Big Picture Advertising

Product Placement in the news again

The UK Culture secretary Andy Burnham has come out against product placement and revived the debate about this topic. Most of the industry feels that product placement is inevitable and it is (was ) expcted that the EU Television without Frrontiers initiative would open the door to product placement within a clear legal framework.
As we've discussed before this is a tactic that can work well - but not always in the way people think; as this chart shows the main benefit of Coke sponsoring American Idol is that the ads in that show track much higher than in other shows - suggesting that the placment works in a sort of low involvement processing way.

The Guardian has a good article berating shows for including brands and highlighting how obvious it can be when done badly.

Our view is that it can be a very useful tactic if done tactfully.

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

End of Advertising as we know it - IBM research

Following on from their end of TV research IBM have released some more interesting research - which is going to be part of their End of Advertising as we know it report to be published this autumn.

The research covers the US, Japan, Germany, Australia and the UK. Again well worth digging through - we were struck by just how dominant social networking and User Generated Content is in the all the markets other than Japan. There UGC is big, but social networks are not so popular - yet.

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.

YouTube - in video advertising

Given that in video advertising is the hot topic these days, this film is interesting. Someone spotted what seems to be a test ad format - which was swiftly removed. A recent WSJ article (reg req.) covers this topic in more detail.

Thanks to Glue for pointing this out.

UPDATE - Our friends at Metacafe tell me they have a very similar product ( called Toaster) in beta right now - with good results so far.

Traffic Shaping

Broadband providers in the UK are getting pretty heated about the the implications on the new BBC iPlayer on their networks. They believe that the increase in data involved in watching video over the internet will place "an intolerable strain on their network" and are threatening to introduce traffic shaping - a neat name for restricting access to the iPlayer service.

We've talked before about the worry that video kills the internet - and we're seeing similar concerns in the US;

"The fundamental problem that Joost faces is the fact that the broadband available to North American households simply isn’t fast enough for them to provide image quality comparable to digital cable or satellite, much less high-definition video." And it seems that P2P doesn't solve the issue either.

A new report from Cisco forecasts that IP traffic will double very 2 years between now and 2011 driven by P2P and Video, so the problem is not going away.

We're convinced that we will see video delivered to the TV via the internet - the next generation of set top boxes will be IP enabled - and that the web will continue to evolve from a text medium to a video one. Its just that the path to that may be a little bumpy.

For consumers this will mean that they have to check the small print on their broadband deal to make sure they get the connection that suits their needs. And for brands it means continuing to experiment with advertising in and around video - but making sure that they get what they pay for - did the ad actually get watched?

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.