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.

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.

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.

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.

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.

Many of the top rated finales have given viewers closure; they found the one-armed man on The Fugitive and all the employees from the newsroom at WJM-TV were fired except for the anchor Ted Baxter. With the popularity of the M*A*S*H finale, these series finales evolved into a television event. Since that time, the most popular finales have been a part of NBC’s Thursday night lineup. The Cheers finale attracted 80 million viewers, Seinfeld 76 million viewers, Friends 52 million, The Cosby Show 44 million and Family Ties 36 million, all five of these shows rank among the ten most watched series finales in TV history (see chart below).

While ER has aired on Thursday longer than any show on NBC, the audience for their finale will fall far short. There are several reasons for that, first is that the most popular finales are all comedies, very few popular finales are dramas. In fact, if you include the Johnny Carson finale on The Tonight Show (a comedy/variety show), nine of the ten most watched finales have been comedies. The only drama ranking in the top ten was Magnum PI which ended as two-hour CBS Sunday Night Movie. One could conclude that the finales for long running dramas are not as popular as long running comedies, even Thursday night dramas on NBC such as Hill Street Blues and L.A. Law.

Unlike many of the comedy finales, there is no single cast member left on ER since its inaugural season in 1994-95 (although ER is bringing back many prominent cast members that had left the show). So unlike Alan Alda, Ted Danson, the quartet on Seinfeld, the sextet on Friends or the Keatons or the Huxtables, there is no central figure(s) for the drama remaining since its early years. The ratings for ER, like most long running shows, have suffered a significant drop in viewers through the years. One reason for the drop has been the growth in the number of channels available to viewers over the past fifteen years. In 1995, the average home had 41 channels, that figure has more than tripled.

Besides the growth in the number of viewing choices, there has been a major effort by cable networks to provide quality and critically acclaimed programs, especially dramas. In recent years, these dramas have been honored with critical acclaim, as well as its share of Golden Globe and Emmy Awards. In fact, the most recent series finale that achieved any “noise” was HBO’s The Sopranos in June 2007. Although HBO is available in about one-third of all homes, the trendsetting drama drew 11.9 million viewers for its finale, more than several broadcast TV finales. In the future, the programs that get the most publicity may very well be cable original dramas. The only show currently on broadcast TV that could attract a significant amount of viewers would be The Simpsons, it meets the criteria of a long running comedy with popular characters.

