Tim Hanlon is Vice President and Director of Emerging Contacts for Starcom MediaVest Group and one of the most knowledgeable insiders in the advertising industry. His job is to know what's happening in the world of television and new media advertising, and he's a leading expert in the field. Tim is one of the most-quoted sources in articles relating to television advertising, and he's the first speaker invited to most conferences on the subject of TV and the future. He also has a news background, having worked as a CBS news producer in the past. His view of the current state of television and advertising is vital to an understanding of what's happening overall.
Q — James Marsh, among others, looks at the year 2005 — after the elections and the Olympic Games — as a potential breaking point for broadcasters. Is that when we'll see the "nervous breakdown" you've predicted?
I don't think there's any one particular point in time that things automatically change. Interruptive change to the traditional "broadcast" business is already well under way, and I think it's sneaking up on different sectors and players in different ways. The artificial spending spikes due to Olympics and elections can't mask the changes to the fundamental infrastructure. Plenty of denial and hand-wringing are already present, which means the breakdown is well on its way. A great case in point is the current Nielsen local people meter brouhaha: status quo broadcasters like the Fox-owned stations have a tremendous interest in not seeing any changes to TV measurement, because the current sloppy system of quarterly sweeps diary measurement is what they've historically been successful at selling. They are scared s***less of more accurate measurement, especially when it might show a real decline in previously thought broadcast station audiences. The reality is that the entire TV industry needs to embrace more data-centric forms of measurement; the LPM debate is simply a smokescreen for the bigger issue at hand.
Q — In the plainest language you can use, what is the nut of the problem confronting the broadcasting industry?
Broadcasters have always prided themselves on offering programming that generates the highest total audiences, and thus, the highest advertising value. And being solely dependent on advertising revenue, they have no choice but to keep touting that logic. The reality, however, is that the *average* US household has 104 channels available to them via cable and satellite, only a handful of which are what you could describe as traditional broadcast outlets. With that many channel choices — plus the coming blizzard of linear digital channels, VOD offerings, and time-shifted DVR-enabled selections — that argument is already stretching credulity. Perhaps certain older audiences may have some brand affinity to broadcast network programming, but it's becoming quite clear that younger generations don't distinguish any difference. The average ratings of broadcast and cable shows are quickly flattening towards each other — and with cable's additional revenue stream of subscription fees, it's hard for broadcasters to command a premium, when advertising is 100% of their revenue.
Realistically, it doesn't matter much since broadcasters have essentially merged into bigger media companies with non-broadcast assets. It's not NBC or CBS anymore — its NBC Universal and Viacom.
Q — You told the Chicago Tribune that we're seeing the beginning of the end of mass media. What do you mean by that?
I think technology is fast-changing the manner in which viewers find, access and consume programming. Given all the choice in video out there - and I include non-TV touch points like broadband, wireless, etc. in that mix - I think it's harder than ever before to aggregate a "mass" audience like you could decades ago. Yes, there will always be the "mega" events like the Super Bowl and the Academy Awards, but the vast majority of TV viewing going forward will become far more personalized and fragmented. People have a much easier time finding specific programs that are tailored to their needs, wants and *passions* that ever before. For example, I'm a huge soccer fan. I remember the days growing up in metro New York where that meant a Cosmos NASL game every once and while and a once-a-week "Soccer Made in Germany" highlight show on my local PBS station. Today, I can see every US National Team World Cup qualifier on ESPN, two national MLS games a week on ESPN2 and Fox Sports World, every out-of-market MLS game via the Direct Kick PPV package, as well as tons of international matches from all over the world on Fox Sports World, GolTV, Univision, Telemundo, and on and on. I literally can't watch all the soccer that's available to me.
Which leads to another, equally important point: that "niche overload" means that viewers will need help - likely through technology — to wade through these embarrassments of programming riches, so as to maximize their viewing time and value. DVRs are the first generation of intelligent "sifters" — to be followed by more sophisticated on-screen guidance mechanisms and recommendation engines.
If I'm a traditional TV advertiser (or a seller of TV advertising time), I have to recognize that people are going to watch TV more and more in this fashion. Thus, I need to reach smaller and smaller audiences on a much more finely targeted basis, and aggregate them myself if I need to achieve scale for my business. Not many TV advertisers are ready for that yet!
