Google’s TV Ad Selling Venture

There’s may be less here than meets the eye.

Description of Offering

• Remnant space on Echostar satellite’s 13 million homes.
• No information available on locations of Echostar subscribers.
• Ad units are inserted into positions reserved for local cable outlets so this is only cable.
• An auction system in which buyers offer bids for time which runs only if the bids are accepted.
• Audience data via satellite tuners is offered at no charge and is likely very accurate on a household viewing basis; i.e., no demographics.

Observation: Undifferentiated household viewing in a polyglot 13 million households (12% of all US TV HH) may be of value to some direct response advertisers who just want the lowest cost per unit of audience. Of limited perceived value to advertisers who want to know where and to whom their messages are delivered.

Recommendation: Pass on this until universe expands and there is more information on audiences.

Major Media Update: What's Up?

This is the first post in a planned series of commentary about the current state of the major advertising media. I welcome your comments and suggestions.

NETWORK TV: WHERE’S THE BEEF?

In an era when lower grade choice beef is often sold as prime, are we paying premium prices for a lower grade of television advertising time?

Primetime has often been regarded as a gold standard for media effectiveness because it combined the phenomenal selling power of the television medium with high ratings and viewer involvement providing advertisers with an opportunity to reach very large audiences quickly.

A 2.0 rating is primetime?

However, average primetime adult ratings have fallen to their lowest levels in history. For example, according to Nielsen, regular primetime programming during the week of September 17-23, 2007 delivered less than a 2.0 average adult 25-49 rating:

Demo	Ratings
Women 25-54	2.10
Men 25-54	1.70
Adults 25-54	1.90
Source: Nielsen Television Index September 17-23, 2007

Since a rating point represents one per cent of the audience, this means that more than 98% of viewers DID NOT see the average program. That’s prime?

Top dollar for lower ratings

In spite of these very low audiences, primetime network television still commands the highest advertising prices. The following table shows what one rating point (representing one per cent of Adults 25-49) is reputed to have cost advertisers this fall in a variety of TV dayparts:

Dayparts	Cost/Rating Point
Early Morning	$25,502
Evening News	$22,379
Prime	$36,612
Late Night	$32,644
Source: SQAD 4Q07 Scatter Adults 25-54

Based on the above CPP and ratings figures, one 1.9 rated primetime :30 should cost in the neighborhood of $70,000.

On the other hand, reinvesting that $70,000 into early evening news programming would generate 3.1 ratings, a 63% increase in audience.

Sure, the early evening news programming will skew older but that’s a bonus since we’re only counting Adults 25-54 in the above example.

So, where’s primetime and why are advertisers paying a premium for a lower grade of beef?

Tomorrow we’ll take a look at who’s in control of network advertising, the sellers, buyers or advertisers and the implications of these observations for advertisers.

Media Merge

The Combination of Newspapers, Magazines, Internet and Streaming Video is Creating a Powerful “New” Medium

One of the great aspects of print is that it puts something in people hands, something they’ve expressed great interest in by paying for it. As a result, each magazine and newspaper’s audience represents a community of shared interests. Therefore, by definition, the print audience is engaged with its media.

However, a possible weakness of print communications relative to broadcast has been the relatively long intervals between reader exposures to the medium. Rather than permitting a constant stream of messages as do radio and television, the magazine exposure interval in particular can be weeks or months even allowing for repeated readings.

The internet now empowers magazines and newspapers to communicate with audiences in real time, continuously and with constant interactivity and feedback. I just logged into Time.com, noted an article about breast cancer and emailed it to my wife. Before I could log out, Time’s website lured me to another health-related article. This is engagement and added value of the highest order.

A Most Formidable New Medium: Magazines & Newspapers

What I like about print media is that they put something in their audience’s hands, they touch their consumers.

I also like the fact that for the most part print audiences pay for their media, which is as clear a demonstration of true interest that one can have.

Increasingly I am also admiring the way some publications are integrating the internet into their content delivery mode, creating a hybrid, morphed medium composed of print readers accessing web content and new users via the web.

So, are magazines and newspapers old, ‘dying’ media as some pundits would have us believe? Or are they in the vanguard of the ultimate expression of current media trends, building on their strong print audience relationships to extend their communications platforms into new touch points with a wider audience?

I think the latter and as publishers figure out that they need to promote viewing of their increasing video content via some form of tune-in advertising, they will constitute a formidable new media force.

