Futuro: a TV estará lá?

Reflexão e acompanhamento interessante.

EXECUTIVE SESSION WITH RISHAD TOBBACOWALA

Last Mass Medium Standing Could Be TV

TVNEWSDAY, Aug 26 2008, 8:44 AM ET

With the decline of newspapers and radio, Rishad Tobaccowala believes TV may be the only mass medium left in a few years

That opinion should give TV broadcasters some comfort. Tobaccowala keeps a close eye on new media as the chief innovation officer at Publicis Groupe Media, one of the world's leading advertising conglomerates. Through Starcom MediaVest Group and Zenith Optimedia media buying networks, it accounts for some $45 billion in spending annually around the world.

Tobaccowala is also CEO of Denuo, a branch of Publicis that he helped launch more than two years ago that focuses on cutting-edge forms of advertising.

To help it peer into the future, Denuo has also taken on an advisory role at more than three dozen nascent companies, and receives investment options for that service. Among the companies are Brightcove (enabling video on Web sites), Sling Media (essentially turning computers and smart phones into clones of your living room TV) and Daylife (a customizable online news service).

Armed with the insights afforded by those firms, Denuo's team of experts works with clients like Dupont, Purina, Hewlett-Packard and Conde Nast, giving them new research, strategies and tools to engage their target consumer groups more effectively.

In this interview with TVNewsday Contributing Editor Janet Stilson, Tobaccowala not only makes his mass-media prediction, but also says that he believes TV stations can have a vibrant future if they capitalize on some strategic opportunities. However, he does envision new rivals on the local video front.

Tobaccowala also discussed how Denuo will maintain its importance in a day and age when at least two of its clients, General Motors and Procter & Gamble, are in cutback mode.

An edited transcript:

Where do broadcast stations stand, in the minds of advertisers, when you consider the massive migration of video content to other media? Are stations still of value to them?

Sure, absolutely. The world is basically consuming more and more video rather than less and less video. And a broadcast station has to recognize that it is less of a broadcast station and more in the business of delivering of video.

For an advertiser, what the broadcast part of this does is deliver large audiences at scale. Let's say you want to reach 25 percent of the market. There is no better way of doing it besides using traditional media, which in the local market tends to basically mean spot television or newspapers. The difference is, people are still watching lots of television, but they are watching or using less and less newspapers.

How do TV stations become of more value to advertisers?

They need to figure out how to leverage their Internet and other media presence, because what may begin to happen is people will say, "Yes I'd like to see what happened on my local news, but I'd like to see what happened on my local news long after the local news is broadcast. And I'd like to see more depth of information," which you can't do in a 30-minute broadcast.

The networks and the stations have to recognize that they're in the video information and entertainment-delivery business. A broadcast station limits what they can actually do.

So you don't think that mass media is dying on the vine?

No, not at all. In fact, my sense of this whole idea of mass media's death is massively premature. The people who are talking about dying will die before the media dies.

Traditional mass media is not a growth business, and so to continue to resonate and be relevant, broadcast stations need to basically embrace digital media, including the Web. You'll actually continue to have a healthy, viable broadcast business, but you have to accept it's not growing, and it's becoming less and less relevant to particular target audiences.

You once predicted that, at some point, it's going to be more expensive to buy advertising on Google than on network television. Do you still feel that's the case?

It has actually become far more expensive to buy advertising on Google than on network television. Google has a product called AdWords, which marketers use to bid on a particular key word [that consumers might type in during an Internet search]. On average, across all categories, it tends to be about 50 cents.

So 50 cents every time someone clicks on a certain advertisement triggered by a search.

Right. Let's say on television you get a $20 cost-per-thousand rate. Fifty cents a click is equal to $500 cost per thousand. You can see how much more expensive it is, but the difference is there's some sort of action.

Do you think the TV CPM rates will decline?

I don't necessarily think that the cost of television is going to decline because, in a few years, it's going to be the only mass medium available.

So radio isn't mass media?

No. Radio is basically a niche media. In fact, I think radio is a declining media. You can see that with declining values of radio stations. There are three major competitors to radio. The first is a small little thing from Apple called the iPod. Radio gets listened to in three places. It gets listened to in the car, right? Well, increasingly, cars come with iPod connectors.

The second place is the office. When people listen in the office, they listen to stuff on the Internet, but they don't necessarily listen to Internet radio stations. They listen to things like Pandora and Lost.fm, which basically allow them to customize their music. And they listen to satellite radio, most of which is commercial free.

I believe that newspapers and radio are a couple of fast-declining businesses. I believe that large segments of magazines will also start declining. I believe that television and out-of-home and the Internet will be OK.

What other things should TV stations be doing when you consider new opportunities that are either here today or about to take place?

My basic belief is that local television stations' biggest single advantage is that they happen to be local. There are things that they can give to people that are unique. The first is to become involved in local events. Radio stations are used to doing that, but I think TV stations need to do that more.

Like concerts and festivals?

Concerts, festivals, remote broadcasting, coverage of events. In the old days it was easier to broadcast remotely with radio versus TV. But now with digital video you can go anywhere you want. What you put together doesn't have to actually be broadcast on TV. It can be broadcast on the TV station's Web site.

