E-TV in the Age of Personalization

    

Adland has long dreamed of a world where viewers sat in front of their television sets, buying everything from Anacin to Zest with a single click of the remote. They’ve even named it “Jennifer Aniston’s Sweater” after a hypothetical situation where viewers would be able to click to buy the garment the moment they saw it on the Friends star.


Only that’s never going to happen.


For the Jennifer Aniston’s Sweater experience to be viable, it needs to truly be one-click, or it becomes too distracting and takes the viewer away from the show, something the actual viewer regards as a negative outcome. And the fact of the matter is that very few products-- impulse purchases or otherwise-- fall into that category. There are always decisions to be made: what color? what size? where do you want it shipped? do you want it sent overnight? And by the time you’ve made those decisions, Chandler’s already asked Monica to marry him, and you’ve missed out on why.


What’s far more likely is a second screen experience that allows viewers to go back after the show is over and shop the product placement goods along with the advertised ones.  This is a much more natural experience. (Well, natural for 2012, anyway.) It allows for behavior like comparison shopping, reading reviews, saving to Pinterest and adding to a Wish List, all of which have become essential parts of the online shopping experience.


The MVPDs who owned the apps would be able to charge premiums for placement and even sell ads that linked to the show site. There would be opportunites for brands to take over a show (e.g. all the women on Friends would be wearing Banana Republic clothes and BR would buy a dedicated page on the second screen app to showcase it.) They could advertise that page during the show or even dress the women on several other shows and combine all the various outfits on a single page.


This would be a great option for car manufacturers who could showcase each of their models on a different program and then send viewers to a single site to see them all. This activity would also help networks sell their series, as viewers may discover a new show as they are shopping.


And that’s just placement. Add in measurement, and you’ve got an even more revolutionary change. 


As Alex Blum and I noted in our article The Nielsen Myth, the most exciting development of the convergence of television and the internet is the ability to finally measure exactly who is watching. Not just which household, but who in the household, when, where and on what device. (Second screen apps will be individualized, so that everyone in the house has their own account.) That means better targeting, better tracking and more timely messaging (no ads for events or sales that ended between the time the show was recorded and the time it was viewed.) It also creates the opportunity to have “paired advertising” -- :30 or :60 second brand ads on the big screen that link with deeper dive, more actionable, “get me more information” second screen spots. 


But it’s the potential of personalization, which is the real game-changer here. 


In addition to not serving up tampon ads to 16 year old boys, personalization will allow your TV (or, more accurately, your social program guide app) to start recommending products and services based on your history. The algorithms will take into account what you’ve bought, what you’ve bookmarked, what you’ve looked into more closely as well as what shows you like, what your friends watch and how much disposable income you would seem to have. 


You’d have the option to share information from the credit card that’s linked to your account, so that recommendations would reflect the totality of your purchases. (Yes, there will be some concerns about privacy, but most people won’t be too put out by the fact that their MVPD knows they ate lunch at Gino’s Pizzeria and bought a pair of Nike running shoes at the Springfield Sports Shop. Particularly since they’ll be a number, not a name.) 


But wait! There’s more!  


MVPDs can start to negotiate deals on behalf of their customers. So going back to Jennifer Aniston’s sweater, say U-verse can tell Banana Republic that they’ve got 20,000 women, aged 18-34, who have bought clothing from Banana Republic within the past six months, all of whom are likely to watch Friends that week. They’ll cut Banana Republic a deal on ad placement if the retailer agrees to give U-verse subscribers 20% off on Jennifer Aniston’s sweater. 


It’s a win-win situation: Banana Republic likely makes up in volume what they lose in margin and U-verse gains the loyalty of their customers who see added value in being a U-verse subscriber. 


As partnership deals and second screen advertising gain bigger shares of marketer’s advertising budgets, the big question becomes who will eventually control the ad buying process: the traditional TV buying services or the upstart internet ones? There are arguments to be made each way and the TV buying firms, in particular, have invested in digital divisions. But the new landscape is far too different to lay odds on either camp right now and it’s entirely possible a brand new service will emerge. It’s really “blue ocean” right now, since few major advertisers actually buy their own media and so they are going to be looking for someone who can guide them through all the changes that the rise of the second screen will bring about. 


The biggest benefactors will be us, the consumers. With personalization, we may actually start to find advertising useful, as opposed to intrusive. (Think of your reaction to catalogs: you might not want to buy something then and there, but they’re kind of fun to look at. That’s the emotional response the new advertising should strive to engender.) And we won’t be forced to sit through sixty seconds of seniors doing tai chi as an announcer warns that Ubiquitix may cause diarrhea, dampness or premature death. 


That alone is worth the price of admission.

What Are Intel and Google Thinking? (Possibly The Same Thing.)

The trade press abounds with rumors today that Intel and Google are preparing to launch their own set top boxes in order to launch their own virtual MSOs.