AUDIENCE OF SELECTED SERIES FINALES

Total Viewers
Program Network Date HH Rtg. Share (000)
M*A*S*H CBS 28-Feb-83 60.2 77 105.9
Cheers NBC 20-May-93 45.5 64 80.4
Seinfeld NBC 14-May-98 41.3 58 76.3
Friends NBC 6-May-04 29.2 43 52.5
Sunday Movie- Magnum P.I. Finale CBS 1-May-88 32.0 48 50.7
The Cosby Show NBC 30-Apr-92 28.0 45 44.4
Tonight Show (Carson Finale) NBC 22-May-92 27.9 63 41.4
All in the Family CBS 8-Apr-79 26.6 43 40.2
Family Ties NBC 14-May-89 20.8 35 36.3
Home Improvement ABC 25-May-99 21.6 34 35.5
Dallas CBS 3-May-91 22.0 38 33.3
Everybody Loves Raymond CBS 16-May-05 20.2 29 32.9
Gunsmoke CBS 31-Mar-75 20.4 30.9
The Fugitive ABC 29-Aug-67 45.9 72 30.0
Newhart CBS 21-May-90 18.7 29 29.5
The Golden Girls NBC 9-May-92 18.9 38 27.2
Frasier NBC 13-May-04 16.3 25 25.2
Night Court NBC 13-May-92 16.5 26 24.6
That 70’s Show FOX 25-May-06 14.6 25 24.5
St. Elsewhere NBC 25-May-88 17.0 22.5
MacGyver ABC 21-May-92 13.8 26 22.3
L.A. Law NBC 19-May-94 15.9 27 22.1
ALF NBC 24-Mar-90 13.1 24 21.7
Wonder Years ABC 12-May-93 13.9 23 21.0
Growing Pains ABC 25-Apr-92 13.3 24 21.1
Quantum Leap NBC 5-May-93 13.7 23 20.6
Who’s The Boss? ABC 25-Apr-92 12.7 24 20.5
Fresh Prince of Bel-Air NBC 20-May-96 13.1 22 19.9
Mad About You NBC 24-May-99 13.6 20 19.8
Knots Landing CBS 13-May-93 13.9 22 19.6
Bonanza NBC 16-Jan-73 15.3 19.3
Will & Grace NBC 18-May-06 11.5 18 18.4
Facts of Life NBC 7-May-88 13.2 29 18.2
Jake & Fatman CBS 6-May-92 12.9 20 18.1
Major Dad CBS 16-Apr-93 12.6 20 17.9
Murphy Brown CBS 18-May-98 12.3 19 17.5
Roseanne ABC 20-May-97 11.6 19 16.6
NYPD Blue ABC 1-Mar-05 10.4 17 16.1
Miami Vice NBC 28-Jun-89 11.0 21 16.1
Married…with Children FOX 5-May-97 10.0 16 15.2
Kate & Allie CBS 22-May-89 11.9 20 14.9
Dynasty ABC 9-May-89 10.8 17 14.7
Beverly Hills 90210 FOX 17-May-00 9.6 15 14.4
Wings NBC 21-May-97 10.2 16 14.2
JAG CBS 5-Apr-05 9.0 15 14.0
King of Queens CBS 14-May-07 8.8 13 13.5
Providence NBC 20-Dec-02 9.0 16 13.3
X-Files FOX 19-May-02 7.9 12 13.2
Life Goes On ABC 23-May-93 8.9 17 13.2
Coach ABC 14-May-97 9.3 16 13.1
Touched by an Angel CBS 27-Apr-03 8.9 15 12.9
Falcon Crest CBS 17-May-90 9.3 15 12.3
Third Rock from the Sun NBC 22-May-01 7.9 13 11.9
The Sopranos HBO 10-Jun-07 6.5 11 11.9
The Nanny CBS 12-May-99 8.1 14 11.1
Ally McBeal FOX 20-May-02 7.5 11 11.5
The Paractice ABC 16-May-04 7.5 13 10.9
Walker, Texas Ranger CBS 19-May-01 6.8 13 10.8
Judgung Amy CBS 3-May-05 7.6 12 10.8
Sex and the City HBO 22-Feb-04 6.5 10 10.6
Melrose Place FOX 24-May-99 7.3 12 10.4
Dr. Quinn, Medicine Woman CBS 16-May-98 6.7 15 10.2
The West Wing NBC 14-May-06 6.2 10 10.1
Mary Tyler Moore CBS 19-Mar-77 25.5
Hill Street Blues NBC 12-May-87 17.0
Beverly Hillbillies CBS 23-Mar-71 18.1

Source: Nielsen Media Research

Another factor has been the consolidation that has taken place over the past fifteen years with media companies and prominent advertisers, such as banking and other financial services, shifting their emphasis from local to national media. The concerns of big national retail outlets and their financial impact on local “mom & pop” shops persists. Industry consolidation has been the result of improved communications and technology. This has had an impact on the media allocation decisions of banks, hotels, restaurants, retail outlets and others. The current economic environment has caused some prominent retail advertisers to file for bankruptcy protection while others have closed their doors. The growth of new technology has had an impact on local television, local radio and newspapers.

Ad revenue of local television stations have been impacted not only by the end of the political season last fall, but also by the automotive industry including dealerships. The automotive industry that usually can contribute upwards of one-third of a local station’s ad revenue have had their ad budgets curtailed significantly. Other top local TV spenders have also curtailed their ad spending due to the economic downturn. Industry analysts estimate that local TV revenue could drop by 20% to 30% in 2009.

Another factor on local TV ad dollars has been fueled by technology. The growth of cable networks has had as much of an impact in audience erosion with local stations as with broadcast networks nationally. The major difference is satellite television. National ads appear across the country on both cable and satellite providers. There is however, no alternative for local advertisers with satellite providers. Local advertisers can use local cable, but because of satellite they penetrate on average only 60% of the market. Moreover, marketers are using the growing number of national and niche cable networks that are more targeted and can be less expensive than ad time on local TV, as well as other less costly outlets.

Since many local stations are affiliates of the broadcast networks, they rely on content from them. With cable and broadband video as alternatives, the networks have begun to explore the possibility of bypassing their affiliates and using their cable partners or websites as a potential distribution outlet. This would have a tremendous impact on the programs on local television. Another factor is Nielsen’s plan to eliminate diaries (and possibly sweeps) across all 210 TV markets, replacing many markets with meters. Traditionally, diary keepers are more likely to report watching broadcast stations than cable. With continual audience measurement instead of the quarterly sweeps, stations are now pressured to provide top notch programming throughout the year to maintain ad revenue.

