TV explodes: The chain reaction hits critical mass

Internet usage is now approaching TV usage — in the US, the UK, Australia, Germany, and Japan — according to an IBM study to which Om Malik points us. Note also that TV networks’ share of online TV viewing is only about 33 percent, below YouTube and barely ahead of Google and social networks in the U.S. — and the alternatives are only beginning (in the life of internet video, it’s only 1954).

Why the hell isn’t online advertising approaching parity with TV advertising? Because advertisers are slow. Says IBM:

The global findings overwhelmingly suggest personal Internet time rivals TV time. Among consumer respondents, 19 percent stated spending six hours or more per day on personal Internet usage, versus nine percent of respondents who reported the same levels of TV viewing. 66 percent reported viewing between one to four hours of TV per day, versus 60 percent who reported the same levels of personal Internet usage. . . .

Despite natural lags among marketers, advertising revenues will follow consumers’ habits. . . .

Saul Berman, IBM Media & Entertainment Strategy and Change practice leader, said, “The Internet is becoming consumers’ primary entertainment source. The TV is increasingly taking a back seat to the cell phone and the personal computer among consumers age 18 to 34. . . .”

Unless, of course, your cell phone is a computer. Hat tip: Steve Jobs.

IBM, being a big-iron company, analyzes what this means to its fellow big companies. That’s where most of the consulting money will be. But it’s not where most of the change — and perhaps power — will be. Says IBM:

To effectively respond to this power shift, IBM sees advertising agencies going beyond traditional creative roles to become brokers of consumer insights; cable companies evolving to home media portals; and broadcasters and publishers racing toward new media formats. Marketers in turn are being forced to experiment and make advertising more compelling, or risk being ignored.

I prefer to look at the opportunities this profound disruption brings:

As we already know, of course, anybody can make TV (second hat tip Steve Jobs), distribute it (YouTube et al), and market it (via the link). The problem remains that even though the costs are a fraction of the old, big stuff, you can’t support it with advertising … yet. But that will come. Witness today’s announcement that YouTube has settled on its means of delivering ads. See also this from the IBM survey: 63 percent in the U.s. said they would watch advertising before or after quality, free content (34 percent said they’d be willing to pay). Speed up, advertisers.

As for advertising agencies becoming “brokers of consumer insights”: they should wish. Before, agencies and media were the gateways to the audience. Now, companies can converse directly with customers and get plenty of insights without gatekeepers. I’d rather be Facebook than an ad agency, wouldn’t you?

Cable companies becoming “home media portals” is a fancy way to say pipe. Period.

Broadcasters and publishers shouldn’t be racing to new media formats for one-way content. They should be racing to enable new kinds of relationships among communities of information.

And marketers shouldn’t just be experimenting with new forms of marketing — though they should. They should be trying new means of conversation with their customers.

Some more findings from the U.S. IBM survey:

* “Content” is now, at last defined as conversation as well. Use of content services: 45% social networks; 29% user-generated sites; 24% music services; 24% premium video content for TV (not sure what that means); 18% online newspaper. Ouch.

* 58% have already watched online video and 20% more are interested.

* DVRs are good for TV: 33% watch more TV as a result (58% the same)

* 74% contributed to a social network; 93% contributed to a user content site. Who says that forums are only for nuts, blogs for early adopters, and photo services for geeks? Everybody’s making content. Why do they do it? Feel part of a community, 31%; recognition from peers, 28%. Conversation.

* How is content marketed today? Peers. Primary reason for viewing content on a user site: 46% said the recommendation of a friend.

* But here’s the fly in my future-of-advertising ointment. Asked which ads “most affect your imopression of a product or company,” TV commercials on major networks got the lion’s share.

  • http://theobstructionist.com/?p=41 Seth

    Well, as far as the last point, I think the reason behind this is simple: Most online advertising content is…garbage, and annoying garbage at that. Online Ads have not put any jingles in our heads or given us any funny taglines to repeat endlessly among friends. I have yet to see any purely internet based campaigns that impress me. Somehow the cheapness of the production tools has been reflected in the content produced by most advertisers, the main reason for this is–I assume–because the internet is still considered less legitimate and less profitable when it comes to marketing. But as this study points out, the term “web-people” is now redundant. If the new release of a killer YouTube video could get the same attention from companies as, say, the SuperBowl, then your “fly” would quickly disappear.

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  • Steve

    “74% contributed to a social network”

    I suspect that this data may be significantly skewed by the fact that it was based on a 40-question Internet survey. If it had been based on a land-line phone survey of home owners, we’d probably get very different results.