Summary Checklist for Evaluating Upfront Buy Proposals

1. Are rating goals met in each daypart?
2. Are variations vs. goals a result of buyer agility in response to changing market conditions or did the buyer just pay more than was budgeted to get to goals?
3. What ratings currency was used and why?

a. Commercial ratings

b. DVR: “Live Plus What”

i. Have DVR ‘viewers’ been discounted for zapping?

ii. Why not live only?

4. How does the pricing of the buy compare to industry averages and historical (e.g., year ago) buys?

a. Are comparisons done separately for broadcast and cable? They should be.

b. Are comparison done for each daypart? They should be.

c. Do comparisons take into account differences in the message length mix (i.e., per cent of ratings in :30’s vs. :15’s)? They should.

5. Programming

a. What proportion of ratings are in high-rated shows? Average-rated? Low-rated?

b. What proportion of ratings are in proven returning shows vs. new programs?

c. Are recommended programs complementary to the target’s lifestyle and the ad message?

d. Were engagement metrics used to prioritize program selection?

6. Platform extensions

a. Are there digital and/or emerging media extensions of the buys?

b. Is there research built into the buys to track performance beyond simple audience measurement?

The toughest upfront ever?A perfect storm for media buyers?

Caveat Emptor!


Let me count the ways that the 2007-08 upfront national television media buying marketplace may be the most challenging in the last thirty years:
1. Declining network ratings have depressed the supply of audience available to sell to advertisers
2. Strong demand for national TV ad time following several quarters of strong scatter sales
3. Inflationary trends in the general economy with both advertisers and the networks discovering pricing power that has been unseen for quite some time
4. The ‘currency’ in which ad time is measured is in question on two fronts:
a. The networks must include delayed viewing via DVR’s in the ratings they sell or face a dramatic and unacceptable further decline in their advertising ‘inventory’
b. A confusing surrogate for commercial ratings is being offered by Nielsen for the first time this year and there’s definitely less here than meets the eye
5. There is a tremendous ratings gap between the few highly rated hit shows and the great majority of programs that deliver ratings that are simply not prime no matter when they air
6. The disappearance of negotiating ‘clout’ as the consolidation of mega advertisers and mega media buyers makes it impossible to walk away from the networks’ offerings
7. The industry’s fascination with ‘new’ media which to a very large extent are simply new platforms for existing TV content but which command much higher ad prices than their audiences would seem to merit

What to do? Prepare carefully for the upfront. Incorporate a certain amount of agility and flexibility in your buying strategies so that if faced with excessive pricing in one area the buyers can hold back dollars or move to other dayparts rather than falling on the sword of network inflation. Remember that there are always alternatives to the traditional upfront---quarterly scatter, last minute opportunistic, calendar upfronts---and to broadcast network television---cable, syndication, streaming video, spot television, unwired networks---and to television in general. The bottom line: explore all of your options thoroughly before making large, long-term commitments in the upfront. Have a “Plan B” in your pocket in case your initial strategies hit a wall. Caveat emptor.

Upfront Buying Checklist/Before the Buy

UPFRONT CHECKLIST

Ten Things to Think About While Formulating Upfront Buy Strategy

1. How much to allocate to the various markets and why?
1. Broadcast Upfront
2. Quarterly Scatter
3. Opportunistic
4. Calendar Upfront
2. How much to allocate to broadcast vs. cable and why?
3. Pricing: What are the budgeted costs per rating point and why?
4. Response options if costs are higher than expected?
5. Programming triage; i.e., what is the acceptable distribution of the buy among:
1. High-rated, average-rated and low-rated programming
2. Original vs. repeat programming
3. New shows, returning shows in the same time period, returning shows in new time periods
6. How does each network’s CPM guarantee compare with the buyer’s estimates of actual audience delivery for each proposal? Have the network and buyer built a excess of probable makegoods into their plans?
7. Are any of the DVR rating measures acceptable for inclusion in the buy or only ‘live’ ratings?
8. Are digital extensions such as streaming video to be sought and, if so, in what way will they be evaluated?
9. How should Nielsen’s new commercial ratings figures be incorporated into the buys if at all?
10. Is there a strategy for negotiating commercial position within pods; e.g., first/last commercial in a pod?

Gene DeWitt

CEO

DEWITT MEDIA STRATEGIES LLC

May 11, 2007