Author: Todd

Programmatic Advertising – what exactly is it, and how does it work?

If you spend any time in the marketing world, you have undoubtedly encountered the phrase “programmatic advertising” and – if you’re like me – scratched your head and pretended to know what it is. In an effort to educate my comrades-in-arms, I present to you a fairly thorough – if a bit dense – article on what it is and how it works.

You may have read about the ongoing battle between publishers and ad blockers. Since subscriptions are still a qualified success, and only in specific circumstances, digital advertising will continue to be an important part of any marketers toolkit.

“Although subscription video on demand (SVOD) and transactional video on demand (TVOD) have been successful, ad-supported content isn’t going away anytime soon, no matter the viewing device.”

In essence, it is an automated way for advertisers to identify potential customers based on their publicly available demographics and past buying behavior to target appropriate ads. The potential market is too big and the amount of work to reach them is too complex.

“In the ideal programmatic transaction, a user clicks on a website, and her internet address and browsing history are packaged and whisked off to an auction site. On behalf of advertisers, software scrutinizes her profile (or an anonymized version of it) and determines whether to bid for the right to place an ad next to the media she is about to view. If you’re looking for affluent women between 30 and 35 who own houses and dogs in a specific ZIP code in Dallas, you may hit a premium price. If you take a broader view—say, all viewers between 30 and 35—your pricing may go down, and the supply of viewers could go up substantially.”

This just scratches the surface, and you will need to be a bit patient in reading the article, but you may find that it gives you just enough understanding that you won’t feel left out when it comes to discussions of programmatic ad buying.

Good luck!

The trouble with advertising in the digital age

I was reading this article in the LA Times about how Hulu is integrating product placement into their programming, and then noticed an ad in the sidebar that was most certainly a function of a condition I have. I don’t talk about it, but have spent some time researching it on the web.

This got me thinking about something I’m sure we have all encountered. If you search for anything, you can bet that ads corresponding to your search will pepper every page that you see henceforth. Have toe fungus? You will see dozens of ads for Jublia and the like. Need a bathroom remodel? Every home improvement store and website will inhabit your web life for days to come.

Granted, there is a desperate effort to find ways to make money on the internet. Music succeeded (if you want to call it that) by licensing to legitimate sites like iTunes and Spotify. But ad blocking software is wrecking havoc on the publishing industry, and the DVR is proving problematic for networks (hence, the article mentioned above). It is also lifting the value of live, must-see programs, especially in sports. Just witness the deals that the NFL and NBA have signed recently.

Advertising is a necessary aspect of free programming, but we are very much in a transitional period where the blunt instrument of banner ads will continue to haunt us in our travels from webpage to webpage, until someone can figure out a way to do it better.

Any takers?

AMC’s chief has it right

I’ve been posting about the relative value of content and its place in the financial landscape of streaming media. One revealing interview was on Charlie Rose a few weeks ago with the president of AMC Networks, Josh Sapan. It is well worth a listen, but it also leads into this particular post.

In a recent interview with MultiChannel News, Sapan expounds on the pricing strategy for the likes of AMC, IFC, WeTV, Sundance and BBC America. It is the age-old adage about supply and demand, and said demand it a function of its importance to the other programs out in the programming universe. He puts it simply:

“We take some comfort in that we have shows that are very important to some people,” he added. “If I was a video retailer I would pay a lot of attention to that.”

Pricing to what the market will bear is standard operating procedure for entertainment, and the article also has some interesting numbers that reveal the perceived value of some channels:

“…affiliate fees range from 13 cents per subscriber per month for WeTV to 40 cents per subscriber per month for AMC. That stacks up against monthly charges of more than $6 per month per subscriber for ESPN and $1.60 for TNT.”

As a dedicated “The Walking Dead” fan – and based on the fan chatter in cyberspace – I suspect AMC may be underselling its channel, but I grant that I am biased. Still, it is an important peek into how cable suppliers look at the popularity of a given channel and decide what the market will bear. It also points to the promise and peril of sports programming. As ESPN can really only license a sports program, they will never have the leverage needed to avoid a bidding war over and given league.

