Big Picture Advertising

Reinventing advertising

There is a good article in Fortune profiling Irwin Gotleib, CEO of GroupM ( the holding company that MindShare is part of) and my ultimate boss.
Its well worth reading to understand where the advertising industry is heading.

NewTeeVee

Whilst TV companies look at their online strategies, we're also seeing an increasing trend by TV platform brands to take ownership of PVRS. We saw Sky buy Amstrad and now DirecTV (34% owned by News Corp) has bought the assets of replayTV, who were an early mover in the PVR market but lost a significant court battle with Hollywood.
So why the vertical integration? NewTV offers new advertising opportunities and formats as well as the possibility of addressable TV ads - and the broadcasters are keen to own that space.
But new players want to be involved and are developing new approaches and technologies - GroupM (the operating company that MindShare is part of) has just invested in Invidi, one of the leading companies in this space.
TV is not going away but it is going to be very different

Interesting times for TV

A few bits of news from the last few days demonstrate just how much is changing in the world of TV.

Here in the UK there has been surprisingly little coverage of the announcement of Kangaroo - a broadband service jointly funded by ITV, Channel 4 and the BBC will offer 'catch up' for recent TV shows across all the channels plus archive material. The service will encompass a number of business models (free, pay to rent, buy to own) and will probably ( in our view) be a destination that eventually replaces the current broadband offerings of the stations.

Some parts of the picture are still unclear - the role for Five and even for Sky ( giving a service an Australian name and hiring a former Sky director is interesting given how powerful Sky is in UK television).

At around the same time we read a senior NBC executive quoted at an event organised by the excellent Jack Myers saying;

"it turns out full-length streaming of TV series drives incremental viewing of the series [on TV]."

At the same event Tim Armstrong of Google said;

"People would watch more content if it fits into their schedule and getting content to the right users with a business model attached is the highest scale success you can have"

The industry clearly sees that TV content has a value outside of traditional TV - the question is whether the current industry structure remains valid. Independent producers are keen to take more value from their work and opportunities to go direct to emerging platforms will be attractive to them. And news today shows that Google intend to be a major player in TV advertising - at their presentation to the UBS conference Tim Armstrong said it would "take Google 3-5 years to become a force in traditional TV advertising"

He also said Google TV is actively looking to expand inventory beyond EchoStar's Dish Network; he described a recent well-attended "advertiser day" at Google for TV and agency execs. "They are at a point now where they believe more measurement is actually good," he said.

TV is going to remain hugely important, but the shape of the industry is far from clear.

End of advertising as we know it

The final report from IBM on the End of Advertising is now available - building on previous reports and drawing data from all the usual sources, there are few surprises. But it is still interesting reading and reminds us all that we're living in interesting times.
This chart shows that all the future growth in advertising is coming from  "new" channels.
It highlights our belief that new media is the wrong description - this is all about Now Media

New Ofcom research on PVRs - and everything else

The new Ofcom Communications Market Report is published today, and as ever, its a wealth of fascinating info on how the UK media market is developing.

Its a huge document and the easiest way to get into it is to read the key points which gives a good topline.

One thing that leaps out is the findings about usage of PVRs;

Fifteen percent of individuals now have a digital video recorder (DVR) and up to 78% of adults who own them say they always, or almost always, fast-forward through the adverts when watching recorded programmes.

As you can see from the chart fast forwarding through ads is amongst the most popular uses of PVRs or DVRs - even though the figures are lower when asked as part of a long list. I'm a big fan - and a big user - of Sky+ and whilst I love ads, I always fast forward through the ads. And so does everyone I know who has one.

We have to accept that people are ad avoiders and create marketing communications that they actually choose to engage with.

Sky buys Amstrad

The new results from Sky show that 28% of Sky customers now have Sky+ - thats 2.374 million households - up from 2 million in January. Anyone who has a Sky+ knows that the TV experience is transformed with one of these PVRs - and we're now seeing PVRs for Freeview and from most electronics brands.

Given Sky have defined this sector in the UK, after initially marketing Tivo, we believe they see Sky+ as a major competitive advantage - especially as churn amongst Sky+ users is significantly lower than the rest of the Sky Customer base.

