Everything You Need to Know About the Future of TV Advertising is in the New NBA Deal

The NBA reached a new 10 year rights agreement with Disney/ESPN and Time Warner/Turner over the weekend that will at least double and possibly triple the current annual rights fee paid to the league. The most interesting aspect of the deal is the de-bundling of at least some games from cable TV packages. From the Wall Street Journal:

“The league also laid plans in partnership with ESPN for a new online video service that would show live regular season games, the people said. In a significant move for ESPN, which derives its huge profits from the pay-TV ecosystem, that service will be open to people who aren’t cable or satellite TV customers.”

This is a big risk for their current business model as they derive around 60% of their revenue from cable TV providers as part of your cable package. However, it is where the market is going and the potential revenue from a la carte purchases (buying a game or a package of games) and more targeted advertising could bring in much greater revenue that the current business structure. What happens when people can consume content without a cable package? What could make up the revenue shortfall?

First, these assumptions can be made about where the market is going:

  1. Video on demand is driving content consumption. This can be live or recorded and through an internet or cable connection. The channel and time driven tune in window programming format is on the way out.
  2. More targeted advertising through programmatic buying platforms has re-shaped how internet advertising is purchased. Big spending advertisers will demand that TV eventually be sold the same way. 65% of advertising on the internet is now purchased on a performance based model.

cable revolution.001

As smart set top boxes evolve, “smart TV” penetrates more households and more content is consumed on mobile devices the opportunity for hyper-targted advertising through TV/video will become the standard in the marketplace. The tools marketers that use to build deep data profiles constructed by piecing together a consumer’s engagement across multiple touch points that live in the cloud driven by Adobe, IBM, SalesForce, Oracle and SAP will drive more change in the $75 billion dollar TV advertising business than anything else in the last 60+ years.

Rethinking the Video Ad Unit

I firmly believe that video is the best way for brands to engage their audience. With the convergence of internet and TV, programmatic buying platforms, marketing cloud solutions that create deep consumer profiles and branded content as a pillar of a solid marketing plan I think it is time to re-think how we look at video ad units and consider everything branded content to sell your story. Each of these units has a place in the consumer’s journey and some make more sense for a brand depending on what you are selling and how considered the purchase is. Free organic reach is quickly going away so thinking about your content creative in the context of everything as a paid ad makes more and more sense. Here are the definitions I am going to start to use:

  • Less than 1 minute – Short Form
    • old definition “TV ad or pre-roll video unit”
  • 1 – 25 minutes – Long Form
    • old definition “branded video”
  • 25 minutes+ – Programming
    • old definition “infomercials”

In the context of a campaign you might buy short form to generate awareness to drive the consumer to long form to complete the path to purchase. If you think of this as one big story across multiple media platforms creative consistency across all of the touch points becomes even more essential for the story to make sense.

Amazon’s Super Bowl Commercial in May

Last week to much fanfare Amazon.com sold Lady Gaga’s new album for $.99 as a promotion for their new cloud music player. They sold 440,000 copies of the total 1,108,000 for the week, which was the best selling album since 2005. 662,000 copies of the total were sold via digital download giving Amazon a 66% share of the digital market for this particular album. Gaga’s record label confirmed that Amazon paid the full $9 wholesale cost of the album netting them a loss of $8 per sale (not factoring costs of delivering the album, etc.). That equates to a cost of $3.5 million for the promotion or a little more than a :30 spot during the Super Bowl. Was it worth it? Well, lets say it netted Amazon 200,000 new customers along with all of the earned media buzz, $3.5 million is still a lot of money but their timing seems to be perfect since Apple announced that they will be launching iCloud next week so anything Amazon can do to gain first mover status in the category will be needed to go head to head with what promises to be a cloud solution that is tightly integrated with the huge Apple ecosystem.

Is Google Creative Labs the best ad agency around?

They don’t have any clients aside from their parent company but Google Creative Labs is coming out with the most engaging TV ads around these days. They connect emotionally to deliver a memorable message.

This ad for Chrome debuted on Saturday Night Live in conjunction with her appearance with Justin Timberlake. I don’t know if made more people switch from IE, Firefox or Safari but it connected the Google brands with a large, desirable audience….and I bet they didn’t pay Lady Gaga to appear as it is essentially a 1:30 commercial for her new album.

When my wife saw this spot for a Dad who tracks the childhood of his infant daughter through a suite of Google products made my wife cry. I was happy it wasn’t for diamonds or a car because I probably would have been shelling out for whatever they were selling.

The next spot “It Gets Better” probably demonstrates the power of the web to connect people (using Google products) and change a life more than all of the articles on TechCrunch ever could. I saw a few people post on Facebook how emotional the ad made them, an important timely message that delivers in 1:30.

Emotional advertising used to be the sole domain of Apple in computers (do people still use the word computer?) and electronics but Google is making more creative ads. I think a lot of people in the advertising industry wondered what they were up to when they put together their all star team for their in-house agency. I guess they wanted to make cool ads….imagine that.

