2014 will be another year of anxiety and confusion for media companies, especially those on the broadcasting side. I’m speaking of managers who put everything they have into the “TV Everywhere” paradigm, while extending lustful nets to capture the dollars and cents as it rains political revenue in an election year, and smiling over their “retrans” money tree. In so doing, they’ll be betting the ranch on the same business model they’ve always known, and when it doesn’t quite turn out as expected, they’ll find themselves another year behind in the creative scramble to enable commerce at the local level. That IS the challenge today. Traditional advertising is crumbling as a foundation on which to build a media empire, much less maintain one.
A recent study by video/search company RAMP and published in MediaPost revealed that “82% are unfamiliar with TV Everywhere…only 4% know their login/account information to access TV Everywhere content.” Broadcasters may assume that this is merely a public relations problem; that they’ll be able to drive traffic to the concept once all the variables have been figured out. I’m just not so sure.
The most direct question we asked our audience was about how frequently they actually watched TV through their provider’s app or web site (Comcast’s TV Go app is one example of this type of experience). As with previous questions, the majority of respondents (67%) are not watching TV in this manner; however, about 20% are doing so at least on a monthly basis, if not more frequently.
There are two big assumptions in any optimism about TV Everywhere. One, that the broadcasting style of interruptive advertising will be accepted on a mobile device, and, two, that such commercials can be of the 15-30 second variety. Those are much more problematic than traditional media companies will ever admit. However, when asked to name a TV Everywhere model that is profitable, most refer to HBO’s “HBO Go,” which is subscriber, not advertiser driven. Meanwhile, the local business need to enable commerce amidst collapsing advertising paradigms continues, without local media company involvement.
Broadcasters’ political money tree will be in full bloom this year as Republicans and Democrats go at each other in the mid-term election. While it’s been slow to be noticed, political money is beginning to drift from traditional media to the Internet, and as Joe Trippi — a name synonymous with online politics — told me in September, it will be business as usual for broadcasters in 2014, but that 2016 would likely see the beginning of the end of TV’s dominance in political advertising. “There’s a growing number of people who get it,” he said, “that there’s a better way to deliver a more targeted and relevant message without having to buy all that broadcast reach.”
“It’s going to come,” he continued. “I’m seeing a growing percentage of people going to the Internet. It’s just a matter of time and innovation.”
“I don’t see it happening before 2016,” he added, “and it might be Hilary Clinton. Her people, however, haven’t shown a tendency to learn from history, so I could see her coming into 2016 thinking ‘I learned my lesson. We need to run it like they did in 2012,’ which was essentially using online to raise a lot of money to spend on TV.
Trippi, however, said that he didn’t fully trust the timing of the change, only its inevitability, and I believe we’re going to witness a lot of experimenting this year. Broadcasters will still likely reap huge profits, but counting on growth from this reliable source isn’t at all a guarantee.
If you’ve never purchased a Borrell Associates report before, let me recommend you do so with Borrell’s first 2014 Industry Paper: “The Future of Legacy Media.” This may be Borrell’s most important work ever, for it lays out data that forecasts rough going for all legacy media companies, including local television. Why is that important? Because legacy media owners and managers still don’t really believe they’re in trouble. Not really. There’s also a fun indictment of accounting practices that make everything appear alright. Using year-over-year (YoY) data, and comparing yourself only to the other TV stations in town is a trap, the paper suggests, when the market overall is expanding, because when the market contracts — as it always does — the real dollar crash to those who don’t follow the market as a whole will be precipitous. Newspapers, the report says, did the same thing many years ago.
The Borrell report looks five years ahead to 2018 and covers two election periods. Here’s author Kip Cassino:
Although TV ad spending was up during the last presidential run, TV’s share of that spending was down, below 60% for the first time in more than 30 years. Political spending on digital media will continue to increase, as polls study the last Obama campaign — where it was used more effectively than ever before. Techniques that were just experiments in years past have now become viable alternatives to expensive broadcast spots. TV will see more share erosion during the 2014 elections, and even more during the next presidential run. Our forecast predicts 10% of political dollars, or $1 billion, will be spent on online media during the 2016 elections. A restrictive turn in campaign financing law would see share loss cascade into actual spending decline.
RETRANSMISSION CONSENT FEES
For years, the free money of retransmission consent has made amends for the lack of real business growth in television’s mass media model. Without it, television stations would likely be no better off than newspapers, and the immediate future of retrans stands in jeopardy against powerful trends that will not go away.
The Supreme Court’s decision to hear the case involving Aereo this year isn’t a case of one industry versus another, as everybody is being led to believe. It’s bigger than that, and that’s why I think broadcasters are about to lose, even if they win. By putting its entire model into the hands of nine political appointees, both broadcasters and Aereo are asking to get clobbered, because the court will have to consider the one group nobody seems to care about — the consumers. This group has been powerless in retrans negotiations since day one, even though they’re the ones paying the bill. Do we honestly think the Supremes will disregard their feelings? This is about greed, not business models, and by agreeing to hear the case, SCOTUS is sticking its nose in the middle of an incredible paradigm shift in the history of communications, and I don’t expect it will turn out well for incumbents regardless of what law says what. The Supreme Court makes law, and it’s not going to be pretty for broadcasters regardless of how their decision goes. Why? Because they have to defend the indefensible as a profit-taking middleman in a world that views middlemen as an error. This will be one of the most far-reaching decisions in the history of the court, for the ability to function as a media company no longer rests with the rich and powerful. The FCC wants and needs spectrum for the advancement of one-to-one commerce. The one-to-many advantages of broadcast towers is increasingly archaic, and this cannot end well.