The second thing they can do is to let local people get famous by covering things like local sports. People like becoming famous, and there's nothing that makes people feel more famous than saying that they were on TV. That's the reason why you have all these thousands of people waving like crazy at Good Morning America and The Today Show.

TV stations have created channels on YouTube to showcase their video content. But some of them have noted that while they're getting a lot of traffic on YouTube, it's not being monetized. Do you have any thoughts about when operations like that will start to really make money for broadcast stations?

I don't understand why they would go and put their stuff on YouTube. I don't think of it as a place that I go to look for local information. The way you build your brand, in the case of the local station, is to say, "Hey, look — I've got my own Web site, which has all this local information."

If I'm looking for Chicago information, let's say Chicago newspaper information, will I go to the Associated Press or will I go to The Chicago Tribune site? What people are forgetting — as they think about all this technology — is what would people do?

Let's talk about Canoe Ventures, the new cable business that's building a national platform for advanced advertising. Is that more of a threat or opportunity to TV stations?

If it works, it will probably be both. It will simply allow people to get a national footprint, and my sense is national advertising is not competitive with local advertising.

Today, spot cable basically sort of sits in between the worst of the programming, and it's hard to buy. Canoe is partly about making it easier to buy. Part of it is basically going to be make it more measurable. Local stations will have both the opportunity of trying to figure out how to be more measurable, and the threat that they've got some other measurable media [competition].

Denuo has equity stakes in a lot of different technology companies with futuristic agendas. Are there any among them that will really change the game for TV?

Inherently, almost everything that we are sort of aligned with does two or three things. They allow for better targeting or more consumer control over video. I truly believe that the Internet is the best way to get better targeting and better control over your video, and most of these companies are Internet-based technologies.

The single biggest encouragement I would give to local broadcast companies is to pay a lot of attention to your Internet presence. Through it, you can sample all these new technologies and see for yourself what's an opportunity or a threat. Because the reality of it is, there's very little technological innovation that takes place on television. But there's a lot of stuff that's taking place on the Web about how to play with, adapt and target video.

One of your clients, General Motors, recently asked agencies to cut their fees back by 20 percent. And another Denuo client, Procter & Gamble, is on an austerity push. How you deal with that?

The key is, if you actually watch what all these folks are doing, they're not randomly deciding to cut budgets or scale back. What they're basically saying is, "We are going to be more careful. We're going to only fund things that have either a history or a chance of working or that are going to be increasingly important in the future."

A lot of what Denuo is doing is going toward that direction. So we're not seeing that as a problem for our small world.

If the market contracts more than it already has, will it affect the way that your company does business?

The only potential negative I can see is if there was a certain part of our business that was looked at by clients as experimental. The experimental tends to get cut whenever there is a budget shortfall. I never want to be in an experimental bucket.

Whenever there is a budget cut, there are two different things that go on. Some market leaders decide to stay or increase spending because they've discovered that the best time to pick up share is when other people begin to start cutting back. You will see certain market leaders continuing to do that. Then you will see other people basically cut back, but they will cut back on things that are not working. They will always move to stuff that's more target-able, more focused, more measurable. And they will put a massive amount of pressure on pricing.

Of the clients that you're working with, which ones do you consider to be the most ambitious when it comes to testing out new ways of getting their messages across?

I would not pick between my current clients because they're all ambitious in different ways. But, in general, two types of clients are intensely ambitious. One type of client is where the underlying behavior in how consumers buy their product is changing pretty dramatically. Those tend to be in the areas of automotive, technology, travel and, to a certain extent, finance. Those businesses have been changed by technology.

The other group of people are marketers who may not be in those categories, but who are finding that their key audiences are changing their media behaviors dramatically. So, for instance, the college students today in America probably spend more time on the Internet than watching television.

It's been a little over two years since Denuo was formed. As things have progressed in the business as a whole, were there any new twists and turns that took you by surprise?

Two-and-a-half years ago, clients wanted guidance of what was happening and what were some of the things that they should do. And today they're far more interested in finding out how to do the things that they know they should do.

Can you elaborate on that a little?

What tends to basically happen is you may tell somebody that they need to be more involved in word-of-mouth and social media. Two-and-a-half years ago, you may have had to convince people that that was important. Now they understand that, but they say, "How do we do it?"

The second big difference is that the content businesses, like the television stations, have started voicing interest in working with us.

Are there any changes that are very likely to happen that will dramatically alter the advertising landscape and, in particular, change things for the TV stations?

I think the Internet video experience will become more and more wonderful, and people will tend to watch more and more video via the Internet. So the share of eyeballs will shift. Second, consumers will spend more time with mobile Internet devices.

The third thing is, there may be at some particular stage a new generation of competition where the best parts of broadcast television, like the news, may find their competitors coming from Internet-delivered stations.

Suffice it to say that if TV stations don't get serious about the Internet, someone in the local market can get serious and compete with them. The next generation of local news may actually come from the Internet and not from a TV station.