News Corp. chairman Rupert Murdoch indicated that this online strategy will extend to other corporate properties including Fox the New York Post among other global holdings.

Online videos are also eyeing the web as a revenue source, as people continue to migrate to the Internet to watch programming. According to The Wall Street Journal, TNT’s The Closer, one of cable’s most watched original programs, is testing the idea of providing the same commercial load online as it does on television, a fourfold increase in ad time. The networks contend they cannot give away premium programming with limited commercials and operate a sustainable business. Despite a potential pushback from online viewers, many networks would like to see broadband video, at the very least, resemble television economically.

The largest cable operators Comcast and Time Warner are also exploring a business model to make cable programming accessible online. The plan is to use a password to protect the content for existing paid subscribers of either cable or satellite companies.

Consumers continue to spend more and more of their dollars and time on media and technology. In Veronis Suhler’s most recent annual study on media, it reported that for the first time (and despite the recession) people spent more time with consumer supported media (e.g., subscription, etc.) rather than with free (mostly broadcast) media.

As consumers spend more dollars on subscription based media, the strategy of providing universal broadband access could derail. The cost could be too high unless it was subsidized by the government, an unlikely scenario.

Additionally, as online content providers experiment with a subscription based model, only those with the financial means will be able to afford to access the new premium rates. This separation will introduce a second digital divide or Digital Divide 2.0.

admin Uncategorized Digital, New York

Whether it was the sluggish economy or a change in strategies of marketers, but in 2008 the amount of network TV commercials that were 15-seconds in length reached 39.8%, the highest to date. As one would surmise, the percent of the standard 30-second was 51.3% the lowest to date. In recent years the percentage of 15-second commercials has been inching upward and if the trend continues (and the economy does not rebound soon) could easily surpass 40% in 2009.

While marketers continue to use 15-second ads as part of their strategy, how effective are these commercials in today’s television landscape. The last comprehensive study on the effectiveness of 15- second commercials was conducted by the CAB in 2000, when 15-second commercials accounted for “only” 31.9% of all network commercial lengths. The study reported that 15-second ads were losing their effectiveness, due primarily, to ad clutter. The number of commercial and commercial minutes has increased over the past nine years. In fact, Nielsen just released a report that stated the number of commercial minutes in prime time on broadcast TV by 3.5% and Spanish language TV by 11% from 2007 to 2008. Logically, the more 15-second ads there are; the more commercials (not just commercial minutes) there are on television.

Fifteen second ads have been with us for the past 25 years in response to the (then) spiraling costs of thirty-second costs on network television. A fifteen-second ad message was, at the time, 60-65% the cost of a thirty-second commercial. The industry was awash in points-of-view, the do’s and don’ts of when and how to use fifteen-second ads as well as awareness studies. In the mid 1980’s most awareness studies reported fifteen-second commercials were between 60-80% as effective as the standard thirty-second spot. By contrast, the 2000 CAB study, reported that fifteen-second commercials had 48% the unaided recall of a thirty-second ads. As one would expect, the recall scores for fifteen-second ads were lower when they aired in longer commercial pods.

As we all know the television landscape has changed dramatically in just nine years. There are more tuning sources, ads are appearing on various screens of various lengths and technology designed to give consumers control over their ad exposures has now reached 30% of all homes. It is time for the industry to re-visit the impact of fifteen-second and various other lengths on viewers across all screens and major tuning sources (including cable and Spanish language networks). While the television industry is waiting for the mounds of information that digital set boxes and interactive TV will provide marketers, they, similar to People Meters, measure tuning, not viewing of commercials and they don’t measure the attentiveness or effectiveness of advertising.

Television remains a vibrant medium. Usage remains at near record levels, there are more choices than ever before and, collectively, marketers spend $70 billion annually. With time-shifting and even place-shifting, ads of various lengths are now appearing on various screens. It is time for industry once again to measure the effectiveness on the length of ad message.

admin Uncategorized Advertising, Digital

With General Motors and Chrysler both undergoing a restructure and facing financial difficulties, it raises the question of their status as marketers for the upcoming 2009-10 broadcast season. TNS reports that for calendar year 2008 General Motors was the third leading spender on network television (behind Procter & Gamble and AT&T) at $630 million. Chrysler ranked only 43rd on the list at $144 million. Chrysler’s impact will be felt more with local television in which it was the top spender at $330 million in 2008. Simply put, automotive accounts account for about 6% of all network ad dollars and 3% of all cable dollars. In addition, automotive is by far away the top category in spending ad dollars with local TV. For 2008, carmakers spent nearly three billion dollars, roughly double the amount of what telecom had spent; the second largest category.

