Thinking Outside The (Set-Top) Box

There’s a little bit of the Luddite in all of us, and my piece of creative anachronism involves an attachment to three VCRs, purchased years ago with the purpose of taping all the programming I was missing because I only could watch one show at a time. They also allow me to blow through commercials.

I think most viewers skip TV ads, either by using a DVR or by walking to the fridge. And I’ve been told that many people (especially the younger set) never watch TV at all. This is what keeps content providers and ad agencies up at night. How do you engage subscribers and sell product if you can’t attract eyeballs?

There appears to be two schools of thought when it comes to the current state of advanced advertising: Cram in as much as you can without hacking off the subscriber or insert highly targeted ads to particular viewers based on behavior (and this could raise some privacy concerns). Hulu’s new CEO reportedly is battling to keep the site’s owners from ratcheting up ad time per half hour from the current 3.5 minutes (compared with 8 minutes on broadcast/cable), a move he believes will harm subscriber numbers and diminish advertiser visibility. And the idea of delving into the personal viewing habits of subscribers (by tracking TV, computer, tablet or mobile activity) is way too Big-Brotherish for some, unless there is an opt in/out mechanism at the front end.

A recent blog written by Adam Thierer, a senior research fellow at the Mercatus Center at George Mason University, says, “When it comes to the future of content and services — especially online or digitally delivered content and services — there is no free lunch. Something has to pay for all that stuff and, increasingly, that something is advertising…Indeed, not all advertising is created equal, and more targeted forms of advertising could create more value for content creators, services providers and consumers."

According to one major MSO, its test of targeted ads two years ago found that "homes receiving targeted advertising tuned away from the commercials 32-percent less of the time than homes that received non-targeted ads.” And there still are those who think completely outside of the (set-top) box when it comes to marketing, leveraging the Web, Facebook and other social media, mobile texting and SMS, and coupons/groupons as ways to drive revenues. Here’s the bottom line, according to Mitch Oscar, the subject of this issue’s Executive Q&A: "Advanced advertising. It’s complicated."