Brett H. Bumeter
November 30, 1997
The future of broadcast advertising faces some very difficult challenges. The television broadcast medium has been assaulted from all sides. The invention of remote controls to a certain extent has freed captive audiences from the absolute bonds of television ads. The cable industry has further fragmented viewers with increasingly more channel options. The internet has begun to pick up speed as an emergent communication media. https://sixtysearch.com/Both of these have continued to draw more and more advertising dollars. In 1998 the medium of television broadcast will switch from an analog to a digital standard.
This switch will have very significant effects on broadcasting. Since television signals will not be received as they have been in the past, methods for viewing television will be altered. Initially, we will have the option to wait for an entire program to be broadcast bit by bit in transmission speeds very near normal broadcast rates. As technology improves and the industry standard allows, viewers will be able to receive entire programs in fractions of a second.
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This is being made possible through significant improvements in technology. Moore’s famous law state that computer chip power will double every 18 months. The computer chip alone will not enable high-speed transmissions of large amounts of data. Fiber optic cables transmitting signals in the forms of light pulses or photons on the other hand may have that very capability soon. “The new law of the photon says that bandwidth triples every year.” (Banks 66)
Your computer, modem, or web TV is not the culprit when you are forced to wait for slow updates on the Web. The slow data transmission speeds are primarily due to a lack of bandwidth. “Bandwidth is the carrying capacity of a communications line.” (Banks 66) At this rate the growth of fiber optics will reach almost a billionfold in 19 years. (Banks 66) This sort of growth in transmission capabilities will provide for virtually unlimited transmission capabilities as compared to those experienced presently.
For example, viewers will not have to watch the new Sienfeld episode at the time dictated by broadcasters. They will not have to trouble themselves with programming their VCRs to record the episode either. Viewers will be able to watch the current Sienfeld episode along with all other old episodes whenever they desire. Viewers will only need to click their remotes on the episode they desire, and the program will be down-loaded ready for them to view. This function alone could even make VCRs obsolete.
Initially, this presents a number of problems for advertisers. If all viewers can watch any television program at their convenience, the notion of prime time viewing windows gets thrown out. The shows might be available at the time historically viewed as prime time. The shows might also be available for quite sometime afterwards, or they may be available forever.
Some broadcasters are thinking about using multicasting. Viewers who missed, say, Sienfeld Thursday night might be able to tune in to the show Friday afternoon. This plan would face stiff opposition. “It would be a nightmare for advertisers, programmers and probably for audiences, too,” says TV station adviser Jack Fentress of Petry Television. “If you have Sienfeld on at four in the afternoon, don’t you think it would have an impact on Oprah?” (Lieberman)
Customers might even come to resent waiting for the release of a program until a historical prime time viewing slot. Customer service might demand that these programs be made available as soon as possible. In fact, whole seasons of Sienfeld episodes might be available immediately to keep up with demand. The life of a program might be shortened tremendously by this demand. However, this whole question becomes irrelevant if group funds the production of the program due to the lack of advertisers to deliver.
Today, many television systems are paid for by advertisers. In a future interactive environment, where almost all advertisements could be skipped, accounting based on access validation seems to be the only viable and acceptable way of billing. . . (Zahariadis, Rosa, Pellegrinato, Lund & Stassinopoulos 63)
Billing customers for access may seem a logical recourse to paying for broadcasting. However, it may not be all that logical to advertisers, who will probably not give up on advertising until there is no profit left in the business.
The essence of the problem facing television advertising is this. The technology that can provide television programs such as Sienfeld on demand can empower the viewer to completely bypass television commercials. The notion of a captive audience will now be ultimately shattered. An interactive audience is not a captive audience.
How can this be possible? First of all, the nature of digital television will allow the parceling of data, or programs, into sample portions of a whole program. The parcels will be broadcast over many different vehicles ranging from direct satellite, radio waves, cable lines, phone lines, electrical lines, or fiber optic cables. These parcels might be directed to community server or they might travel directly into you home.
The home television of the future will then provide viewers with the option to play the program. This television is actually a hybrid between a television, a personal computer, and a dumb terminal. For example, it could allow for the viewing of different video clips ranging from a video teleconference to the previously mentioned Sienfeld episode to the ultimate fighting bout between Mike Tyson, Hulk Hogan, and Shaqille O’Neil.