So the decision to buy Amstrad ( who supply around 30% of Sky's set top boxes)is probably behind the need to make Sky+ the clear leader in PVRs . By having a design and development team inhouse Sky can pioneer new uses and applications for set top boxes - including offering real VOD through a broadband connection rather than just through the satellite as previously announced. With over 700k broadband customers Sky can develop hardware that maximise the synergies between (Satellite) TV and the web - defining the sector before new players like Apple and PlayStation emerge as real competitors.

Of course another advantage of owning more of the supply chain is that the cost to Sky of new Sky+ boxes will be cheaper - so we still expect Sky to start giving them away sometime soon. With the marketing costs increasing to fight off Virgin and the levels of churn, we believe that it would probably be cost effective.

Sky+ in 2 million homes

Sky have started the year with an announcement that Sky+ is now in over 2 million homes and that they will enhance the service with video on demand later this year.

The press release points out the huge impact of time shift viewing in Sky+ homes;

time-shifting accounts for   22% of all viewing of programmes originally scheduled between 9pm and 10pm and   17% of all viewing of programmes scheduled between 10pm and 11pm. (Source: Sky   View)

Coupled with the news that BT now has over 10 million broadband customers its clear that the consumers are embracing new media opportunities.

 

Slingbox - the future of TV

We met Blake Krikorian, the CEO of Slingbox, last week who gave us a fantastic demonstration of Slingbox.

This little black box plugs into your TV and into your broadband connection, and allows you to watch whatever you want from your TV on your PC - wherever you are in the world. It evens give an image of your remote control to change channel etc.. We saw it working on a laptop and on a mobile phone - and having seen it, everyone in the room wanted one.

As well as allowing you to access any channels you receive on your main set, you can also view programmes recorded on the hard drive of a PVR, so I'll be able to watch all those episodes of West Wing on my Sky+ next time I'm traveling.

Sales are already going well in the US, and in the UK (where its on sale in Dixons for just £180) and we think it has huge potential to be the next piece of mass market technology. We've seen that consumers do adopt new technology where they can see a real benefit, and placeshifting will be just as attractive to consumers as time shifting is.

Its potentially good news for broadcasters as it will increase audience (although measurement may be harder to crack) but it seems like really bad news for all those mobile TV trials - why would I pay £10 a month to access Sky when I can do it for free with Slingbox?

There are also some very interesting new advertising opportunities - watch this space for more detail.

Big Picture on TV

Well, sort of. Last year we did some work for Thinkbox for an event they ran - and the videos we were involved in have just been added to the Thinkbox site.

The two videos are;

Making the most of sponsorship - It explores Interactive content & consumer trends:  the off-air opportunities for advertisers, and speculates as to where brand-content associations could go next, as new technologies come into the mainstream and consumer behaviours evolve. Contributors include Simon Andrews (Big Picture), Dom Burns (Fremantle), David Fletcher (Mediaedge:cia), Paul Chard (Sponsorcom) and Charles Vallance (VCCP).

and

AFP, Brand channels and beyond - Brand content (or advertiser-funded programming) will be an intrinsic part of tomorrow’s marketing. Some brands are going beyond individual programmes to create their own digital channels. Ofcom are looking at relaxing the rules regarding product placement on British Television programmes. What are the opportunities for brands in this new world? We asked some key players on the brand-content frontier to look at this question and share their thoughts on camera. Click on the adjacent film to find out what they said. Key speakers: Simon Andrews - Big Picture, Vicki Anstey – Ikea, David Brook - Optimistic Media, Paul Chard – Sponsorcom, Mark Cullen & James Penfold – Enteraction TV & David Fletcher - mediaedge:cia

Thinkbox is a very interesting initiative by the UK TV industry to raise understanding of all the ways TV can be used - sponsorship, interactive and branded content as well as the usual spot advertising. The newly revamped site has some really useful content and is well worth a look.

Accenture view on the health of TV

Accenture have published an interesting paper on "Why TV Advertising will never be the same again". There is little new here but it's a good summary of where we are right now. And given Ford just hired Accenture to advise them on their US media and marketing planning, their view is pretty influential.

Probably the most interesting opinion is that interactive TV will grow in the US, following the European experience. We agree but continue to worry that brands are not as involved in iTV as they should be.