MPG’s Mitch Oscar On Advanced Ads: ‘It’s Complicated’

Mitchell Oscar literally wrote the book on interactive advertising, and he is the architect and moderator of The Collaborative Alliance, a quarterly forum in which more than 225 media professionals help navigate the future of the consumer and advertiser relationship within what he calls the “evolving televisual landscape.”

His role as executive vice president/Televisual Applications at MPG North America (part of Havas Media) has Oscar focusing on the development and deployment of new video apps across all platforms. He also is president of HocusFocus, a media and marketing consultancy founded in 1991. The short list of those clients includes Acxiom, AT&T, BackChannelMedia, Cablevision, CNN/Cartoon Network, Cox, Comcast, Discovery Communications, ESPN, Fox Cable, Hotel Networks, Nielsen Media Research, Verizon and Visible World.

In a recent conversation with Communications Technology Editor Debra Baker, Oscar discussed the difficulties in getting advanced advertising off the drawing board and into subscribers’ homes.

CT: The concept of advanced advertising isn’t new. Why haven’t we seen more of it deployed?

Oscar: We’ve been talking about it for a long time, but it’s still not there. There’s a couple of reasons. In the Internet community, it took about 10 years to come up with established guidelines for the Internet. The good news about what they had done was that the technology was the same for everyone to get onto the Internet; the only question was speed. Every Web publisher needed to use the same specs; for skyscraper ads, it meant this and for a vertical ad, it meant this.

Interactive TV started in 2002 and was supposed to pick up steam. User generated video was supposed to be “it” and it isn’t; and there’s HD, 3D and mobile video. Agencies think “do we give up our whole advertising budget and only do social media?” We’re always into the “next next.” We’re in the advertising business.

CT: Is it just technology or is it also critical mass right now?

Oscar: Unfortunately, I would have to say it’s technology deployment. There hasn’t been a lot of it yet. We’re hoping that, at some point, there will be more so that we can determine the value. If I get the right commercial to the right home, am I really closer to selling something? I think so, but do operators think it’s worth the premium?

CT: What we’re really talking about here is standardization, and it’s surprising the industry hasn’t nailed this down.

Oscar: We don’t have a standards process but, again, standards based on what? With the Internet, the technology was the same for everybody. The question was: How much would you pay for what kind of speed? And browsers made everything uniform when it came to Web sites and what would fit on the screen. But on television, with channels being linear, we don’t really know what the consumer experience is and what it’s worth. And that’s a major problem.

And remember that each carrier is protecting their subscribers first. Advertising is secondary. In the broadcast television business, it’s all about advertising because it generates anywhere from $60 billion to $70 billion.

CT: So why isn’t interactive TV acting like the Internet?

Oscar: Unfortunately, it’s the cable operators. Up until about 10 years ago, there were 10,000 different cable systems, each with its own technology that was in some form custom, from Scientific Atlanta, from Cisco, from Motorola and from other major manufacturers. Over time, the major cable players began acquiring the Mom-and- Pops. Right now, you have 10 operators that control 90 percent of the market. The five dominant players own the majority of the 60 million set-top boxes out there. Each has a different technology, and they’re trying to figure out what to do.

You might say it shouldn’t be that hard to do, but the cable business generates $100 billion from the cable triple play right now but on advertising, they generate only $6.5 billion. So advanced advertising hasn’t been a priority.

CT: Are you saying there’s been no incentive for MSOs to move forward?

Oscar: There’s a lot of competition. Satellite came from out of nowhere, say, in 1994 or 1995; all of a sudden, there were 34 million people who subscribed to satellite who would have been cable subscribers. Then you have the telcos coming around. They said, “well, let’s see, the cable companies are trying to get into the telephone business and they’re in the broadband business like we’re in, so we’d better protect ourselves and get into the video business.” There are 6 million homes that are telephone subscribers that now take FiOS and U-verse, and they used to be cable subscribers.

So when you advertise with a telco, you’re going against the cable operator in the local market. Those are the real numbers and the politics behind motivation.

CT: Expand a little on the concept of video addressability.

Oscar: Take a company like Cablevision, for example, that decided it could make money on advertising if it could send the right commercial to the right home. They would take four varieties of a commercial — one to Caucasians, one to African Americans, one to Hispanics and one to bluebloods — it’s the same product but you are specifically targeting them. And everyone says “wow, that’s great, but it requires technology like set-top boxes that can handle it, and then there’s something called bandwidth.”