If they get someone to sell them content rights, that is.

But obvious problems aside, should the big pay-TV providers be worried about the new competition?

I’m thinking probably not. But you know who should be worried?

TiVo.

Let me explain: as I have harped on about for a while, the very first thing the user of a virtual MSO will need is an internet connection. And where is our user getting his or her internet connection? From the pay-TV provider, of course! A vast majority (90%+ if you’re a FIOS customer) get their internet from the same company that sells them TV. And that bundle comes with a considerable savings. And no bandwidth caps.

Now Google has spent a while trying to wire up Kansas City with ultra hyper turbo speed internet. But as Verizon found out with FIOS, the US is a very big country and wiring individual houses and buildings with ultra hyper turbo speed internet is a very time consuming job. Like decades worth of time-consuming.

Intel, on the other hand, doesn’t even have that. All they have is a box and a dream. Oh, and a spinoff called Intel Media “a business group with a mandate to get content for Intel-based platforms”

Content they will likely run on... what? Their own network that Comcast magically gives them the bandwidth for? Doubtful.

I can see Intel making a set top box they sell to Comcast, since their box allegedly will have the ability to tell who is watching, sorted by age and gender. And consumers might be intrigued by a box that has “Intel Inside.” But content? What credibility does Intel have as a content distributor? Selling or licensing their data collection functionality seems to make much more sense than trying to become the new Cablevision.

But what do I know.

Google on the other hand, has tried its hand with content: YouTube. (Okay, they bought YouTube, but still.) But that’s about it. They’ve got an ad network that may be of interest to networks. (Or not: they may decide Google’s algorithms are great for search terms but not for channel search.) They’ve also got billions of dollars to buy up content. But beyond Kansas City, where they can offer ultra mega internet, what’s the hook? Will the content work across all Android enabled tablets and phones? Which, to be real, inevitably means only the newest phones can get it and that service will vary wildly by provider. It also means the project would DOA.

Here again, I think Google may just want to make a set-top box. One that takes all their data collecting expertise and puts it to use for advertisers and content producers. They can even integrate G+ and Gmail if they want. Just don’t try and become Verizon. (And why did they spend so much money on the Morotola purchase if that wasn’t where they are headed.)

TiVo needs to worry (a little) because even though they make a DVR rather than a set top box, they have long been the only game in town. Plenty of other people made DVRs, but none innovated the way TiVo did. 

Given consumer’s tendency to lump STBs and DVRs together, a Google or Intel box would be seen by both consumers and providers as a replacement for TiVo, with stronger data integration capabilities and a rosier financial outlook.

And if you're TiVo, that could be a problem.

UPDATE - 6.12.12: The Wall Street Journal is reporting that the U.S. Justice Department has taken note of the stranglehold cable companies have on the internet and is looking at whether bandwidth caps and other measures are meant to "quash nascent competition from online video"

The Real Story at Today's Apple WWDC

Apple made a number of noteworthy announcements at today’s WWDC, but the one that’s of most interest to the TV industry is the fact that the newest OS, dubbed Mountain Lion, will have AirPlay enabled for laptops and desktops, not just iPhones and iPads. 

AirPlay is Apple’s software solution for streaming video from your device to your TV set using the $99 Apple TV box. Enabling it on all devices, while not unexpected, is still a huge breakthrough.

That’s because most people don’t have iPads. A fact that’s easy to forget if you are in the industry and surrounded by people who do. (We call that “NASCAR Blindness” after the ad industry’s inability to recognize the huge fan base NASCAR had accrued because no one on Madison Avenue actually knew someone who admitted to liking NASCAR.)

Most people don’t have iPhones either, and neither iOS device has a whole lot of storage. But laptops and desktops? They are plentiful. And their storage capacity is bountiful. So suddenly there’s a place to manage all that content you could technically download and watch. And while it’s not broadcast TV, it’s pretty darn close to TV Everywhere: if the file for the movie lives on your laptop and you can use AirPlay to push it to a TV or another device, you really can start watching in the living room and then finish it up on the train.

That, my friends, is pretty, pretty awesome.

One Other Thing To Watch: Siri’s movie listings will apparently come with Rotten Tomatoes ratings. So it would not be surprising to see them integrated into the iTunes store as well.

TV 3.0 Summit at the Paley Center

One of the signs of a really good conference is that you actually walk away with the feeling that you've learned something. Which I why I'm glad I went over the Paley Center yesterday for the TV 3.0 Summit sponsored by The Media Council and Broadcasting and Cable.

The TV industry is reeling from all the digital changes. Not necessarily in a bad way, but everything is happening pretty fast and furious and, as Discovery CEO David Zaslav noted in his interview with CNBC's Becky Quick, no one really knows what's coming next.

