News item: In fourth quarter 2008, the broadcast networks lost three million viewers or 7% of their total audience when compared to a year ago. Meanwhile, USA Network recorded an industry high 2.86 million viewers in prime time throughout 2008.

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.

badgate Uncategorized

Many marketers could learn a lot from The National Football League. Over the past forty years the professional football league has created an unofficial winter holiday for marketers. The Super Bowl is an event that tens of millions of Americans look forward to, a date in between Martin Luther King Day and President’s Day. Even in a today’s multichannel environment, a typical Super Bowl game will average a household rating of over 40 (or 40% of all TV sets watching the game) and attract around 90 million viewers.

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.

badgate Uncategorized

Historically, a television program’s success was dependent on one criterion, the number of viewers (especially young viewers) as measured by Nielsen. While Nielsen ratings remain a very important factor in the success or failure of any program, there are other criteria that the networks have begun to consider. These factors can be the number of video streams watched on websites or mobile phones, the number of people who view the program on demand (either with a DVR or on VOD), the number of downloads on video iPods as well as other handheld devices and the number of DVD sales among others. Since all these ancillary platforms have the potential to boost a program’s revenue (and value), they are now a factor in the long term success of any program. Hence, a program’s profits as measured across all platforms can increase a broadcast network’s revenue base and their parent companies’ quarterly earnings report, just as easily as the Nielsen ratings.

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.

badgate Uncategorized Advertising, Digital

The Presidential inauguration will be the biggest video event of all time, we just won’t know how big.

At 12 noon (EST) on Tuesday, January 20th Chief Justice John Roberts will administer the oath of office to Barack Obama, making him the 44th President of The United States. Besides all the pageantry and balls, the inauguration marks the conclusion of the longest, costliest and most extraordinary political campaigns in history.

Campaign strategists are trendsetters in micromarketing niche consumers (or voters) and in that regard, the Obama campaign was exceptional. In fact, Barack Obama’s campaign strategy was so effective, that in an Advertising Age poll advertisers voted him “Marketer of the Year” for 2008. Barack Obama had succeeded Nintendo and beat out Apple, Nike, Coors and other “products”. The reason for the industry recognition was Obama’s effective use of both traditional media such as direct mail, television and radio blended with new media platforms such as, e-mail blasts, paid search, text messages, social networks and even video games. Meanwhile, his competitors relied primarily on the tried and true mainstream media campaign strategy. Obama’s team was especially effective in attracting “millennials” (18 to 29 year olds) by using a combination of grassroots marketing and these new media channels available. The result not only made younger Americans vote, but also encouraged them to become part of the political process by volunteering. All this media strategy enabled Obama to become a household name and eventually President from a relatively obscure freshman Senator.

Media pundits have concluded that if Franklin D. Roosevelt was the first “Radio President” and John F. Kennedy was the first “Television President” than Barack Obama will be the first “Internet President”. This brings us to January 20th, the oath of office and subsequent inaugural address. This will undoubtedly be among the most watched video events ever. However, we won’t really know just how big a video event it will be. The reason is lack of viewing information across the three screens, television, computer and cell phone, in which the speech can be watched. This issue forced NBC Universal to create Total Audience Measurement Index (or TAMI), which used several audience research companies to measure the various video platforms available that it developed for the Summer Olympics. The inauguration will be available on far more channels than even The Olympics.

Nielsen has been the currency of television ratings for years, (27 million viewers watched Richard Nixon’s first inauguration in January 1969 on the three broadcast networks). With the few exceptions however, Nielsen’s sample consists almost exclusively of in-home viewing in sample households. With Obama’s inauguration occurring on a Tuesday afternoon, people across the country will be watching the event on television sets outside the home, such as offices and schools, these millions will go unmeasured.

Combine that with the millions of Americans watching the inauguration online (with the first Internet President) again at work, in school, or at hotspots around the nation and other locations. Recent major sporting events happening during work hours can gauge the impact of online viewing. According to CBS, 92% of the 4.8 million people streaming March Madness did so at work. The U.S. Open Playoff (golf) on a Monday afternoon had at least four million streams. The inauguration, will be available on far more broadband video outlets, including foreign language websites, it will much higher online numbers. While there are a couple of research companies that can measure online video, many of these websites streaming the speech will be too small for accurate measurement. In all likelihood, an aggregate “census” count all the broadband video websites carrying the speech would depict a more accurate number. Video clips of the speech will also be uploaded and viewed countless times on Facebook and YouTube (both hadn’t existed during the last Presidential inaugural) and other websites. The speech will also be e-mailed across the country and around the world.

Mobile, the third screen, will have the smallest impact on overall viewing, has the least amount of viewing data available, but is the fastest growing. With over ten million phones with video capabilities, the inauguration could draw several million viewers. In all likelihood, most mobile video viewers will be “millennials” who received all those text messages, volunteered and voted last year.

The inauguration will be a watershed event not only for the nation, but also on how Americans can now watch the speech. People will have to opportunity to watch the inauguration on various screens at any location and anytime thereafter. It could be the most watched television event outside the home. It will be the most watched event on broadband video and on mobile television. Unfortunately we will probably never really know how many total viewers there were.

badgate Uncategorized Advertising, Media Channels, Research