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The Future of TV is Online

Published: August 21, 2007

Author: David Rodnitzky

I have maintained for some time that TV advertising is a pointless waste of money, and I stick by that assessment. The only exception to this rule are the late-night infomercials, which are totally ROI-driven and make loads of money.

And as advertisers get more and more accustomed to the measurability and accountability of online advertising, it’s going to be more and more difficult to convince companies to shell out tens of millions of dollars to have their commercial shown in prime time. Add to that the increasing adoption of TiVo and the concept of TV as the mass medium to reach America is rapidly becoming anachronistic.

To their credit, however, the TV industry isn’t (totally) sticking their collective heads in the sand. They’ve tried to combat TiVo with a combination of massive product placement – upwards of an 84% increase, subliminal messages in ads designed to get people to actually use TiVo to slow down the commercial, and contests and special footage to attract surfers to visit the TV Web sites.

Compare the TV industry to, say, the music industry, and I’d say that they are pretty forward-looking for an ‘old economy’ industry. That being said, all the product placements and special Web-only content is not going to save TV. The fact remains that TV shows are just too expensive to produce as compared to the actual value of the commercials that support them.

TV is just not as efficient an advertising medium as online, and you can no longer use the argument that there aren’t enough eyeballs online to justify a major shift in ad spend. Smart companies and agencies will shift more and more of their money online, just as smart companies and agencies shifted money from radio to TV in the 1950s and 1960s.

So what’s TV to do? Well, I do believe there is one great hope that remains – IPTV – Internet Protocol Television. There are many different visions for what IPTV will be, but the basic concept as I see it is a fusion of the Internet and television. In other words, with IPTV, you’ll be able to use your TV to watch TV, surf the Web, or combine both activities.

To be clear, this isn’t WebTV of the 1990s, which was basically just the ability to use your TV to surf the Web. IPTV will actually enable you to interact with TV programs. For example, you’ll be able to watch a show and chat with other viewers at the same time, or play along with a game show at home, or control the camera angles you see during a sporting event.

In short, it will make TV interesting again and – dare I say – more interesting than just the Internet! The combination of Hollywood professionalism with interactive features is just the type of thing that could bring this generation and the next generation back to TV and away from the plain-old Internet.

But the real potential of IPTV is the commerce opportunities. Imagine a world where viewers watching Oprah can instantly order her latest ‘book club’ selection just by clicking their TV remote (and perhaps even get a special discount that only lasts the course of the show). Or, while watching the latest episode of Entourage, you can click on any of the characters’ clothing and have your own copy delivered to your door by the weekend?

And the beauty of this ‘watch, click, buy’ system is that you don’t actually need commercials. If you can generate enough buzz around the products on your show, the show pays for itself many times over. It’s basically the Home Shopping Network, but with interesting content as opposed to saleswomen with really long nails.

Best of all, TV could transform itself from a ‘branding’ medium to a ‘direct response’ medium. Imagine if NBC created an auction model for product placement on an episode of “The Apprentice” (note, not sure if this is on NBC or not, but work with me here). The company that bid the most would get to have their product front and center on one episode of the show.

As part of the episode, there would also be a special at-home offer where viewers could just click their remote and order the product instantly (or a coupon, or whatever). NBC could then clearly deliver statistics to their advertisers about the actual ROI of their campaign. Over time, NBC would have pretty clear metrics on the percentage of people that ordered a product on a given show, and both the networks and the advertisers would truly understand the worth of a product placement. Just like online!

If you accept the idea that interactive TV could be more popular than the Internet by itself, the importance of product placement on a top-rated IPTV-enabled show would be massive. Indeed, it would the perfect storm of ‘mass media’ and measurability.

None of this will happen anytime soon. But then, the Internet didn’t emerge overnight – it took at least 6-7 years of bumbling before anyone really made it profitable. The potential, however, is there. TV has taken it’s fair share of lumps over the last couple years. IPTV could be the blockbuster the industry has so desperately needed.

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