One of the themes was a recent article by Henry Blodgett proclaiming the death of the television industry. Irwin Gottlieb, Chairman and CEO of WPP's Group M had the most blunt assessment as he told CNN's Erin Burnett, "with all due respect to him... he's totally wrong. One should never do 'sample-of-one' research"

Gottlieb's analysis was spot on: Blodgett's analysis was based on his own NASCAR Blindness. He looked at how he, his family and his peers consumed media and extrapolated that to the general public.

"The average family income in the U.S. is $38,000 a year," Gottlieb reminded Burnett. "We've all been to lunches where the bill was close to that." Punch lines aside, Gottlieb made an excellent point about how the average American has a completely different relationship with technology than the media types who make up most TV insider's inner circles.

This point was echoed by TiVo CEO Tom Rogers and by Zaslav, who noted that in order to avoid the fate imagined by Blodgett, "operators and programmers need to be paranoid, and continue to study all the new data on viewer behavior."

Another issue that kept surfacing was the rapid growth of TV in emerging nations like Brazil, India and China. Gottlieb explained that in India and China, consumers were bypassing both smartphones and TV sets and moving directly to tablets; Zaslav pointed out that Discovery's greatest growth was in Brazil, where early investment ensured that the network now has more than a dozen channels. (Zaslav also noted that Discovery's content was unique and translated well overseas.)

The third issue that speakers and interviewers focused on was the effect of OTT services like Netflix and Amazon. Zaslav explained that in his days as NBC's cable chief, conventional wisdom was that syndicating a show while it was still on-air would hurt ratings. In practice, he found the opposite to be true: syndication drove awareness, which in turn drove tune-in. The same holds true for OTT: Discovery has a deal with OTT services to provide them with content that is at least 18 months old. Given the timeless appeal of many of the broadcaster's properties, (e.g. Animal Planet) viewers often discover the program via Netflix and then go on to watch current episodes as they air.

Quick's interview with TiVo's Thompson was the only disappointment: Thompson danced around a lot of TiVo's early problems, blaming them on cable operators distaste for "broadcasters" (he and other top execs came from the broadcast, rather than cable industry) and not on any realization that consumers wanted simplicity and "free" more than they wanted a very sophisticated UX that many could not be bothered to master. The quintessential moment came when Thompson claimed that the TV was "the most expensive screen in the house," a surprising claim at a time where the $400 HDTV is often the least expensive screen in the house, behind the $600 iPad and $1000 laptop.

In a session more notable for its format (speakers had 5 minutes to give their pitch to Simulmedia CEO Dave Morgan who played the role of a VC, and the audience then voted on the best pitch) several social TV apps presented themselves to an audience that seemed unaware of their existence. (An audience member admitted that he never knew Shazam was available for television until then, which gave me my own personal moment of NASCAR Blindness, wondering how a TV exec could have missed all the buzz about Shazam during the Super Bowl.)

Jason Forbes from Zeebox USA rolled out the term "app hospital" to play up how so many apps don't get used, and John West presented an interesting concept called The Whistle, a sports network aimed at kids 6 - 14. If you've ever had to sit through a Cialis commercial with an 8 year old, trying to figure out how what the best distraction would be during the part where they talk about "erections lasting more than 4 hours" so you don't have to field questions about what that meant, you'll understand the genius of that proposition.

And on a final note, the food served after the seminar was really good.

Something else you don't stumble upon very often.

The Orange Milk Crate

A few weeks ago, I set out to buy an orange plastic milk crate to use as a newspaper recycling bin, so, like many consumers these days, I went online to search for one via Google.

Looking back, I realized that my decision reflected a real sea change in consumer behavior that involved a couple of unique decisions along the way.

Pre-internet, I would have walked into a store like Target or Bed, Bath & Beyond and chosen from among their selection of plastic milk crates. If I was really committed to finding an orange one, I would have continued my search by roaming from store to store. The amount of time and money I spent I spent on my search would be directly correlative to the degree to which I wanted an orange milk crate.

Nowadays, that paradigm is reversed. It’s easy enough to find an orange milk crate online. My key decision has now changed to “does the price exceed my desire for an orange milk crate?”

That’s a significant shift that give consumers more power: Retailers are no longer in the position to say “this is what we have for sale. Which item do you want?” Rather, it is the consumer who now has that power, for they are able to ask “here’s what I want to buy. Do you have it available for a fair price?”

The same dynamic plays out in the world of television. Pay-TV providers were once able to tell viewers “this is what we have on air. Watch it or change the channel.” But now that the viewer is in charge, the question becomes “this is what I want to watch. Do you have it available?” Pricing will directly correlate to the viewer’s desire to watch the show or movie. So paying a premium for an ad free version becomes an option for your favorite show, while free, ad-filled TV is okay for shows you may consider nothing more than background noise. But again, the onus is placed on the seller to provide something the buyer wants, priced and packaged in an attractive manner.

While that seems like something that should have been the case all along, it isn’t, and we are still waiting to see the full effect of this radical shift of power in both retail and TV.