Do Superbowl Ratings Identify Flaws in Online TV Theory?

Overnight ratings for the Superbowl are in – and they’re outstanding. (Click Here.)

Of course, this suggests that when internet TV enthusiasts tell us about huge groups of people “cutting the cable” they’re really trying to cash in their venture investments. Because there are apparently enough cables still connected that the 2011 Superbowl had more viewers than any TV show in history (111 million of them) AND appears to have had a 71% share – watched by over 2/3rds of all televisions turned on at the time.

Let’s use this as a starting point to think a bit more about what Connected TV theorists are claiming right now – namely that we can throw out existing TV with its cable pipeline. (NOTE: A comment from Peter reminded me that this Superbowl was available without cable on Fox network affiliate broadcast feeds. Correction appreciated. And I don’t think this fundamentally changes much. Those feeds are a by product (today) of the strong cable distribution in the US. Change that cable distribution and the economic support for sports broadcasting changes.)

Mass Market or Fragmentation?

As I noted in a recent post, the internet is a tremendous tool to reach tiny shards of audiences. Because online, people scatter to the ends of the web.

But the Superbowl showcases TV’s ability to reach the masses quickly. In fact, TV drives mass communication – the web doesn’t. The web’s inherent strength is fragmented communication.

Note that for all the claims that Facebook and Twitter drove awareness of the recent Egyptian demonstrators, it took 24 hour coverage on the TV networks as well as newspaper front pages to generate broad awareness. (Note that TV coverage of Egyptian demonstrations has given CNN it’s highest ratings in years.)

If All TV Arrived Via Internet, Would There Be a Performance Issue?

These Superbowl numbers also make me wonder if scattering on the web isn’t critical to good web performance. We know the web breaks down under high use. For example, yesterday I attempted to look up some information from Fergie’s online bio’s during the halftime performance. What % of the TV audience was I competing with? .05%? But EVERY site had crawled to a stop.

Would there be a performance issue trying to broadcast the Superbowl ONLY over the web? I’m not a tech guru enough to know. But, here’s the problem: When 50 million US households want the same HDTV programming at the same time, the cable pipe seems to be a much more convenient distribution mechanism than the internet.

There are clever staging, cacheing, and other network load management things that can be done for a predictable event to attempt to maintain performance for something predictable like a Superbowl. Maybe they’re enough. But what about when an unexpected event like 9/11 happens (god forbid it happens again)? Would we be able to get good coverage? News sites already slow down when a gas main explodes in New York.

Sports Are Critical to Americans

Sports are a good place to consider this issue because technologies can be made to live by offering new sports options (DirecTV). Or they will die without it (we’ve forgotten the names of all those interactive TV efforts that were meaningless).

American’s won’t put up with a Superbowl where the action looks and feels like a satellite report from Afghanistan. Sure hope someone’s got this figured out before VC money pays to mount the effort to destroy cable TV.

Copyright 2011 – Doug Garnett

DVR’s Do Not Hurt Ad Effectiveness – And May Help It

Media Post reports yet one more study (link here) that shows that time shifting doesn’t hurt TV ad effectiveness. So after a decade of the ad business seeming to “wish” for the end of TV advertising, it clearly hasn’t happened. Even more interesting, the Advertising Research Foundation discovered a year ago that ad effectiveness may even have increased after the introduction of the DVR.

My own experience at home confirms this. When there’s an ad that matters to someone in my family, we can now rewind to make sure we know what it says (movie release date, specifics about a product, details about the upcoming news, etc…).

And it’s beneficial to advertisers to know that they can reach, for example, Daily Show demographic that can’t watch at the typical broadcast time. That just adds to the target audience.

And so, TV remains, for the forseeable future, the fastest and strongest way to introduce new products to a large market.

For more on this topic, read this article (link here) I wrote for Response magazine summarizing the ARF research’s TV findings.

Copyright 2010 – Doug Garnett

“Free Internet TV” Will Hurt Consumers

Claims of “FREE!” drive purchases of cheesy TV products from Shamwow’s to those (supposedly) Amish heaters. But somehow, it escapes notice of the tech press that equally cheesy claims of “free” run deep amid marketing of the internet.

Free music, free newspaper articles, free magazines, and now supposedly free television. Everybody offers free. And it’s no surprise that consumers go for it.