  • http://www.thefutureofnews.com Steve Boriss

    Maybe those of us online are a little slow, too. Advertisers will jump in big time when it becomes clear that advertising on the Internet is superior to TV. That will happen when we all stop trying to mimic mass media and get serious about selectively attracting audiences that align with advertisers’ best sales prospects. (Steve Boriss, The Future of News)

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  • http://deleted Tansley – addendum

    And, adding to what Seth points out:

    Most of the high-end creative talent in advertising was educated for television advertising…read: video/cinematography. Commercial advertising on television is movie production in-miniature and the goal is snagging someone’s attention and riveting them to the spot. There’s not a lot being done online by this talent trust, as yet, largely owing to BANDWIDTH issues.

    Even with a T-1 line on my office machine, it still can take even a flash animated banner ad a full twenty seconds to download, particularly if my machine has suffered some RAM fragmentation in the course of the day’s browsing. If I quit the browser and restart it, this often clears up the problem, and even streaming video will stream with only one or two hiccups, depending. But it’s pretty clear that a full-screen resolution ad is NOT going to get to my screen anytime soon, even with a high volume pipe such as the one I have. Once we get there, maybe you’ll see more. OR, as the web picks up marketshare, more talent will migrate to the more challenging medium (imagine scripting for a 30-second animated mini-movie banner…yikes!)

    Overall, it’s going to be money that will be the major determinant. YouTube will do a lot in this area, I suspect…

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  • chico haas

    YouTube ads on content = Billboards on highway. Clutter.

  • Jerry

    In my job, I spend millions of dollars a year on key word advertising with Google. That spend is cost effective. I have experimented with all traditional forms of advertising and can never get returns similar to those we get through search marketing.

    John Wanamaker famously said that half his advertising budget was wasted, but he didn’t know which half. I believe that search engine based marketing shows traditional advertising to be grossly overpriced.

    I suspect that one of the reasons more dollars flow to TV advertising than the web per viewer hour is that on the web it is too easy to see when your advertising is not working. Clients (usually) don’t knowingly fond ads that don’t drive sales, but with TV it is hard to know what return they are getting on the ad budget. Knowing that at least some of it works (at least to some extent) they keep on buying. On the web, they know quickly what is working and isn’t; they kill failing projects/refuse funding for the less promising. That reduces the overall budget for online advertising relative to the TV spend. But it’s a good decision. better would be if they could measure TV advertising effectiveness more accurately and cut spend there that doesn’t deliver a positive return.

  • Jerry

    In my job, I spend millions of dollars a year on key word advertising with Google. That spend is cost effective. I have experimented with all traditional forms of advertising and can never get returns similar to those we get through search marketing.

    John Wanamaker famously said that half his advertising budget was wasted, but he didn’t know which half. I believe that search engine based marketing shows traditional advertising to be grossly overpriced.

    I suspect that one of the reasons more dollars flow to TV advertising than the web per viewer hour is that on the web it is easy to see when your advertising is not working. Clients (usually) don’t knowingly fund ads that don’t drive sales, but with TV it is hard to know what return they are getting on the ad budget. Knowing that at least some of it works (at least to some extent) they keep on buying. On the web, they know quickly what is working and isn’t; they kill failing projects/refuse funding for the less promising. That reduces the overall budget for online advertising relative to the TV spend. But it’s a good decision. Life would be even better if we could measure TV advertising effectiveness more accurately and cut spend there that doesn’t deliver a positive return.

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  • Paw

    “Asked which ads “most affect your impression of a product or company,” TV commercials on major networks got the lion’s share.”

    Of course they did, Jeff. TV ads move product – I’ve said so in this space many many times. Also, Seth’s point is well taken – creative executions in the digital space lag far behind those in linear TV as far as engagement goes.

    In addition, I always take survey findings with a grain of salt, especially this one – does anyone believe an online survey about online habits will yield negative results for the online category? With fewer than 900 US respondents?

    Finally, the elephant in the room – Most net enthusiasts older than college age use the net during work hours; thus they are by definition less engaged than their TV viewing counterparts, who spend their viewing time outside the office.

  • David

    Jeff et al,

    Online advertising and TV advertising–as a lot of posters have pointed out–are very different animals that are each valuable in their own right. In short, TV=mass reach & internet=targeting and conversion to purchase(like direct mail)…

    I am going to order this study (I have not read it yet) & will take a look at its methodology before making any comments about its findings, which do look interesting.

    David

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