The lines between TV and PC, already blurring, could disappear with the arrival of DTV. After all, digital TVs will basically be computers with chips, software and memory. With the addition of a chip and tuner card, a PC can become a TV. (Davidson)
Soon computer chips embedded and peripherally connected to the television will give your television more computing power than the space shuttle Columbia. The connection between your television and remote servers will allow it to tap into the computing power of remote super-computers.
So this television will have more than enough capability to screen out commercials that have been broadcast with parceled programs to your television. These commercials have already been broken down along with the program itself. Your computer or television only needs to skip over the commercials, much as a CD player can be programmed to skip from track 1 to track 20 without missing a beat.
The big problem resides in the level of difficulty advertisers will face just trying to get viewers to watch advertising at all.
Practically everyone dislikes it. Advertising interrupts radio and television programs, crowds editorial matter off the pages of newspapers and magazines, disfigures city streets, defaces the countryside, and even lurks at eye level for tired, vulnerable standees on the subway. (Scipione 49)
Soon, viewers will have the technological capability to disregard commercials. Jane Doe downloads an episode. Jane runs a quick macro program on her television and eliminates all advertising. Jane quickly saves this new version of the episode and emails it to a list of clients who prefer to for go the difficulties of this technological interchange.
Once a video image has been digitized, it can be manipulated without loss in picture quality – which is vital to cable companies that need to process a signal several times before redistributing it to customers. In the analog world, the video degrades a bit with each video distribution process. (Haring)
Obviously, this is illegal. However, even though it is illegal for software to be pirated, it still occurs throughout the world. “Expecting children not to share their computer software is like leaving hundred-dollar bills in a schoolyard along with the message ‘Please don’t pick these up, they belong to Michael Eisner.’” (Wang 78) When the technology becomes simple and convenient enough for the average couch potato to use, advertising will face an even tougher challenge.
Advertising will have to alter its strategy. The death of prime time viewing slots may actually benefit advertisers. They may not now when viewers are going to watch a specific program, but they will know exactly which viewers have watched any particular program. The rating system as we know it will be altered considerably. No longer will decisions be based on the viewing habits of a few families. Feedback will be available on the viewing habits of every last person. This amount of information alone can save advertisers from an early peril due to the death of television ads, as we now know them.
With a better understanding of consumer behavior, advertising effectiveness can be significantly improved, while the amount of advertising decreases. This will have a number of benefits. The amount of clutter could be reduced. The expense of advertising research in the long run will decrease in proportion to sales. These are just a few of the possibilities advertisers can expect to confront in the future.
Accepting the idea that advertising faces a difficult situation, the immediate question is “What should advertisers do?” Should advertisers hold back waiting to see what the future medium of advertising might shift too or should they attempt to implement and build it as the medium of digital television is built? “People always use new technologies to implement the paradigms of the past.” (Davidow 22) This could lead to disaster for future advertisers.
In the recent past, the shift in advertising mediums from newspapers to magazines to radios and the television all shared one common aspect. They have all attempted and generally been successful at binding advertising to the media content. Newspapers and magazines both attempt to place ads near news copy to capitalize on the readers eye movement. Radio and television broadcasts have always benefited from a captive audience. Aside from turning of the radio or television, listeners and viewers had no choice but to listen or watch an ad inserted before, during, or after a program.
This changed slightly with the invention of the remote control. Allowing television viewers to change channels effortlessly. The spread of cable has given remote control owners the option of many different channels to scan. Today commercials are still here. Broadcasters can easily collaborate to position their commercials in a time frame so that a channel flipper will readily find a commercial on any channel they view. Now, advertisers must come to terms with the problems of advertising in a medium where the message is not necessarily bound to the media. (Davidow 22)
In the future if advertising must be separated from the media that it has historically been linked too, then how much benefit will there be in advertising on television. If viewers do not watch commercials during a television program, advertisers are not going to get their dollars worth out of that commercial. Without a change in their current practices advertisers will not have much success advertising in this medium.