In fact, this idea of making millions by giving things away was found in many of the irrational “business plans” that dotcom’s claimed would make their investors rich. It didn’t work then, but maybe things have changed.

How is “free” going for Wikipedia”? Wikipedia is the poster child for internet “free”. Except they are deep in the midst of a campaign attempting to raise $16M in donations just to keep their doors open. It’s a campaign that pitches quite hard. Makes me think that even for a donated content online Encyclopedia, “free” isn’t quite as powerful a business plan as we thought.

How is “free” working out for newspaper and magazine content? Bob Garfield wrote an AdAge blog entry recently about the incredible dark side of “free” print on the web.

He notes that print on the web is driven by sites that “aggregate” (bring together) content. Where do aggregators get good content? From newspapers or magazines. Except aggregator sites deliver content to you for free.

In a fit of business insanity, internet copyright anarchists imply that revenue from the hated banner ads on the site of the aggregator somehow trickles back to pay for the hard work it took to create that content. (Hard work is required to make well written, well researched, well fact checked, and well published content.)

Well, the revenue doesn’t trickle back. Garfield notes how “free” access has undercut the economic model that created good content in the US. But he also notes that even those aggregator sites are struggling to keep in business. Guess this model is so flawed that you can’t make money even when giving away content you didn’t make.

How would “free” go for TV content? Don’t expect too much. And note that it’s a double “free” idea that is being used to entice consumers to internet TV – payment free and advertising free. (Secondarily, there’s the idea that they can watch anything they want, anywhere they want, and on any device they want. But while consumers will pay for DVR’s, there’s no evidence of willingness to pay for it online.)

Double “free” is publicized with massive money from manufacturers of internet TV sets, creators of internet TV sites, the venture capitalists behind them, and the tech research agencies paid by the venture capitalists – all drooling at the idea of tapping TV’s big old vein of pure financial gold.

And, frustration with out-of-control cable TV costs means there’s very high consumer interest in cost savings. But do consumers really want what double free TV would mean? I don’t think so.

Double “free” TV over internet will kill content. The existing economic model supports an incredibly well developed, sophisticated, sometimes dysfunctional, but essentially effective eco-system – an eco-system that creates good TV, offers the single advertising medium which delivers the best economic impact and delivers most of what consumers want.

The net results for consumers would be the death of programming. Google claims they’ll stitch together YouTube content to make programming (of course, selling their own advertising time within that content). Don’t expect much. The existing ecosystem turns out everything from niche to mass hits – 30-Rock, The Daily Show, Survivor, Amazing Race, NFL Football, Antiques Roadshow, and CSI Miami on a big screen (I just can’t include “Darth Vader, Night Clerk” in that list). But it costs millions to deliver those shows – often over $1M per episode.

There’s some good news for TV. As Mark Cuban has pointed out, TV is different from print and music. Networks ARE aggregators. That means TV networks have been fighting this type of battle all along. They also seem to have learned from print and are being quite stubborn about protecting their right to get money in return for all the money they invest. Consider

– Hulu (funded by networks) started “free”, but is beginning to use subscriptions.
– The networks fight regularly with cable operators to maintain a viable economic model – even if that means people don’t get to see the World Series. We have to assume they’ll use all means to fight against a double free idea that hurts their business.
– An example of this seems to be that while networks work with Apple, they don’t work with GoogleTV. Maybe they know Apple wants to create viable media business models. But it seems the only reason to create GoogleTV is to try to steal advertising revenue that currently goes to the networks – revenue that pays to for programming.
– Now Hulu (funded by networks) has made it so that you can’t watch their programs on GoogleTV’s.
– Network testing seems to indicate that consumers are willing to watch online TV with traditional advertising breaks. In other words, the double free idea doesn’t even seem necessary for internet TV to work.

Internet TV should have a tremendous future and it will be stronger if the industry stops the promise of double “free”. Internet TV’s future comes with the truly exciting opportunity: integrating programming with interactive features that make the programming more valuable.

But sadly, companies aren’t talking about delivering more value. They’re getting wrapped up in dead ends – like removing advertising when there doesn’t appear to be monetized market power created by doing so.