Under General Motors new structure, they will jettison three brands; Saturn, Hummer and Saab, while maintaining GMC, Chevrolet, Buick and Cadillac. In 2008 these brands account for 21% of General Motors ad spending. Also, they are pulling the plug on Pontiac, marking the end of 83 years for the car model. Pontiacs has been an integral part in America’s pop culture such as songs, TV shows and movies. You can also expect a drop in the number of GM and Chrysler cars appearing on movies and TV shows as the studios and networks continue to look at product placement as another revenue stream.

Part of the void in advertising inventory created by General Motors and Chrysler will be filled by imported carmakers that see opportunity. Hyundai has already capitalized on that by replacing General Motors in this year’s Super Bowl and Academy Awards, the two most expensive shows on television. Hyundai will use the occasion to re-position their cars from inexpensive entry level models to quality built sedans.

The financially precarious situation for General Motors and Chrysler coincides with the network annual upfront marketplace. However, the upfront continues to be a very lucrative business for the networks despite losing eyeballs to cable, the multiple screens available to consumers, viewers being able control their ad exposures with DVR’s and even last year’s writers strike. For the 2008-09 upfront the networks raked in $9 billion in ad dollars, a figure had that corresponded with previous years. There is the prospect that the networks may demand ad dollars from the financially troubled carmakers up front instead of the usual verbal agreement.

Another area that could be hard hit is sports marketing. Besides automotive, Anheuser-Busch InBev, the nation’s largest brewery, is planning to cut back on its advertising budget. Financial companies are another category hit hard by the economy. Prominent sports marketers are also expected to curtail their sports marketing dollars. Expect telecom, imported autos, other beer companies and other product categories to pick up some of the void.

While the automotive industry is in a tailspin, it will be only temporary. Despite their troubles, General Motors and Chrysler will still be selling cars, still making cars and still buying advertising time. It is possible that only eight million cars could be sold in 2009. Industry analysts JD Power and Associates estimates that 20 million cars will be sold by 2014 with new consumers, new, enhanced cars and confident consumers returning. A revamped Chrysler expects to turn a profit even sooner by 2012.

badgate Uncategorized Advertising, Local TV

Simon Cowell, the often acerbic judge from American Idol, is seriously considering leaving the show after his most recent contract expires in 2010 (or after the program’s ninth season). Cowell cited his hectic schedule, which, besides American Idol, includes appearing on and owning Britain’s Got Talent and The X-Factor as the reasons for wanting to step down. Cowell “commutes” from London to Los Angeles and back every week, making for an exhausting lifestyle.

The possibility of Cowell leaving American Idol is sending ripples across the television industry. Since its inception in 2002, Cowell has been an instrumental part of the show. His loss would be disastrous to the reality show as well as its network Fox. Although American Idol is a reality show, his departure would have the same type of negative impact that it would if Alan Alda had left MASH or Ted Danson had left Cheers. Simply put, Ryan Seacrest, Paula Abdul and others are co-stars, but there is no doubt that Simon Cowell is the star of television’s most watched program. Cowell (along with Anne Robinson of The Weakest Link) even helped to create the authoritative and at times snarky British reality show personality. This was later copied but never equaled (with viewers or ad dollars) by Gordon Ramsey (Hell’s Kitchen), Len Goodman (Dancing with the Stars) and Jo Frost (Supernanny). With the ratings for the American Idol beginning to slip, keeping Cowell on the program must be a top priority.

American Idol has been the reason for propelling Fox in becoming the top rated network among Adults 18-49 for the past three seasons. Before “Idol” ramps up in January, Fox finds itself mired in fourth place. The show premieres, and lo and behold, Fox is soon the top rated network. Besides, American Idol serves as a platform to launch or popularize other programs on Fox. The most notable has been House. The audience for the drama in its first season were lackluster until it was partnered with American Idol, since then it has become a bona fide top ten program on television. A lower rated “Idol” would not help the ratings challenged shows on Fox.

Another factor is cost. The cost for a thirty-second ad on American Idol this season is roughly $650,000, making it the most expensive regularly scheduled program on television, more four times the cost of an average thirty-second commercial. The program also generates dollars from product placement by Coca-Cola, AT&T and Ford Motor. While production costs for American Idol are lower than entertainment shows, ad rates will surely plummet, as demand subsides, if Cowell decides not to re-up.

While the competing broadcast networks should be ecstatic about a suddenly more vulnerable American Idol (and Fox), it could mark the end of an era. American Idol is the only show on television that regularly attracts 25 million viewers or three times the amount of cable’s top program. The other networks are quick to point out the power of broadcast television in its ability to attract more viewers than cable; the gap between the top rated broadcast and cable shows will notably decrease.

Fox does have several options in attempting to keep Simon Cowell on the show. The most obvious is to pay the wealthy Cowell even more money. Another solution is moving American Idol from Los Angeles to New York cutting his commute in half. Of course, Fox could also bring back the Concorde.

badgate Uncategorized New York