Provocative as it may be to declare ‘old media’ dead in the water, the reality of the situation is that there is still vastly more money to be made today on broadcast, cable and satellite television than there is online. As the Bear Stearns report I wrote about yesterday pointed out, even though cable networks have more total viewership combined than the broadcast networks, broadcast networks still get the lion’s share of advertising revenue. Whereas online advertising spending is rising, it’s still miniscule by comparison.
But as Philadelphia retailer John Wanamaker once lamented, “Half my advertising is wasted, the trouble is I don’t know which half.” Backchannelmedia is using the web to address the inefficiencies in targeting advertising in the context of traditional television by measuring the response to offline media using online tools. Other companies are trying to do the same thing — including Google. The company is betting that new digital television services and improved tracking tools are the real gold mine.
The key to Backchannelmedia’s approach is in measuring the response to advertising campaigns, not simply estimating the number and nature of the eyeballs that might have viewed them. Have you ever broken down and ordered a set of knives from Ronco at some ungodly hour? By combining the time of your call with a few personal details, the company’s system can help Ronco determine what time slots in what markets and on what channels to purchase for airing the direct marketing infomercials and advertising spots.
By automating the collection of both viewership and response, Backchannelmedia can then parse the data to mathematically determine when you get the best return on an ad placement. Co-CEOs Michael Kokernak and Daniel Hassan were generally bearish about the prospects online in a phone interview last week. The solution for television the company arrived at was a feedback loop — ads run to demographically targeted audiences, their response is measured, and the attributes of the best performers are analyzed to find similarities between the strongest matches for future airtimes.
Responses can range anywhere from self-addressed stamped envelopes and retail visits to phone calls and clicks from email links. And when I suggested that similar response measurement could also be applied to online campaigns, Hassan suggested that down the road they’d look into it, but for now, “We’re going to want to play in the TV space for a while. That’s really where the relevant dollars and relevant interest lies.” In other words, the market for online just isn’t big enough to pay much attention to, yet.
While in the age of TiVo, networks are struggling to get people to sit through the ads, this helps to address two issues with the current television advertising model. By making the ads more valuable, networks could run fewer of them; it gives networks a way to offer incentives to watch the ads; and potentially even a way for viewers to respond directly to product placement within shows. What it will also mean is that you’ll probably be seeing more paid programming, which has become a cash cow for networks.
Kokernak and Hassan are committed to the current video distribution model, and are under the impression that venture capitalists will be playing plenty of attention to this space over the next few years. Assuming OldTeeVee can move fast enough to take advantage of these new efficiencies as web upstarts like Joost are trying to, mass media may continue its time in the spotlight for quite a while yet.
Comments have been disabled for this post