So next time you hear someone talk about how great it is to get free programming on the internet, know that they’re really talking about a future of really bad programming. You may not like programming today (it’s fun to complain). But just imagine what it would be like in that free future.

Copyright 2010 – Doug Garnett

Wishing it was true? Internet TV advocates trumpet flawed research.

There’s a survey circulating right now by a group named “Say Media”. I won’t link to it because it’s irresponsible to circulate mis-leading research.

Scoop is that Internet TV advocates are shouting that the survey shows that around 1/3 of the adult population in the US has turned off cable in order to get their TV online. (To be fair, the Say Media report doesn’t say this.)

Are some advocates so desperate that they’ll believe anything? This research is seriously flawed. To begin, it relies on…wait for it…online surveys. Yikes. Doesn’t anyone pay attention to methodology anymore?

So, an online survey finds a larger portion of 1100 people are more active…um…online by using more online TV. THEN, those results are projected to the entire US population (and we’re given the usual drivel about +/- to make it sound like solid research).

To understand how flawed this is, let’s look at a similar hypothetical. If you stand outside the stadium at a Lacrosse game and interview sports preferences among those leaving the stadium, you will find that most of your interviews prefer Lacrosse to American Football (especially if your wording encourages that answer which is common in this flavor of research).

And if you can find enough people to interview, then you can get some statistician to give you +/- error percentages so that you can claim that you found that the majority of Americans prefer Lacrosse to Football.

And, you would be entirely, wholly wrong. But that’s essentially what it looks like they did in this survey.

In addition, the “researchers” observed their online habits. (Huh – take people who claim that they went off TV but you only watched them online?)

And, they did eight (8) in-depth interviews too. Eight? They probably found those eight among their friends.

What else might be wrong here? For decades people have lied about their TV habits – minimizing the amount of time they watched. Because it’s an issue where social pressure suggests they’re “bad” if they watch too much TV. In order to accurately guage TV habits, research has to be extraordinarily sophisticated. The best work invades people’s homes.

Just for fun, let’s try to figure out what they really found out with the research.

– First, they only interviewed people online. It looks like only 70% of US adults are online.
– Second, of that 70%, only about half will participate in online surveys. And, that half is likely to be the most online savvy.

In other words, their survey applies to the most online savvy 35% of US adults. Of that 35%, 13% were disconnected and 20% were connected, but reducing their viewing. Except, it’s reasonable to guess that half exaggerated their disconnectedness.

SO, they found a small group (6%) of adults that are disconnected. Yawn. Oops. I mean “write a big press release. Because we just found out that what we’ve known about TV for 50 years is still true. Not everybody watches.”

Until we can learn more, put a massive RED WARNING FLAG on this research. Significantly more reliable research has shown that there is no degradation in TV viewing habits – only an increase in viewing now that people can view it on their mobile devices.

So we have to wonder about the motivations of the groups that cobbled together this marketing masquerading as research. Is it possible that it’s VC funded to make certain that investments in GoogleTV pay out? Possible. But we don’t know.

Copyright 2010 – Doug Garnett

Should Apple Share its Software?

It’s interesting to see discussion that criticizes Apple for not releasing their software. Now I’m in no way a ShareWare/FreeWare expert. But some of the fallacies surrounding FreeWare seem pretty obvious.

One: There’s an implication that “Microsoft succeeded because it shared its code.” Really? It did? I don’t think so. If I remember right, Microsoft is paid for every unit that is sold with it’s proprietary operating system. What makes. Microsoft different from Apple is that it is primarily a software company where Apple is a systems company. So you would expect Microsoft to seek to put its software everywhere.

Two: “Offering your software to other people is the road to business success – profitability.” Let’s ask Sun Microsystems about how much profit they got from Java. Although Java penetrated the market thoroughly, it didn’t generate a big enough bottom line advantage for Sun to save the company.

Three: “What about Unix?” I love Unix and used to use it quite a lot. But you can’t compare Apple’s IOS with Unix. No one needed to profit from Unix because it came out of a government and university funded effort. Why don’t we check with Apple’s CFO to see if they’ve become government funded?

Four: “What about Android?” Now we arrive at the newest test of the theory that a public company’s best interest is maintained by publishing FreeWare (or ShareWare). Truth is, we can’t say how it’s going to turn out – Android is too new. But don’t confuse a plethora of Android handsets with success. Google’s ultimate win must include generating higher ad revenue because it published Android.

