A recent McKinsey study on TV’s effectiveness caught my eye. According to the study, TV’s effectiveness will be significantly less just a few years from now than it is today. It claims TV as a selling channel will be two-thirds less effective in 2010 than it was in 1990. On one hand, who really cares how effective TV was in 1990? That was 16 years ago. On the other hand, TV is pretty darn effective right now, which means TV’s importance as an ad medium will drop dramatically in the next few years. That gives one pause.
The real issue, therefore, is how quickly things could change. Bob Garfield has dubbed this the Chaos Scenario. TV is currently the primary workhorse for a lot of the awareness campaigns marketers rely on. Add to that radio and print, both of which are in more or less the same boat as TV. Most of us still go to market in roughly the same way as we did in 1990.
Typical online media usage is another example. Yes, most major agencies have a strong business built around online media. But most media is purchased, used, and assumed to be consumed as if it were TV. Buy a bazillion impressions on Yahoo or ESPN, and shove a banner, skyscraper, or, better yet, a roadblock onto the page in the hope of attracting some attention. That’s TV thinking.
But who am I to criticize? From a business perspective, everyone seems happy; agencies are doing a great business, properties are selling space, and marketers are talking up the results while happily forking over cash (in increasingly large handfuls).
But millennials aren’t consuming ads the same way boomers are, and over the next few years, well, let’s just say it’s millennials rising. Teens spend significantly more time online — like five times more — than adults. That’s good. But they multitask. That’s not so good. They spend half as much time watching TV.
Case in point: I was visiting my friend Josh Baer, founder of Skylist and CTO for Datran Media, at his house the other night. I’m 50. Josh is 30. We were talking about music in Austin. He asked me if I had a TV. I had to think about that for a second: Do I have a TV? Everybody has a TV, right? Turns out, Baer doesn’t have a TV per se. He watches TV programming on a small monitor that sits next to a much larger monitor, both of which are in the kitchen. On the smaller monitor was a continuous stream from the startup music channel ME Television. On the larger one was everything else Baer relies on to manage his day, all of it coming from the Web. From a marketer’s perspective, Baer is a desirable consumer. The question is, how are you going to reach him and the millions of millennials who think and behave the way he does?
I’ve written a number of columns that are suddenly converging. The first makes a case for cutting ad spending while cutting the price of goods services. The result is a decrease in the cost of living –and hence more purchasing power — along with a decrease in the number of interruptions served up every day. The second and third cover the effective use of word of mouth along with the many channels savvy marketers are using to reach consumers in addition to TV. The final column examines the changing role of the CMO. All these issues are relevant in discussing TV’s declining role.
Even if marketers wanted to, they couldn’t just shift current spend levels to online or similar channels. There simply isn’t the inventory (though if MySpace gets a handle on effectively monetizing all its 80 million profiles, that could change). Of course, a shift in spending isn’t the only answer. It’s expensive to produce and broadcast a great TV spot. What if the equivalent coverage were shifted to online and to other, newer channels, and the excess dollars — the difference between the cost of obtaining a specified reach through the combination of these channels and that of TV — were applied to lowering the cost of the products themselves? Instead of “New and improved… now 10 percent more effective” how about “New and improved… and now costs 10 percent less!” Think that might get people talking? With the price of gas, it seems a no-brainer.
That brings me to my second point: the rise of word of mouth and its role in the many channels that are forming around the connections between consumers.
We’ve all read word of mouth is a highly trusted form of communication. I’ve outlined the fundamental feedback loop through which experience (not advertising) drives word of mouth and advocacy, and how new online channels directly facilitate its spread. The good news for TV is that turning down advertising to about 30 percent of what it used to be is probably about right. TV is still a good basic awareness tool, whether delivering its message on a 46 inch screen to a boomer’s living room or to a 15 inch monitor in a millennial’s kitchen. It’s the other two-thirds of the communications portfolio that’s changing. This, noted in the McKinsey study, points to the underlying message to CMOs: the job’s changing. Frankly, it’s never been better.
As a CMO, I feel like a kid from the Midwest walking into FAO Schwartz on Fifth Ave. I’ve got tools that didn’t exist 10 years ago. New ways to use them seem to appear overnight. The rise in adoption and use of social networks is one example. Millennials’ multitasking behavior is another. I can reach people in different channels rather than hammer them 6, 8, or 10 times with the same message delivered through the same channel. The CMO’s job is, if nothing else, more interesting than it used to be.
Is TV less effective? Not a problem. Smart marketers have plenty of channels to work with and a great emerging consumer segment that uses all of them. Plus, with what we’re already accustomed to spending on TV, we’ve got all the cash we need. It’s simply a matter of sorting out what needs to be moved where.
All in a days work for a CMO.
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