So now Cablevision wants to deploy, it has three advertisers, it’s going to pay a lot of money, and it gets delayed. But why does it get delayed? Because that extra bandwidth Cablevision needed to build the technology to do advertising instead could be used to do HD programming. The people who went out and bought HD sets want HD programming. They’re willing to pay $10 more per month for it and they’re willing not to leave their cable subscription to go to satellite, so do you do that and gain subscription revenue or do you hope you can gain more money in advertising? Guess what Cablevision elected to do?

CT: But there have to be other issues.

Oscar: You have privacy concerns. The Internet is great at targeting and deep packet inspection. Do ISPs know too much about the consumer and are they trading in that information? Yes, they are selling it. Now take it to television. What kind of privacy would you really be concerned about with television? The only thing I can think of is if I’m watching pornographic channels. If I watch “House” or “The Biggest Loser," who cares? But the issue for the holding companies and the major media companies is “where else is there going to be a problem?” So if the government gets involved in clamping down on television, cable or Web sites, we have to tread softly.

And if consumers think, as television viewers, they’re being watched, maybe they’ll cancel their subscriptions. And no one wants that because people are paying between $100 and $200 a month for cable, and is it worth $1,200 (in potential ads) to do them? So there’s the $100 billion versus $6.5 billion. Do the cable companies want to risk it?

Then let’s look at the telcos. They have 6 million subs, they have triple-play options, but they’re heavily involved in the mobile business. If they start looking at behavioral patterns, the first thing the government is going to attack is mobile, saying “we need privacy protection there.” Mobile is a big business for telcos compared to televisions. Do they want to risk it?

And in terms of high-speed broadband, there are maybe 70 million telco broadband subs out there, and cable has maybe 43 million. With being only a few million apart, do they really want the government to start looking into restrictions?

CT: You differentiate video on demand (VoD) and “on demand.” Why?

Oscar: VoD deployment is in different stages in different markets, and it’s also called different thing by different cable companies, satellite providers and telcos. It’s very complicated.

VoD is very different than on demand. On demand generally means “I want it now and how can I get it,” services like Netflix and Hulu. As a part of on demand, VoD is a form of advanced pay TV, like when you go into a hotel room and pay for a movie.

But then, as part of the cable networks’ deal with cable operators, they created ad-supported VoD. So every cable network can get a channel of VoD where they put commercials at the opening, maybe the middle and the closing. The programs aren’t original. They had to already have aired.

And when (an agency) integrates its commercials, the inventory has to be there four weeks prior to the program the advertiser want to air in, which is different from the two or three days now necessary for linear broadcast. That makes it very difficult for an advertiser.

CT: How does VoD play into advanced advertising?

Oscar: VoD has great value, but the problem is that the navigation to get to the programming is pretty tough; it’s about five screens. BlackArrow says it can send a targeted ad to a home the minute there is a VoD request, and it doesn’t need to know the subscriber’s name — just that it’s a male homeowner with three kids and a golden retriever. That will take some of the pressure off ad agencies but cable operators still need to work on navigation.

We do buy VoD as advertisers because of “context programming.” If I believe CNN is a good environment for a commercial because I like their audience, then the advertising community can do an “extension” on VoD if CNN is there; on CNN.com; and, if CNN has a mobile application, we should be there because we like the association through the context. So that has helped many advertisers to extend their packages

CT: Are there any success stories out there or are operators too wary of each other?

Oscar: The cable operators aren’t rivals. The satellite industry may be competitive for subscribers but they aren’t for advertising. And telcos eventually will take money away in the markets they’re in.

NCC Media (owned by cablecos) isn’t doing the “local local” deals but it is trying to get national advertisers to spend more money locally in many markets as opposed to every local cable operator that might have a sales force on the street. So NCC recently made a deal that they would represent some satellite inventory locally and also some telco local inventories.

CT: Then it appears advanced advertising isn’t going to happen tomorrow or next month or maybe even this year.

Oscar: It definitely isn’t happening this year, even though we all want the whiz-bang stuff. I remember when the Comcast/NBC Universal deal was announced, and I was asked if this was a good thing for advanced TV. I said “absolutely not” because Comcast wasn’t aggressively in the advanced-TV arena to begin with; they really did very little, except for VoD, in the space. And now they’re going to spend the next 18 months engulfing NBC and dealing with Washington oversight.

I then was told my opinion was contrary to everyone else’s, and I said “tell me who they are and I’ll tell you why they’re wrong.” There are certain things you learn about this business. There are no easy answers and lots of choices.

Contact Mitch Oscar at [email protected].