Scientists help each other to tremendous new discoveries by sharing what they know and learn. That’s important. (And, scientists also fight like tigers to protect things they believe will help them get ahead.)

So, maybe tech’s fascination with sharing got its start with scientific collegiality. More often I think it’s based on some ill considered utopian ideals.

Personally, I hope Apple doesn’t share. Love them or hate them, when you buy something with Apple software, you know exactly how it will work: the way Apple intended. And that’s what builds a strong brand and strong profits.

Copyright 2010 – Doug Garnett

What Parts of Internet TV will Twenty-Something’s Still Want When They’re 35?

All too often, marketers miss the fundamental humanity of people who buy their products. And technology marketing’s focus on 20-something’s is one key place where companies forget about human nature.

Here is a human truth: I once read a book where a 20-something character walks downhill and meets his father who is walking uphill. The author notes that these positions reflect life. While 20-something’s typically feel a tremendous angst about the stress in their lives, the truth is that the demands of life becomes dramatically more complex as we grow into our 30’s and beyond – as we layer on careers, children, marriages, and communities. (Fortunately we also grow in our ability to handle that complexity.)

In forgetting about this reality, tech marketers also forget that every generation says it’s different. My generation did. So did the generation before us and the one after. But looking back, for a marketer’s perspective, we ended up looking pretty much just like every other generation.

How should this affect tech marketers? Consider tech industry hype about so-called “twenty-something’s”. This hype suggests they are entirely different generation – transcending the fundamental needs of today’s generations over 30. Some go so far as to imply that 20-somethings are an evolutionary recreation of the human race beyond all past needs and wants. Bullocks.

Consider text messaging. Studies show 20-somethings text far more than they email or make phone calls. And so, some prognosticators claim email will die. But while the studies are accurate, the conclusions are bunk. The university students I teach rely heavily on text because their lives are more mobile and transient because of their age. Hence, text is the most effective communication. As they age, they shift to email because life becomes more tied down, they have better access to email, and their career success demands it.

Consider also Internet TV. A 21 year old may have the energy required to search YouTube for hours on end to find one unusual video. But most 41 year old’s would rather just sit back and watch a well produced, interesting show where they already know the characters (e.g. pretty much what we have on cable today) because they want their TV time to deliver relaxation and escape. And they’d rather choose those from a set of channels they know – because those channels reliably produce similar quality programming on similar topics.

I don’t hear this reality recognized by Internet TV advocates. For example, much of GoogleTV hype seems predicated on the idea of abandoning cable in order to recreate our cable experience online. How? By searching around the internet to find things from which to create our personalized entertainment world. (Sort of like we’re all network executives without the golden parachutes.) Riiiiiiggghhhht.

After a 10 hour workday, your son’s baseball game, homework, dinner, and getting the kids to bed, you want to do the very hard and frustrating work of searching the internet. Not likely – even if Google’s gone fully creepy on us and inhabited our very souls to perfectly suggest what we want to watch.

So, when they’re 35, will today’s 20-something’s still want whatever internet TV turns out to be? Of course they’ll want the effective parts. But it’s not humanly effective to spend hours searching YouTube’s 120,000 new hours of programming each week. My prediction is that they will mostly want… well… a small evolution of exactly what they get today from cable with a good DVR and some type of on-demand access to movies (streaming, downloading, on-demand,…).

Copyright 2010 – Doug Garnett

Google Says its Internal Development is Struggling

I’ve been interested by the industry hoopla surrounding Google’s vaunted approach to development. Maybe “interest” is the wrong word. Because whenever the innovator books worship a company’s policies, I get suspicious.

The Wizard's at Google search for revenue by buying companies.

It appears these suspicions may be well founded. Bloomberg reports that Google is acquiring companies to drive growth because internal developments aren’t delivering. Interesting. In fact, 2nd quarter results for Google show a 22% increase in internal development spending – probably hoping more money will solve the problem. Something ain’t quite right in Silicon Valley Heaven.