Ten years ago, local radio was finishing a wave of unprecedented consolidation and was flush with ad dollars, mainly from Internet companies. The ad dollars dropped precipitously after the dot com bubble collapsed in 2001. The wave of consolidation was also criticized for creating “cookie-cutter” radio formats, increased ad rates and the homogenization was criticized by many who complained radio had lost its localization.

Local radio faces challenges from new technologies such as satellite radio, online radio, podcasts, music-oriented websites and perhaps the biggest threat, MP3 players. (Unlike television, HD radio has not caught on with consumers). While satellite radio has been having financial difficulties, Sirius and XM have merged with 20 million subscribers. Online radio continues to grow with content provided that is either rebroadcast from the broadcast stations or programming available exclusively online. According to Arbitron and Edison Media Research, 33 million Americans listen to a webcast each week. In 2008 The Pew Internet & American Life Project found that 19% of all web users have downloaded a podcast. Another factor is the popularity of MP3 Players and other handheld devices that offer music and other content to consumers. Over one-third of Americans have an MP3 Player including over 60% of young adults. Satellite, Internet, podcasts and MP3 Players all know no local geographic boundaries or rely on antennas. Now more than ever, younger people are hearing songs for the first time on a device other than the radio.

According to The Radio Advertising Bureau, ad revenue for local radio dropped by 10% in 2008 compared to the previous year. Revenue for online radio grew by 7% during 2008. Industry forecasters predict radio will have a difficult time in 2009 although online could continue to be a bright spot. Similar to local television, automotive has been a heavy supporter of the medium. Another heavy supporter has been local businesses. Many have been hit hard by the current economic conditions and have curtailed their marketing budgets.

Similar to local television, local radio is undergoing a transformation on how audience data is collected. Arbitron has been replacing diaries with meters across many major markets. The change in methodology has had an impact on the currency. Arbitron claims that 100 diary rating points is equal to 70 meter rating points.

Another local medium that has been going thorough a difficult transitional period is newspapers. The medium has been beset by declining circulation and ad revenue. The circulation of many daily newspapers has been dropping about 3%-5% each year. The drop in circulation impacts ad revenue which accounts for 80% of their bottom line. Ad revenue among major newspapers has reportedly dropped by 15% over the past year. Even more pronounced was the decline in classified ad dollars, which has dropped by 30%. The Associated Press reports that in a recent 2½ month period, four newspaper publishers and 33 daily newspapers have declared bankruptcy protection.

In response, many publishers have shrunk the size of their newspapers, reduced the number of newsroom employees, put newspapers up for sale, published free newspapers to get young people into the habit of reading one, allowed for ads on the front page, as well as other strategies designed to grow revenues.

Many people who have dropped their newspaper subscription are now getting their news online. Every major newspaper now has a compatible website. Unlike newspapers, their websites do not have to concern themselves with printing and distribution costs. In December 2008, Pew Research announced that the Internet had surpassed newspapers as a source for national and international news.

The continued presence of newspapers online continues to be felt. Average monthly unique audience figures for newspaper websites grew by nearly 7.3 million in 2008 to 67.3 million visitors, an increase of 12.1% over 2007. Newspapers however, face competition online from other news related media, as well as blogs from consumer journalists. Some have criticized the policy of the newspaper industry of giving free content online while charging people for the printed edition.

Things are not all doom and gloom for local media. Tens of billions of dollars are still spent on the yellow pages, direct mail newspapers as well as local TV and radio stations. There are still numerous companies that have a finite geographic area of distribution and rely exclusively on local media. Millions of people still appreciate local media’s coverage of weather, traffic and community events. Local media is still used to test market a new product or experiment with a new creative execution. Marketers still rely on local media when the national media schedule under performs in important markets. Advertisers can also test the impact of different spending levels on sales. Marketers still use local media to target a specific ethnic group. Presumably, once the economy strengthens, ad dollars will return to local television, radio and newspapers.

Similar to other industries local media is undergoing a transformation. Although marketers are allocating more of their ad dollars nationally, new opportunities have been evolving locally that are more geographically narrower than the footprint of any TV market, metro, cable system or even zip code. With the continuing emergence of digital media, many marketers also covet the amount of behavioral data to be uncovered while more effectively targeting geographically.

For example, many cable operators and satellite companies have the ability to collect second-by-second viewing data from digital set top boxes. By collecting this viewing data, marketers will be able to uncover such information as whether their ads are being watched in their entirety and can eventually be used to hyper-target with ads that resonate most with viewers down to the household or even individual television set level.

Both broadband video and web radio while providing marketers with a national (or even global) footprint are also becoming available. These local ads can be inserted on a geo-demographic basis by using consumer information (e.g., zip codes) or IP technology. Online radio and broadband video consumption will continue to grow as more content becomes available and consumers become further acclimated to it.