Advertisers are not the only business areas beleaguered by the change. For example:
Ceaseless change continues to bedevil the technology industry with counterintuitive lessons. Microsoft’s attempt to build a proprietary on-line service—Microsoft Network—initially bombed. Not for lack of great features, but because the Internet’s “open systems” bias was foreign to Microsoft’s reaction pattern of proprietary control. (Champy 103)
So how do advertisers cope with these sorts of changes? “If you suspect your environment is changing, and your sensing capabilities aren’t telling you what to do, get help fast.” (Champy 103) This appears to be exactly what smart advertising companies are doing. They are buying up small online agencies or hiring high-tech oriented CEO’s.
Furthermore, if commercials can not be bound directly to television programming, then advertisers will have to find other methods for getting their message out and across to consumers. An example of the future of television advertising might be found in the online environment. “In the online environment, consumers see a lot of advertising. But only what they choose.” (Davidow 22) If this is a glimpse of things to come, advertising must take on a different role in television.
“The disconnect between seeing a picture of, say, a watch and then finding a store where it is sold disappears when you can order online.”(Davidow 22) This is even truer if you put this example in the context of viewing that watch on high definition television or watching James Bond drive a new BMW in a movie. If you could click on the 007’s car and switch to a BMW site that disconnect becomes even smaller. If the viewer takes one more step, the dealer could be picking them up in 20 minutes to go for a test drive.
On the other hand maybe commercials can be packaged with future programs within a different format. “The development of specialized cable channels has provided a new setting in which it was possible to place program content and a commercial message on the same screen.” (Carey 214) “Consumers could choose which commercial they wish to watch or which version of a commercial to watch. Commercials can offer contests in which a viewer might learn instantly if they have won a prize.” John Carey goes on to state:
<span style=”font-size:85%;”>This would be much more difficult to do in a broadcast network program, simply because a tradition has been established by which content and commercials are separated. Interactive programming may provide another new setting to explore new forms of advertising that would break traditions and expectations of broadcast and cable settings.
The advertisement packaged in this manner would be similar to inserts found in newspapers. An interested viewer would only need to click on the insert to enter the commercial site in order to watch a commercial, learn more information about a product, or actually make a purchase through a retail outlet or classified section. This is similar to the trend that newspaper advertisers see today. “’Most national-account ad dollars for newspapers are generated by inserts, not by ads placed within newspaper pages’ (Tolley 1993, p. 11),’ and most ad revenue comes from retail and classified advertising, not national advertisers.’ (Newspaper Association of America 1994)” (King, Reid, & Morrison 3)
When the concept of the commercial insert is considered in context with the fact that information piracy will be relatively simple, an insert might make more sense. Consider the pass along value that magazine ads benefit from when magazines are shared and read by more than just a subscriber or purchaser. As in the software industry, “Most people receiving unauthorized copies would not have purchased the software in the first place. And such ‘distribution’ can often strengthen a software product by helping make it a standard.” (Wang 78) This could hold true for television or movies as well. If sponsorship of a television show or movie production costing approximately $25 million gets your advertising insert circulated throughout 75 percent of China then you have purchased your advertising at a bargain.
Even though Pepsi experienced some success with this type of advertising with its sponsorship of the movie Top Gun, this activity is not the norm today. Furthermore, without control in the early stages of conversion, serious problems could arise.
It is obvious, however, that the basis for funding development of expensive intellectual creations (remember that Hollywood movies cost tens of millions of dollars to create) is threatened if we destroy compensation models. (Wang 79)
Advertising changes in all of these directions can benefit advertisers. “’There’s only so much you can do in a 30-second spot,’ says Comcast’s Roger Keating. ‘The Web is unlimited.’” (Levine 42-3) A format resulting from the combination of television and the internet can benefit from the best of both worlds. Customers, who show the desire or interest to investigate further, are going to pay more attention to the presentation that they encounter. Since these viewers control the numbers of ads that they investigate, the amount of clutter that these individuals experience will be directly tied to that threshold of advertising they are willing to accept.