I’ve suspected development problems at Google for years. A lot of outsiders worship Google’s current development ethos. But that process isn’t the one that led to their highly successful initial development. And their current process works on some flavor of the theory that anarchy creates profit. (Reviewing several millennia of history doesn’t uncover historical precedent for this idea.)

To cap off this mix, Google never communicates the few developments that somehow rise through the anarchy to deliver significant potential value (as I noted in this article).

So, let’s please stop suggesting that Google’s discovered some unusual development magic – it’s clear they haven’t.

Only the internal team at Google can estimate the effectiveness of this new increase in spending. But, it appears it will only payout if their executive team can rein in a corporate culture that appears ready to party straight into the ditch.

Copyright 2010 – Doug Garnett

The Unspoken Costs of TV Over the Internet…

The following article in the NY Times suggests that so-called “free” internet services are anything but free (click here). Why? Because there’s always a cost. And on the internet, what we get for “free” often costs significant time and frustration. And this is what the author finds as he views all his TV shows online.

In fact, this is a great area to sit and think. Because so many activities on the web consume time. How many hours does it take to schedule business trips online? A lot. Would I be better off paying an agent to just make the reservations? Not necessarily. I travel so much that I am quite picky about flights. But it’s worth remembering that a $25 or $35 fee to an agent is small compared with my losing an hour or more finding flights. And I have generally found that agents have access to some very low cost alternatives that I don’t have. (Of course, I continue to make my own reservations.)

There is another hidden cost that affects online consumers – opportunity cost. That time we spend wading laboriously through online services also costs us lost opportunity. We could be using that time for more productive things – perhaps even thinking about how to better spend our time.

I also think this idea helps clarify one important marketing area. Consider the technology chasm that kills so many products (that jump between the narrow market of early enthusiasts and the first wave of mass purchasers). Time, frustration, and lost opportunity can be perceived as insignificant by the early enthusiasts. But those same costs quickly overwhelm the mass market consumer – leading them to pine (in the case of internet TV) for the simpler days of cable TV’s instant and easy access.

Technology marketers need to become aware of when their early success happens despite these hidden costs. Because early adopters put up with hassle that early majority consumers simply won’t stand. I don’t see many companies who “get” this truth.

Incidentally, this thinking may be important when considering smart phones. Millions and millions sold. But, it’s a lurking long term problem that in another interesting recent NYTimes story we find that the large majority of SmartPhone users aren’t, well, using it much as a Smartphone. Is it possible they don’t get enough benefit in return for the hassle or complication of trying to learn to use them as Smartphones?

In our love for our own advanced technology, it is always wise to take some time to sit back and think more deeply about the unintended results of our work. Because there’s a cost to everything. Its just that not all costs are monetary. But it’s those other costs that may draw the line between market success and failure.

Copyright 2010 – Doug Garnett

Marketing Tech Like Consumer Goods: Move Beyond Cool.

Apple is proving that the future requires treating technology like a consumer good. But to get there, we have to start changing our communication And that starts by getting a grip on our use of “cool”.

Today’s tech advertising rarely goes deeper than “cool”. As I walked the Consumer Electronics Show (CES) last January, I found meaningless cool everywhere. The most obvious was the video version that cluttered the show and might best be called “video wallpaper”. Action, color, and hype… And nothing more.

Many communication suppliers (agencies and production companies) love “cool” because it’s a low risk approach to keeping clients happy while making loads of money. Unfortunately, it’s also the lazy man’s approach and must become secondary as computers move into consumer goods quality products.

For years, we’ve probably gotten away with it since the craziest of early adopters respond to the mere implication that they’re missing something without that new technology. Interestingly, with the iPad Apple seems to have skipped over this group and succeeded by going directly to people who are already across the chasm.

To achieve this success not only requires more mature products but more mature communication. Because the only way across the chasm is with communication that delivers meaningful value. (In research we’re even learning that tech companies have burned consumers so often that cool often implies “gimmick” – positioning the latest advanced technology right next to the Snuggie in the consumer mind.)

“But what about Apple? They’re cool.” They are. But their brand became cool because they deliver highly unique and valuable products with high levels of consumer refinement. Continuing to deliver that value is the primary driver of sales. This doesn’t mean being cool is unimportant for Apple. But my guess is that “cool” plays a minor role – perhaps bringing a 5% to 10% added value.