The future is mobile

Amazing data from Google regarding mobile device usage and their place in the consumer decision process. We live in the future. Highlights from the article:

Action-Oriented Searchers: Mobile search is heavily used to find a wide variety of information and to navigate the mobile Internet.
  • Search engine websites are the most visited websites with 77% of smartphone users citing this, followed by social networking, retail and video sharing websites
  • Nine out of ten smartphone searches results in an action (purchasing, visiting a business, etc.)
  • 24% recommended a brand or product to others as a result of a smartphone search
Local Information Seekers: Looking for local information is done by virtually all smartphone users and consumers are ready to act on the information they find.
  • 95% of smartphone users have looked for local information
  • 88% of these users take action within a day, indicating these are immediate information needs
  • 77% have contacted a business, with 61% calling and 59% visiting the local business
Purchase-driven Shoppers: Smartphones have become an indispensable shopping tool and are used across channels and throughout the research and decision-making process.
  • 79% of smartphone consumers use their phones to help with shopping, from comparing prices, finding more product info to locating a retailer
  • 74% of smartphone shoppers make a purchase, whether online, in-store, or on their phones
  • 70% use their smartphones while in the store, reflecting varied purchase paths that often begin online or on their phones and brings consumers to the store
Reaching Mobile Consumers: Cross-media exposure influences smartphone user behavior and a majority notice mobile ads which leads to taking action on it.
  • 71% search on their phones because of an ad exposure, whether from traditional media (68%) to online ads (18%) to mobile ads (27%)
  • 82% notice mobile ads, especially mobile display ads and a third notice mobile search ads
  • Half of those who see a mobile ad take action, with 35% visiting a website and 49% making a purchase
Implications

Get ready for the iTax

It was interesting to see that Apple rejected the Sony e-reader app for the App Store last week. It is still unclear exactly why the app was rejected aside from Apple thinking Sony makes junk, but if it was rejected because they didn’t pass along a 30% cut to Apple for the purchase it is a bit scary. I bought the iPad the day it was available last year and downloaded a book from the iBook…cool, more or less same as the Kindle from a UX but turned the pages with a swipe as opposed to clicking. However, when the Kindle app became an option I downloaded all of my reading there. Why? The selection was about ten times the size of the Apple store, plus I could read it on any device. I don’t think Apple will make the rules that you must make purchases through their platform retroactive or make it impossible to read Kindle books on your iPad because they would receive so much negative backlash. This is scary for app developers though. Can you imagine Apple demanding a 30% of all purchases through an app? What about those serving ads, content providers, etc. if iAd became a mandatory platform? That is a massive portion of any profits. I think such a large chunk that developers would shift away from iOS to android. This becomes even more of an issue for everyone who feeds off of the Apple ecosystem when start to look at projections for the growth of mobile business from David Shapiro, Google’s director of small business marketing – “Two-thirds of all purchases and half of transactions will occur on mobile devices by 2015” click here for the whole article .

What will Social Commerce look like when it gets here?

I finally got around to seeing the Social Network this weekend and it sparked me to start thinking about how social networks are going to change the way we buy everything from cars to diapers. Facebook in particular has been adopted at an unprecedented rate globally  and everyone knows that word of mouth is the most powerful tool in moving someone from consideration to purchase. How does word of mouth evolve as social media becomes part (and probably the most influential) of the purchase process? Here are some questions that I want to answer before the map the future of social commerce can be drawn:

  • What lines will be drawn from a privacy perspective? You obviously don’t want all of your personal purchases shared, what is fair game and what is not, who decides?
  • What role will mobile devices play in this? This is where the real innovation is occurring with bar code readers, NFC chips embedded in the next iPhone (speculation), geo-location applications (foursquare, WHERE, SVNGR, etc.) that can tailor offers and experiences to your specific locations, and traditional credit card processing companies being challenged by new players like square this all has the potential to disrupt the way people shop in a big way.
  • What platforms or tools that do not currently exist and are yet to be born that will become the glue that binds all of these processes together? Will it be Facebook? As social networks and the web in general evolve into something that is an important piece of every bit of our life and not something done from a desktop or laptop screen what is next? How will the rapid deployment of 4G wireless networks that promise wi-fi speed everywhere  change the way people shop in-store, on the go and at home?

How do you justify spending $3M on a Super Bowl commercial?

It is always an interesting thing to debate  – is a :30 Super Bowl spot worth the money? I think it depends on how “mass” your brand audience is (that is why beer and cars dominate the game) and of course how good your creative and integration across social platforms is, but it can be a good and sometimes great investment. Here are some things you must consider that are unique about the Super Bowl as an event:

  • Over half of the US population tuned into the game at some point yesterday – 162.9 M – where else do you get that sort of mass audience this day in age? Nowhere.
  • The average audience was 111M so lets say you paid $3M for your spot for the sake of simplicity that delivers a CPM of about $27. That is 3-4 times what you normally pay for broadcast TV but well worth it and at a smaller premium over what the NFL gets throughout the season being a live sports event. The “Force” spot for VW had 15M views on YouTube in two days, prior to even airing during the game.
  • Nobody DVRs the Super Bowl and it is only time people are excited about watching commercials.
  • The social aspect of the ads now can deliver an additional 50M or more impressions from places like YouTube, the massive TV news and print coverage, etc. everyone is an armchair ad critic following the game.

So how do you maximize your spend if you have an extra $3M lying around?

  • Put together a spot that is actually creative and smart. What was so compelling about the VW ad above? It wasn’t the features and benefits of the Passatt or it hugging tight corners on a mountain road. It was embedded on YouTube a couple of days before the game, people passed it around because of a great emotional connection that it triggered, not sophomoric humor which has no long tail.
  • Make sure your spot is for something new and is easy to find using social media and search after it airs. Use this as your opportunity to tell the second chapter in the story. All great advertising campaigns build on a message in a linear way over time.