Inserts can also increase the abilities of advertisers to segment their audience and target different segments. A viewer after entering a contest, in which they are required to give some basic information about themselves, will then be directed to an ad custom designed for viewers exhibiting similar characteristics matched up from the entrance survey. This same survey along with follow up questions can provide immediate feed back to advertisers as to what advertising is working and how well. (Carey 214) For example, an on-line service called At Home developed a site for GM this year. They created a series of questions on the viewer’s driving habits; those who respond get a specific recommendation for a GM vehicle. (Levine 42-3)
One of the key concepts here is that the customer must be kept in mind. Advertisers can not continue to barrage customers with advertisements. Advertisers will have to provide their potential customers with information and support. This information and support can then be used to make the decisions that will ultimately lead the customer to the advertisers services. Once they have captured the attention of the customer and brought them this far, the advertisers will have to work with their clients to provide service. Esther Dyson states this as an example,
“What does the consumer really want? He wants attention. He doesn’t want Net (internet) Advertising. He does not want mass content. He wants the company to pay attention to him. The best example is Federal Express. I don’t care what kind of airplanes FedEx uses. I don’t care that they have this great brand name. I care about my package, number 9029852. That’s the real valuable information to me.”(Dyson 1997)
Providing good customer service is a great goal, but incorporating customer service into advertising is quite different. Advertising can help demonstrate customer service in a video format, but it must evolve more as part of the customer service function. Advertising can not maintain effectiveness by increasing clutter, nor can it maintain effectiveness by failing to take advantage of technological innovations that allow customers to interact with advertisements.
Besides applying technological aspects to advertising, there are other more subtle strategies that can be applied. Advertisers need to approach their ad plans from the viewpoint that the customer must be serviced faster and those customers’ products must in turn service the customer faster as well. According to Michael Schrage, “The single variable customers and clients care most about is their mean time to payback. That’s the speed at which they believe they will get a payback from purchasing your product and/or service.” (Schrage 55)
When this concept is factored into the advertising plan, it can only benefit the effectiveness of advertising. In an age where ‘instant gratification takes too long,’ it is imperative that advertising does not hinder or even turn off customers. Advertisers need to be careful not to provide customers with that one extra reason to change the channel, screen out commercials or ignore commercial sites.
One of the reasons that advertising has not spread throughout the video rental market hinges upon this concept. If an advertisement slows you down, then it is automatically no good. Currently, the only ads that generally appear before or after a movie on a rental tape are movie previews or other advertisements directly related to the movie industry. When advertisers make the mistake of putting an unrelated ad on a rental tape, consumers are more likely to hit the fast forward button and disregard all of the advertising. This might directly apply to television in the future. If advertisers break through the acceptable levels of television commercials, viewers will be more likely to exercise that little bit of extra effort to completely bypass all ads.
This same problem is affecting on-line advertisers currently. The time it takes subscribers to initially log on, switch to different web pages, and down load information detracts from the immediacy of the medium. “Consumers want television-type functionality with their on-line experience—instant-on, for example, plus the ability to change applications and services with ease and spread of the television viewing experience.” “Signing on with a 28.8 modem may be better than signing on with the slower modems a majority of us are using now, but it is still light years away from the instant-on experience of television.” (Hartwick 105)
The idea that advertisers need to take on a customer first approach is rather novel in American advertising. “American advertising has traditionally been written with straightforward and aggressive intentions—to boost sales, to attack the competition and increase market share, to build a consumer franchise and drive loyalty, to launch and develop strong new brands.” (Jones 9) This has resulted in the growth of a negative viewpoint and cynicism towards advertising. “Three of the greatest ironies of advertising: (1) Advertising doesn’t always work but gets blamed by consumers anyway for most of their purchases. (2) Even when advertising has a big impact on Consumers, people are loathe to admit it. (3) Advertising sometimes works and sometimes doesn’t, but advertising people always take the credit for most sales anyway” (Scipione 49)
In his article Is Advertising Still Salesmanship? Dr. Jones goes on to state that the process off targeting “apathetic or even hostile prospect(s)” with a strong argument in the hopes that they will purchase a brand does not work as often as advertisers might think. He later addresses his belief in the argument that mature markets that no longer have much of an increase in primary demand do not react to “strong force” (American) advertising.
He states that a more subtle and seductive approach similar to that used in Europe would be more effective. In general the theory he promotes, the “weak” theory, states that “If existing buying behavior has a greater influence on buying than external stimuli do, what do these stimuli accomplish?”(Jones 10) He does feel that advertising can play a part in maintaining the current status of a product or brand. In one of the findings of Dr. Jones research he found that in a mature market “a single advertising exposure was shown to be all that was necessary to achieve an immediate sales increase.”(Jones 11) Initially results showed that there was an immediate effect on sales in 70 percent of cases, but after a imposing tougher standards this number came down to 35 percent. His findings also showed that there “not much” increase from additional advertising.