So here are some thoughts to help guide us through the maze of cool options…

…Tech “cool” has been trained into an entire culture of marketers and executives. And it is the default for every communication team. But cool has a problem because it’s so common that it has become dull and uninteresting. (Just think about this while you walk your next trade show.)

…Cool changes depending on the age of your consumer. If you are marketing tech to adults over 60, cool can raise concerns and dramatically reduce sales. And for “youth” products, there are many flavors of cool so choose yours carefully. Too often mid life art directors deliver work to recapture their own youth and leave out the meaning young markets demand. (Remember that the young consumer is savvy. While they want a flavor of “cool”, they also want value.)

…There are great tech products where “cool” isn’t their school. The Netpliance iOpener press tour bombed when it pitched “cool”. Too bad. The iOpener was a great product that delivered significant benefit. But, it’s technology wasn’t new – it didn’t deliver cool. Editors never saw the value of the product and they panned it. How many tech products have failed because they assumed that “coolness” was their ticket?

…Coolness is just one of many attributes. Where does it fit for your product mix? The CES show was a great place to look around and realize that “cool” companies are a dime a dozen. The truly successful emerging companies have messages that are meaningful. (Sadly, the big boys like Intel and Microsoft too often get away with carpet bombing cool in their booths. But don’t be mis-led. This plays only a small role in their success.)

Truth is, VC’s seem to demand cool because it continues to be important for investors considering a buy-out or an IPO. So be it. Figure out where “cool” delivers meaning with your product and create a strategy for using that “cool”.

Then realize that consumers need a lot more. Deliver the thing that will generate the profit you really need: meaningful advertising that drives sales of a meaningful product.

Copyright 2010 – Doug Garnett

Is there a Consumer Downside to Internet & TV Convergence?

While there is some superb “envisioning of the future” in the tech business, all too often discussions of future products are delivered with a sci-fi like naivete and a misplaced utopianism. 

Now I’m an advocate for TV/Internet convergence. But I’m also quite concerned by the dominance of this naivete in today’s discussions about convergence. And one strange area of utopian ideas surround claims that eliminating advertising in TV programming is a value to consumers. 

Supporters of this idea point to survey claims that consumers don’t like TV advertising. But surveys of this type have been around for 50 years, always said the same thing, and always been notoriously inaccurate. And we rarely hear about the contrarian research like last year’s study suggesting consumers enjoy programming more when it includes advertising (“Enhancing the Television-Viewing Experience through Commercial Interruptions”, Nelson/Meyvis/Galak, Journal of Consumer Research, August 2009 also summarized here).

Even worse, utopians seem to forget that consumers hate internet, mobile, or email advertising much more than they hate TV ads. Still, this thinking endures – even at many advertising agencies.

We should all be careful of what we wish for. Convergence could easily hurt consumers more than it helps them. Consider…

…Consumer experience of unwanted advertising on TV is quite minimal since DVRs make it easy to skip ads that aren’t valuable. Note that the latest research shows that DVR’s haven’t decreased ad effectiveness and may even have increased it since consumers can rewind DVRs to see the ad again.

…TV ads work exceptionally well. If everyone hates them, how can this be true? Maybe when you’re asked if you “like” ads, it’s socially unacceptable to say “yes”. And, maybe “liking” isn’t what’s important.

…TV ads deliver a value to consumers. Good ads deliver valuable information consumers can’t get anywhere else – and nothing’s better than TV at delivering this value. At the same time, these ads pay for the programming in a consumer win-win.

…Program developers, networks, cable systems, stations, and advertisers live in a delicately balanced “eco-system” that benefits the consumer. Evolutionary adjustments within this eco-system are the only approaches that have been profitable. Unfortunately, the rush to convergence may dive head-first into revolutionary change that hurts consumers. 

Discussing these truths may be a fools errand. Few people, even those in advertising, have the courage to observe that advertising brings consumers value. As a result, many advertising agencies are actively colluding with new media companies, tech developers, and investors in an attack on television.

There is significant value to deliver with convergence. But we must not let utopianism lead us to destroy what’s good in the TV ecosystem. Are we so naive that we ignore the risk that convergence could end up delivering only a bit more programming while increasing costs and slowing down internet performance?

Copyright 2010 – Doug Garnett