Media and Entertainment Panel - I want it NOW!!!!!!
This panel was fairly similar to TV 3.0, which I covered yesterday; a discussion about how new mediums are changing how we consume media and the implications for both the media and advertisers.
The Landscape
The new reality = technology has enabled people to consume media when where and how they want to versus the old model where consumers could only watch on TVs a schedule predetermined by the network with approximately 8 minutes of commercials for every 22 minutes of television.
Today, Pirate Bay (an illegal download site) downloads 300 million videos a month. Television networks can sit back and watch these sites erode their audiences OR create a legal way where people can download content when where and how they want. The reality with technology today is that audiences can gain access to the content they want when and how they want it (albeit illegally). This poses a challenge for traditional media and they have to participate and develop platforms that serve these audiences, and protect or build their revenue streams.
Ted McConnell, Director, Interactive Innovations, Procter & Gamble pointed out that the cost to deliver the content is relatively low, and continues to drop, however the total operational costs and content creation can be more significant.
How Will Advertisers and Networks Make It?
“There is very little appetite for consumers to pay for content online, except iTunes” – John Cantarella, General Manager, TIME.com. The TV industry seems to a few years behind the music industry – as illegal online consumption grows, the traditional outlets look for ways to provide a better service in a legal way.
The key with online television is to increase ROI with better targeting and formats. According to Jean-Paul Colaco, Senior VP of Advertising, Hulu, traditional television advertising isn’t great – you don’t know who is watching the programs or very much about the audience. Online provides the potential for advertisers to target in ways that they can’t with traditional media.
Hulu is one of the biggest phenomenons with online video – with virtually no marketing spending it is the best known destination for watching video online. The now famous Sarah Palin SNL clip was viewed more online than on the traditional television broadcast.
Why does Hulu work?
The Hulu ad model is 25% of the ads that you see on traditional television. From a cost/benefit perspective, hulu provides a clean way to watch media and most viewers see the limited ads as a small price to pay for a simple way to get access to premium content.
From my personal experience, I canceled cable 6 months ago and watch all of my television on sites like hulu and the abc online episode viewers. The commercial breaks are shorter and less frequent than what you see on television, which improves the overall experience. I think that one of the best opportunities for sites like Hulu to improve is to give viewers more control over the ads that are served to them and to do more/better profiling and targeting.
What is the competitive advantage for Hulu? They aim for the best consumer experience in both the viewing experience and by providing a single point to access the content. Rather than going to multiple sites for each show, Hulu aims to provide everything in one place in a simple and intuitive format.
What will the Future Bring?
On-line and on-demand are the future of the industry – traditional television viewing might not go away, but it will continue to decline. The reality of advertising online is that there are synergies and relationships behind different formats of advertising. For example, display and search advertising together typically provide better ROI than either does alone. With multiple platforms available (online, mobile, television, etc) advertisers have potential to create synergies among these different platforms. The KEY will be to make up the revenues lost from traditional media in the new formats to continue to support the production of quality programming.