And that’s why owning  content is so crucial in the evolving media landscape.

Why original content is so crucial

As reported in Tech Times, the cost of content, original and licensed, at Netflix will exceed $12 billion dollars this year, which is more than 50% of its annual revenue, but a fraction of its $44 billion valuation. It is also the reason why their efforts to build a robust library of original content is so important. The article states:

“Netflix original content production is one of the main reasons viewers subscribe to the service, according to a recent survey, in which the VOD streamer overtook HBO for the first time when consumers were asked which pay TV service produces the best original content.”

 

This demonstrates the stakes in an environment where a streaming service must establish its own bona fides in the original content competition. Like HBO in its early days, or more recently, MTV or TV Land, reruns, music videos and old features can only do so much beyond launching a channel. At some point, the reason for a viewer returning to a channel or service must be something that cannot be found elsewhere.

HBO did that with Oz, Curb Your Enthusiasm, The Sopranos,  and now, Game Of Thrones. Netflix is succeeding with House Of Cards, and the pressure to deliver more hits will only accelerate. And I expect that, as content suppliers leverage their libraries to keep competitors – like Netflix – at bay, the price of even reruns will become out of reach for streaming services.

The changing landscape of television lead-ins

Here’s an interesting article from the CNN Money website about television advertising and the ways it has changed in the last 15 years (more or less). Indeed, the increasing use of DVRs and the rising popularity of streaming services like Roku and Hulu, have upended the very model that I learned when I was a television agent in the 1990s. No longer can networks rely on a show’s viewership to introduce new series and promote upcoming content.

One way it hasn’t changed as much is the desire for late-night programs that may lead into the next day’s offerings. Back in the day, Jay Leno was essential to The Today Show’s leadership in morning talk, and added pressure to ABC to abandon Nightline in favor of Jimmy Kimmel. And also explains why local late news is vital, as well. But this quote misses a larger point:

“Due to audience fragmentation, there aren’t many series that generate the kind of massive lead-in that virtually ensures sampling for new shows that follow them. CBS’ “The Big Bang Theory” and NBC’s singing competition “The Voice” are among the few that produce a big enough audience to help incubate newly hatched programs.”

The point being, it emphasizes the increasing value of unique, live event programming that encourage sampling. In particular, sporting championships like the Super Bowl and NCAA Basketball and Football Finals, will continue to generate huge rights’ deals, and explain why the programs following such events are seen as the most important to a network.

So, the next time you are watching the World Series, The Oscars, or any other popular live event, pay attention to what immediately follows – it will be a undeniable indication of that network’s priorities. And should also help explain why the deals for such events will continue to grow in dollar value.

The latest on VR (Virtual Reality) – is it the next media platform?

Depending on how you define a media platform, some experts are calling the impending arrival of mass-scale virtual reality technology as its next incarnation. Having only cursory first-hand experience with it, I can only speculate how it will play out, but the chatter among the technophiles would certainly indicate that it will be very important and a potential game-changer.

With this in mind, I just saw a fantastic discussion about its promise and future on the Charlie Rose PBS show, which you can watch here.

What do you all think?

 

What is your content tolerance?

There was a time when I would subscribe to HBO solely for seeing “Curb Your Enthusiasm” and “Deadwood,” but today’s crowded field of content providers means that you’ll likely be forking over cash for access to beloved content. You can access HBO through HBO Now, as well as offerings from Netflix, Hulu, Amazon, and now, Fullscreen.

Assuming you’re an aficionado of Bret Easton Ellis or “Electra Woman & Dyna Girl,” and you can afford the $4.99-a-month subscription fee, you may be a Fullscreen customer. But this begs the question: With limited resources, how will you prioritize both your time and money to see certain programs? This will be the question many of us will face as the days of broadcast networks fade away in lieu of subscription fees become the norm. Already, the advent of cord-cutters have viewers getting the bulk of their content from the likes of the aforementioned content distributors.

There is a lot to be learned about how viewing habits are acclimating to this brave new world of media, and the days of channel surfing have given way to ordering from a menu, knowing that even the menu is limited by who owns what. Or will advertising-based content take over subscriptions because of the cost and time limitations?