The new technology of digital television has the potential to “convert TV viewers from couch potatoes into interactives by offering them a more lively evening. ‘Television has been the same experience for the past 50 years,’ says Comcast President Brian Roberts. ‘All of a sudden, it’s a whole new experience’”(Levine 42-3) It can not be over emphasized that the television medium is changing and will be different. As more money is invested into the convergence of television, online services, interactive services, and the digital standard the sophistication level of programs is going to have to make some long leaps. Viewers will become increasingly less passive.
The greatest challenge would lie in instilling appeal into the multimedia information services while providing an intuitive interactive interface. This then will successfully wean the audience at homes from the existing passive TV programs to the interactive multimedia services of tomorrow. (Tambe 513)
Advertisers will know within nanoseconds how well their advertising ploys have worked for their clients. They’ll need only count the sales and analyze the survey responses.
In the current realm of online advertising, web sites are already starting to pay off in certain situations. However, the costs to create web sites are high. In a recent poll by Forrester Research, 43 out of 50 companies surveyed responded that they had spent between $500,000 and $5,000,000 to create a commerce-based Web site. (Halper 117) These prices may appear daunting, but then again if companies consider the alternative of not maintaining a presence on the web, the costs not to play could be much higher. An International Data Corporation survey studied several internet sites and “found returns ranging from 205% at Deere & Company to a stunning 2063% at Amdahl. Of the seven companies surveyed, six had ROIs of more than 1,000%.” (Halper 117)
Other alternatives for advertisers might include increasing the level of promotion in advertising or utilizing more themes throughout the entire marketing spectrum. In the 90’s marketers can definitely not rely on a single television ad campaign to attract customers. The theme of their product needs to be incorporated at as many levels as possible.
This could include the architecture of the company building if that will help. This especially holds true where the point of sale occurs. To a certain extent customers are not only buying the product but the whole buying experience. For example in the Detroit suburb of Southfield, Michigan a 185,000 foot Star theatre movie complex was opened in June. The design of the entire building helps to set the setting for a moviegoer’s experience. “The fun-house effects starts at the front door. Phony popcorn kernels the size of basketballs look as if they’re spilling from a monstrous bucket.” (Levine 148) “The house is as much an attraction as what’s on the screens.” The movie theatre now attracts customers from an hour and a half away. “Why build a billboard when you can build a building? ‘It should be worth the price of the movie just to go into the theatre,’ says Star owner Jim Loeks.” (Levine 149) This is by no means a new idea. Walt Disney began capitalizing on this concept years ago.
Another possibility that has not been explored here is the potential for this convergence to bring about a completely virtual retail experience or a “virtual shopping mall.” With the increased interactivity provided by the television component, retailers could definitely benefit from showcasing their products in real time by video. Currently online snapshot pictures provide little more sensual activity than flipping through a JC Penney catalog. However, watching a product in action or viewing clothing as it is tried on by a sales representative of your measurements might take virtual purchasing to a higher level. (Zahariadis, Rosa, Pellegrinato, Lund & Stassinopoulos 63)
Improvements in cryptography and future deregulation of this science might finally even give consumers the anonymity that they desire in their purchase power. It will also increase their security in making transactions over a broadcast medium as opposed to physical transactions in person. The real profit for broadcasters will eventually shift, as they become a monetary means of exchange. As people shift from using physical dollars to electronic dollars, there will not be a need to utilize a bank and broadcasters can capitalize on this immensely. (Mchugh 172-9)
In conclusion, advertising in the television media will undergo a massive restructuring in the next few years. It must adapt to find its place in the oncoming era of digitized television combined with the interactive capabilities of information age. Advertising commercials must be altered so as to attract attention from consumers in very different settings, for television viewers of the future will not be captive audiences.
Fortunately, advertisers can also benefit from technology. The same interactivity that will accompany the digital platform will allow advertisers to gain a more complete understanding of their audiences almost immediately. Advertisers will aid in the transformation of television from a solely broadcast medium to an actual market place. They will need to utilize their skills developed during the television era to forge ahead into this new media. This past experience will aid them in guiding audiences to their clients in a fast paced changing media environment. Empowered audiences will aid advertisers by providing feedback, while advertisers must respect the mature market place in which they operate.