Tuesday 4 December 2007

IPTV: TV Advertising to Fall Apart

For years now, people have been predicting the demise of TV and TV advertising. But there wasn’t much substance to these predictions and they seemed somewhat far-fetched. However, when Bill Gates makes predictions and acts upon them by launching Microsoft IPTV it is hard not to take notice. Actions speak louder than words after all, and Bills actions are big actions.

What he’s saying in speeches, and predicting is also a lot more subtle and specific than the mutterings of crystal ball gazers heretofore and I think he’s absolutely right, and what he predicts is, in fact, inevitable. The time frame is the only thing that is in question.

In speeches he’s saying that the TV advertising business model, where the vast majority of traditional ad spend goes will fall apart over the next five years, when the new type of news-on-demand interactive TV formats come into their own. Google, and Yahoo! also have IPTV offerings, and services like Joost, Babelgum, 4OD stimulate this growth.

That’s the technology, and how often have you seen articles on the net telling you there is a new offering that will change everything. However, this is different! (Don’t they all say that?) I think this is different because three things are happening in tandem and when these all move together, change happens. Yes, firstly the technology has developed and advanced, but secondly society has also changed with peoples’ behaviours and media expectations shifting through YouTube, Video on demand and UGC. And finally there are necessary major economic shifts, through advertising, to pay for it all. That’s the full set of requirements for technological and social change. These are the three elements that explain why VHS succeeded where Betamax failed and then why DVD outstripped them both; why vinyl gave way to cassette, CD and then downloads changed the music industry forever; and also why IPTV will rock the world of TV advertising and change it forever. (In fact, more recently Amazon are trying the same trick for books with Kindle).

Yes, the technology is changing, but also peoples’ behaviour and the economics to pay for it all is shifting also. The technology has advanced as has the broadband speed to deliver the new formats, but also net ad spend has increased, by around 17% worldwide last year. While it’s still only a small proportion of total ad spend, in many countries it’s on a par with, or bigger than newspapers, radio and outdoor. Over perhaps 5 years, this is a tectonic shift in the world of advertising. TV ad spend however is the mother load and when this starts to come netwards you have to take notice. Bill Gates is predicting this will happen before we know it.
Traditional advertisers are therefore presented with opportunities, challenges and new paradigms to come to grips with. It must be understood that the net simply isn’t like TV, even though you can watch TV over the net. If you don’t take this on board, the TV advertising you deliver over the web simply won’t be effective. There are two reasons for me saying this:

1) The net is a 2 way active and interactive medium, while TV is a one way passive medium and consequently...

2) The net viewer is in active mode, rather than a passive one, so therefore has a totally different set of expectations and behaviours.
It’s TV, yes, but sent through a different channel, for an audience in a totally different state of mind.

TV is passive. Marshall McLuhan called it a ‘cold medium’, because you do nothing. The viewer simply sits back and video and audio wash over them, their only action being to change channel – if they can remember where they put the remote, it’s that long since they actually did anything (imagine losing your wireless mouse, or keyboard?). The modern net, with web 2.0, is not only active, it’s a super-heated hyperactive zone of multi-tasking – the opposite end of the scale, with viewer/users collaborating, communicating, sharing, viewing, reading, talking, listening and contributing to the medium all at the same time at super high speed. When you sit in front of a computer, your role, your expectations and your control is totally at odds with the TV experience. And consequently, where with TV people have to watch long tranches of boring ads because they have no choice but to watch, change channel, or put the kettle on; with IPTV they do have a choice and will ruthlessly flash to something more engaging in the blink of an eye immediately forgetting what they’ve just seen.

So, what can advertisers do to address this viewer promiscuity? Several things in fact and all of them have the IPTV web viewer firmly in mind. The IPTV viewer expects to be offered the capacity to engage with a product or brand on the Internet, (something they are never even offered on traditional TV). IPTV ads therefore need to offer some incentive to engage, like a special offer or reduction. There needs to be a URL to visit and view the product, if they have the time, or somewhere within the ad to register their interest for later, if they don’t. They might be given the capacity to leave contact information, or ring a special phone number on their mobile or work number and this number will relate to this specific ad campaign, not the whole company. In short, ads need to be tailored to the needs of the viewer. They need to have their requirements, interests and availability to the fore to ensure optimal success.

Online, there is also the capacity to know far more about the specific viewer of an ad than on TV. National research projects, like Net Behaviour’s MIR/NB Report means we have a very clear idea of the demographics of the Irish people who visit pretty much any site or Internet software, their frequency of doing so, and a whole tranche of other activity, such as their online purchasing activity. Pre and post ad view and click tracking can tell a considerable amount about viewers interests both through the sites they visit and where they go on these sites. Registration and social networking software means you can know each viewer's age, sex, interests, friendship networks and even what they buy. Ad view capping software also means that ads aren’t wasted through several views of the same ad, but rather views can be evenly spread amongst those who would have most interest, and only shown the optimal number of times to ensure the message has got across, but not too many to irritate.

So, while there are challenges presented to IPTV advertisers, these are completely outweighed by the important new opportunities the Internet offers, and the increased the capacity to make a sale. In short: For TV, getting the viewer from the point of actually seeing the TV ad to buying a product is largely in the lap of the gods, if they even remember seeing the ad. For IPTV advertisers on the other hand, they have a much greater say in what a viewer does immediately on seeing their product advertised. The audience is offered a much greater opportunity to engage with the message on the spot. They can explore the products specifications and price, learn about the producer, and even interact with the ad message asking the advertiser to contact them at a later date, and all without interrupting their reason for being on the site hosting the ad in question. They can also much more easily take the desired action – buy the product.

So, in conclusion: in this instance I think Bill Gates must be 100% right. TV advertising will move towards an IPTV model before we know it. The technology is there, the consumer will prefer it and the advertising will be more effective and efficient. But, the ad industry must just take on board that while it is a TV message, the Internet is a totally different channel, and one much better suited to engaging with the consumer.

Monday 3 December 2007