Content is back to being king!

Media’s love affair with content has been in an ebb and flow for years. But as the means of distribution continue down the path of more choices for less cost, the value of owning content has returned to its throne of supremacy in this digital age. Increasingly, content consumers are choosing their online destination by virtue of where it can get the desired programming.

Once upon a time, the major studios would supply content to the highest bidder, even if that was a direct competitor. Indeed, it was common for Warner Brothers Television and others to supply the spectrum of broadcasters, without regard to who was distributing it. But in this age of Netflix, Hulu, Amazon, etc., owning content takes on greater importance.

That is what makes this Ad Age article particularly enlightening. Clearly, Comcast is pursuing a strategy of owning as much of its content as possible, with its move to acquire DreamWorks Animation.

“Content owners have become increasingly valuable as of late and we could argue Comcast sees potential value in the library of franchises, characters that could be integrated,” said Eric Wold, a B. Riley & Co. analyst covering the entertainment industry.

It is likely that the success of Netflix has been largely a result of its being the sole source of programs like “House Of Cards” and “Orange Is The New Black.” And, apropos of the DreamWorks Animation news, Amazon Studios has been an avid producer of children’s programming.

This is good news for creators, but like everything in entertainment, conditions can change on a moment’s notice, so get while the getting is good, because it may not last. One scenario that I think may be a trend is the sourcing of content via app, as opposed to cable, satellite or SVOD (Subscription Video On Demand).

The game of chicken being played with programming

In what is becoming a common occurrence in the entertainment world, Dish Network avoided a blackout of all Viacom properties (Comedy Central, Nickelodeon, MTV, BET, etc.) with a last-minute deal to secure this critical programming. This is just the latest in a long history of brinkmanship between cable and satellite providers, and the owners of programming.

It went to the bitter end, but Viacom needed a boost to its stock price, and Dish’s 14 million subscribers might make a meaningful dent in its advertiser rates, as well as setting a precedent that might come back and bite it in the you-know-what:

“News of the deal should give Viacom shareholders relief. The stock was up about 5% on Wednesday after Ergen’s comments and soared 9% ($3.41 per share) to $40.70 each in early trading Thursday. Analysts had feared that losing Dish for any length of time would affect future carriage deals with other distributors and set the stage for continued pushback against other content companies concerning the high cost of programming.”

Not that Dish was in the driver’s seat either:

“Dish was also incented to do a deal after losing about 23,000 pay TV customers in the first quarter, a loss that was tempered by gains in the Sling TV service. MoffettNathanson principal and senior analyst Craig Moffett estimated that Dish lost about 158,000 satellite TV customers in the quarter, offset by a gain of 135,000 Sling TV subscribers. Some analysts had predicted that losing Viacom could result in as many as one-third of Dish customers heading for alternative providers.”

This is further proof that there is significant pressure to produce and own programs to avoid these showdowns, and with the advent of new means of distribution, these battles will morph into different battles with new stakes.

Given the choice, would you opt for sushi programming?

Okay, okay. This is my way of asking about ala carte programming for your television. With the explosion of options in what to watch at home, would you prefer the current slate of channels from your cable or satellite provider, or would you prefer something that more resembles a sushi menu? In other words, a screen with every channel available with a checkbox next to it. Then you simply click the boxes of the channels that you want to receive. You would be charged per selection, with some (such as ESPN or HBO) going for top dollar, and others (such as The Food Network and The Military Channel) going for less.

Another way to look at it is, will all video boil down to two choices: 1) Live (or close to it) programming? This would primarily be sports, politics, award shows, and news. Or 2) Anything that is not time-sensitive? I can watch most of my programs anytime. The only pressure coming from being “in the know” so that I can talk and read about the shows without having the drama spoiled (yes, the dreaded “spoiler alerts”).

The future of programming in a digital universe has many implications, and they’re being tested around the globe as we explore the implications of each. Often, what the consumer wants isn’t necessarily what the corporations feel is in their best interest. But with the rapid deployment of options, I can guarantee that some enterprising upstart will stumble across a winning formula. Certainly, Netflix and Amazon are already rewriting the rules.

Very exciting!