A medium that is having a revival is outdoor media, fueled by digital out-of-home media, placed based advertising and guerilla marketing. Local video ads can appear in movie theaters, taxi cabs, gas stations and retail outlets to name a few. In-store product placement will become more targeted with tailored ad messages for each aisle.

Another local medium that has huge potential for marketers is the cell phone. With the handheld device becoming ubiquitous, marketers by using wi-fi networks, GPS and cell phone towers, will be able to target consumers based upon proximity to points of sale; their activities and other patterns can be measured by these smart phones. After all, local media is about the whereabouts of consumers.

There are concerns about privacy and personal information being used for marketing purposes, a huge factor. Nonetheless, the next generation of media is expected undercover more granular and personal information based of the behavioral patterns of consumers. This will result in more relevant ad messages on an individual basis. You can’t get more local than that.

The fact is that the so-called “top tier” cable networks such as USA have been facing the same competition and potential for audience fractionalization that the broadcast networks have faced for the past 25 years. The emergence of smaller, niche cable networks have the ability to siphon off viewers from both broadcast networks and “top tier” cable networks. Moreover, these smaller networks continue to make inroads as cable operators, satellite and phone companies consider the number of channels offered as a “churn buster” along with other services. Yet the ratings of many larger cable networks have not been impacted negatively.

Despite the unending competition, what these top tier cable networks have been able to do to maintain viewers is to continually roll-out quality original series. From USA’s Monk, which has 100+ episodes, to TNT’s The Closer, which attracts over 7 million viewers each week, to the critically acclaimed and Emmy Award winning drama Mad Men on AMC, these original series have become well-known and popular with viewers and marketers. Many, but not all, of these scripted shows air during the summer months serving as counterprogramming to the reruns and reality shows that the broadcast networks air (USA had five original series during the summer of 2008).

Cable networks are increasingly airing first run original series throughout the year. For example, in the fall of 2008, TNT introduced Raising the Bar in September 2008 and Leverage in October 2008. FX premiered Sons of Anarchy (the heir apparent of The Shield) and USA’s The Starter Wife began in October 2008. In January 2009 (when the broadcast networks unveil their “second season”) USA is returning Monk, Psych and Burn Notice for a truncated run (four to five episodes) and TNT is bringing back The Closer for five telecasts. In January, TNT premiered a new drama Trust Me as did A&E with The Beast. FX, a cable network noted for original programming, brought back another season of Nip/Tuck and Damages in January. The final season of Sci-Fi’s Battlestar Galactica will begin in January as well. Looking ahead, Rescue Me will return to FX and AMC is expected to bring back the Emmy Award winning Breaking Bad this spring.

Despite the production costs, there are several reasons why original series continue to thrive on cable television. Unlike the broadcast networks, which can require a 22-episode commitment for a regular series, cable networks order a limited number of episodes (typically 11 to 16). Hence, because of the limited commitment, cable originals can attract actors that have never been a regular on a network television, such as William Hurt, Patrick Swayze or Holly Hunter. The limited programming commitment of cable originals enable actors to work on other projects such as movies or theater. In addition, cable networks do not adhere to a broadcast calendar and can run original series throughout the year regardless of the month (and there are no sweeps). As an example, the first year of Damages premiered in July 2007 and the second season debuted eighteen months later in January 2009.

The content on cable networks are not monitored as closely by the FCC as the broadcast networks are. Hence, they can put on riskier content that are answerable only to marketers. Another advantage, cable networks have access to two revenue streams from advertisers and cable operators, broadcast networks rely on only ad revenue. Cable networks can amortize their programming assets easier by running encore telecasts of an originals series at any time, which the broadcast networks cannot. Similar to broadcast programs, original cable series can produce revenue by DVD sales, off-net capabilities, product placement and global distribution.

Looking ahead, a number of original series will continue to be programming staples on cable television. TNT announced plans to introduce two new series slated for 2009, Time Heals and The Line and USA recently gave the go ahead with Royal Pains. Meanwhile, the broadcast networks continue to air less and less scripted entertainment shows.

While the television model may not be broken (the broadcast networks did generate $9+ billion in the upfront last year), the cable networks realize they have an advantage and are not afraid to use it.

Before cable came along, you could count on several shows that would average a 40 rating each year. They include the Academy Awards and the Miss America Pageant. Even regular episodes of The Beverly Hillbillies produced a 40 rating regularly. The last non-Super Bowl program to average a 40 household rating was the final episode of Seinfeld over ten years ago. By comparison, 36 of the past 37 Super Bowls attained a household rating in excess of 40.