Q — How do you view broadcasting's reaction to the disruptive innovations of recent years?
Foot-dragging and denial. They'll do anything to maintain the status quo and paint things like DVR penetration as anomalies. At least until they retire out of the business!
That said, you have to admire efforts like Steve Lindsley's USDTV and Jeff Smulyan's Broadcaster's Initiative to offer broadcasters — especially station groups not owned by network-afilliated media companies — actual digital business options going forward. The possibilities for a digital broadcast signal — whether that be high-definition, multi-casting, data-casting, whatever — are about as limitless as people's imaginations. Real businesses are possible with that spectrum — and not just more ad-supported channels. Just look at Disney's nascent MovieBeam service.
Q — There is a considerable knowledge gap between local advertisers and national advertisers on these disruptive innovations. What's it going to take to close that gap?
In some cases, I actually think local advertisers may have a leg up on national ones, in that they see the evolving issues in distribution in TV more plainly. Cable operators have made some pretty interesting in-roads with sub-national advertisers in areas like addressable targeting (e.g., Comcast's Visible World-powered AdCopy/AdTag), opt-in interactivity (e.g., Navic's addressable on-screen overlays with Cox/Phoenix, Time Warner/Albany, NY, Oceanic/Hawaii), and on-demand video (e.g., Cox's FreeZone in San Diego). If you really want to see what's happening and what's possible, fly out to Hawaii and check out the digital cable experience offered by Time Warner's Oceanic system - a real eye-opener.
National advetisers are still interested in cost-efficient scale, and it's easy to dismiss the fragmented evolution of "new TV" platforms as not-yet-scalable. But revert to answer number three, and you'll understand why "scale" isn't the same anymore. And thus the need to change accordingly.
Q — You used to be a television news producer, and I think that's reflected in your commentary. So put on your producer hat for a moment and tell us — what's the big advertising story these days?
More and more people are tuning out ad messaging, especially as more and more irrelevant ads come at them. And the agencies and marketers seem to be responding with simply more and more of the same. I've got news for you — cramming more and more :30 spots into ever-expanding ad pods only results in more tune-out — the DVR only makes the process easier. And program promotions only add to the clutter. The shameless self-promotion of upcoming shows in news programs is starting to border on the nauseating. When you start to strip away all of the ad messaging and program promotion from a typical show environment, there's not much left. Viewers will start to revolt sooner than people think.
Q — What's the best advertising advice you can give today to local advertisers? Where would you advise them to put their money?
I think any advertiser — local or national — should be actively embracing the Internet as their chief marketing vehicle, with the recognition that many of the skills learned there will eventually port over to the other traditional mass media (TV, radio, print). A Google AdSense campaign can be extremely cost efficient and targeted, yielding results far beyond what a traditional TV or radio campaign can offer — with plenty of money left over to do other things.
In addition, I'd suggest becoming very comfortable with direct marketing techniques — online and offline — with the knowledge that those skills, too, will come to mass media — especially television.
The future of marketing is in better targeting of more relevant messaging to interested audiences, niche as they might be. Online and direct marketing methods will offer ample insurance for whatever mass media evolves into.
Q — Necessity is the mother of invention, and we're certainly at one of those points right now. Are you seeing any evidence of innovative ad concepts that will have legs?
I like what TiVo has pioneered with their ad "telescoping" platform. Allowing a viewer to opt-in to a longer video message from a spot or program via a discreet blinking icon and button push — with a guarantee that I will not miss any of the programming I'm watching via the DVR recording functionality — is as close to a killer concept I've seen. The viewer doesn't get penalized for tuning away from the program and the advertisers gets only interested viewers to see/hear the message. If only TiVo were more scaled than 1.6 MM households (or some entity could string together all DVRs to enable the same functionality). . .
Q — Finally, a lot of good people who work in television are terrified about losing their jobs. What advice do you have for them?
Learn all you can about the new technological wrinkles that are coming to the medium and how they potentially upset your conventional ways of doing business. Then think about how they can eventually make what you do better. No employer will penalize you for havng an action plan for the future!