If broadcasters no longer “broadcast,” then retransmission consent fees can’t be sustained. “Well, cough-cough, Terry, cough-hack-cough, you don’t REALLY think we’ll let that happen, do you?” Well, yes. It’s about the people, folks. Where there’s demand, the government will be along for the ride. Moreover, there’s former FCC Chairman Michael Powell’s famous quote from 2004: “I have no problem,” he said, “if a big and venerable company no longer exists tomorrow, as long as that value is transferred somewhere else in the economy.” This is a profound prophecy that speaks to the government’s state-of-mind vis-a-vis advancing the economy by providing technological chops to industries in growth. Broadcasting simply isn’t one of them. Mr. Powell is now the chief lobbyist for the cable industry, whose job is to prevent his industry’s fatted calf from being the recipient of such a whacking.
But like addicts, we’ll do anything to protect our stash, not realizing that weaning ourselves from that to which we cling is the only path to real change and a future of brightness instead of gloom. We simply must be honest, openminded and willing to embrace new ideas and until we do, every one of our actions contributes only to the tipping point.
WHAT DO WE DO NOW?
I’ve published my thoughts about the coming year ever since The Pomo Blog was birthed in 2002. This is, of course, the habit of contemporary writers who wish to influence, because it provides an opportunity to summarize — often in list form — the essence of our thinking each and every year. In so doing, my prophecies have been on the negative side, for I refuse to buy into the industry’s hyperbole and outright self-deception that everything is just fine. It’s not, and this produces a certain gap between my ability to communicate and my target audience’s ability to receive.
Be that as it may, I strongly urge you to reorganize and re-engineer your plant and everything in it in 2014. You are a contemporary media company that happens to have a TV station at your disposal. Let your organizational chart represent that. Put a “leader” at the top, and resist the temptation to milk only the same old cash cow. Experiment. Try things such as the ten concepts listed below. Some will insist, “We’re already doing that,” but I’ve yet to encounter any company fully embracing even one of these.
TEN THINGS YOU CAN DO TODAY
Work the network and listen. The glistening glow on the horizon is the growth and maturation of the network. It doesn’t exist to serve the needs of legacy media; it is an end unto itself, and it is mobile. You need to take a hard look at this through your own research to determine everything from rules to expectations as you reinvent yourselves for the network. If 2014 is nothing else, it should be your “Year of Listening,” which includes research.
Define the local (mobile) Web. Nobody has, so it’s a book without pages. Define it for your customers before somebody else does. This will help you lead the way locally and not follow somebody else’s interpretation. Make this a companywide effort, so that by year’s end, you’ll be able to rightly address a value proposition to offer people in the market.
Start serving your own ads via your own server and discover the value of data. You cannot run a successful advertising business in the 21st Century without data. Impressions only matter if the eyeballs viewing them are potentially predisposed to the products and services being presented. It’s not an impressions world; it’s a data world.
Get into content marketing two ways: One, redesign your websites to offer one of the three presentation styles suitable for content marketing: the stream/feed, the grid, or the gallery. Two, get in on the creative side of the business, helping local companies create their content for marketing.
Practice the personal branding of your employees. Begin to understand the network value of many URLs versus only one. Those who try to force a top-down paradigm into one that is horizontal will never understand the value of being networked. We must actually practice network concepts in order to take it to the next level.
Practice the “Law of Attraction.” Disruptive technologies are empowering individuals far beyond anything we’ve ever known before. The relationship between buyer and seller among those empowered can only produce a buyer’s market, and this is true whether you’re a blogger, the New York Times, Proctor & Gamble, or a local television station. Our energies need to stay focused on making ourselves more attractive on every level instead of wasting our time and resources on clever ways to promote ourselves.
Emphasize steak over sizzle. Again, it’s the quality of the content we create that determines whether people will participate in a horizontal marketplace. Our money is better spent on the content itself than on efforts to drive traffic to it. Why? Because the goal is to give others a reason to pass it around.
Aggregate voices within the network. If you’re doing your part to listen, you’ll begin to recognize patterns and concepts that will lead to decisions about how to aggregate certain streams to help others make sense out of the noise produced by the cacophony of voices in the network. This can be one of the products you create as a result of practicing the above.
Work within niches, the narrower, the better. Absolutely own the important information niches in town. Think narrowcasting instead of broadcasting. Operate a network of sites in the network instead of just one.
Teach/Train the community in journalism & video. Enable the personal media revolution in your community. You have knowledge they seek and need. Go into schools and make it the mission of your company to raise the level of journalism and technical video knowledge in your community.
There you go; ten things you could do today to better position yourself for tomorrow. “Where’s the money?” will be the familiar refrain, and the answer is if you wait until the money is visible or you have your map, it’ll be too late to do anything about it.
People want the hows and whats of all of the above. The problem is we’re in transition, and we just can’t know the end from the beginning. That’s precisely the danger of “planning.” Innovation needs to be led, not managed.
Here’s an old Heatonism to ponder:
Managers write business plans
Leaders write manifestos
2014 is a good year to write yours. We need it.