One of the reasons why The Super Bowl is an anomaly is that it will deliver a huge viewing audience regardless of what network is broadcasting the game, the teams involved, what the other networks are programming (which is typically not much) or whether the game is nail biter (like last year’s game) or a blowout. The Super Bowl is a mass marketer’s dream, reaching 90 million consumers with only one ad. To embellish the strength of Super Bowl, consider this; The Super Bowl is, by a wide margin, the highest rated kids and teens program on television each year. For a football game, it has an enormous appeal with women; for last year’s game, 45% of the audience was women. While the Academy Awards has been called “The Super Bowl for Women”, it’s not even close when compared to The Super Bowl. Last years’ Oscars (the least watched in 39 years) attracted 32 million total viewers. By comparison, The Super Bowl last year had 37.7 million women viewers.

Since The Super Bowl is such a big event, many households are inclined to have parties with families and friends watching the big game together. This unusually large “co-viewership” is an inviting target for beer, soft drink, snack foods and movie studio advertisers. When people are together at a party they can be drinking, munching or discussing movies. Another anomaly about The Super Bowl is that viewers actually look forward to the ads, even in this era of DVR’s. Although the ads are much anticipated and talked about the next day, in most instances they are soon forgotten by viewers, even if they do cost millions of dollars in ad time. Consumers are bombarded by ads all the time.

Many sponsors are using the Internet as part of their Super Bowl buy. Last year, 70% of Super Bowl sponsors, used paid search as part of their Super Bowl marketing strategy. Audi reported that they were the most searched item on Google immediately after their ad ran in last year’s big game. This year, as new marketing opportunities become more mainstream, Super Bowl sponsors are creating multi-platform messages with cell phones or social networks.

Despite the current economic climate in which such long time sponsors as Fed Ex and General Motors have backed out, NBC has been able to sign on many sponsors at the three million price tag led by the aforementioned beer, soft drinks, movie studios. The most anticipated ad will be the 3-D from DreamWorks and Pepsico. Not to be outdone, Coca-Cola will bring an ad with an avatar and an updated version of the classic Coke ad with Mean Joe Greene. Clearly, the cola wars are returning in a high tech 21st century world.

As television continues to fractionalize and many other popular TV shows continue to suffer from audience erosion such as The Academy Awards and even the mighty American Idol, the value of the Super Bowl as a mass marketing, DVR-proof, multi media strategy will only become more enhanced.

This season, the networks have been slower than usual in cancelling programs, although some shows have gotten the axe. There are perhaps a dozen or more other shows, some first year and some returning, that are on the brink of cancellation due to poor ratings yet the networks have held back. One reason is that with an uncertain economy in 2009, advertisers will be able exercise their option to pull out of their upfront advertising commitment on any show that is cancelled. Another possible reason is that the 100-day writers strike wreaked havoc with the program development season and the networks have a thin bench of replacement shows.

While both reasons have merit, I think there are several other financial factors to consider on why the networks are exhibiting unusual patience this fall. One is product placement in programs; not only does this circumvent those viewers who fast forward commercials with their DVR’s when time shifting, but also has become a new revenue stream for the studios and networks. The early cancellation of these shows could wipe out the product placement dollars for the telecasts that will never air. Another is the financial loss the networks will take by cancelling a program with telecasts already “in the can”. Although this has not stopped the networks in previous seasons, the business model for television has been changing of late. In order to cut production costs for shows (which continues to increase with the advent of digital television), some networks for the first time in recent memory, have begun, in 2008, to “green light” a proposed series based upon a script instead of ordering an expensive pilot when developing their programming strategy. The current economic slowdown may also put limitations on the program development schedule and the number of pilots ordered for the 2009-10 season.

NBC’s announcement of airing Jay Leno weeknights at 10PM, in the fall 2009, is another example of the new economic model of television. The show lends itself to product placement, is less likely to be time shifted, some of the shows clips can run on hulu.com and nbc.com and its production costs are less expensive than dramas and even reality shows. For Jay Leno to succeed, it does not have to win the period, or even charge the most for a thirty-second commercial. What the program has to do is earn a measurable profit for the network and its parent company.

The changing television model could best be explained by one of its biggest stars NBC’s Tina Fey. On winning an Emmy Award for 30 Rock this past September, she said “30 Rock is available to be viewed on NBC.com, Hulu.com, iTunes, Verizon phones and United Airlines, and occasionally on actual television.” While television remains the dominant medium with viewers and ad dollars, increasingly decisions on whether to cancel a program or renew are going to be based upon other factors than just television ratings.