We Interrupt This Web Site for a Commercial Break

In his best-selling book “Three Blind Mice,” broadcast critic Ken Auletta chronicles the rise and fall of the three major U.S. television networks: the American Broadcasting Company (ABC), the National Broadcasting Company (NBC), and the Columbia Broadcasting System (CBS).

In the book Auletta demonstrates how network executives, drunk on power and blind to the potential of the scrappy cable television networks, lost a third of their audience and more than half their annual profits. Now here comes the Internet, and this time the networks are determined not to make the same mistakes. Each of the big three networks is positioning itself through different strategies to become the cornerstone of the web among U.S. audiences.

CBS has created the CBS Internet Group and is merging with cable company Viacom (which also owns the UPN network). Can you guess who bought whom? NBC has created NBC Internet, which merged its assorted Internet properties such as Snap and Xoom. (Full disclosure: Greg works for the peacock over at NBCi and actively censored this article for jokes about Tom Brokaw’s speech impediment.) ABC falls under the Disney umbrella along with ESPN.com, and the ever-changing Go Network.

Of course, they continue to face the same kind of competition that brought them to their knees in the first place. The Turner/TimeWarner/AOL merger is but one example demonstrating that the big three are no longer the heavy-hitters. NewsCorp is also getting cozy with some interesting non-media partners, as their recent $1 billion deal with online health company Healtheon/WebMD shows.

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The key impact on businesses is that the television networks are looking now to close the loop between advertising and purchasing. Traditionally, the networks sell airtime to advertisers based on the size of the audience a particular time slot typically gets. In other words, the product being sold is not the laundry detergent or car you see on TV. As we’ve mentioned here before, you as a viewer – or at least your attention span – are the product being sold to the advertiser.

But there has always been a significant gap between the size of the audience viewing the commercial on television and the number of viewers who actually purchase the product. For decades, advertisers and the networks have been trying to figure out how best to ensure the series of actions between viewing and purchasing – how to get the viewer to get in his car, drive to the advertiser’s location, and buy the new and improved steak sauce.

What the entertainment companies, and particularly the networks, have always had is the ability to attract the attention of the masses. In other words, they’ve mastered the art of creating content for the lowest common denominator and, therefore, casting the widest net for the ultimate pot of gold: mindshare (ooh, sounds spooky).

The web poses an interesting juxtaposition for the networks, whose strength is mass entertainment. Look at the buzzwords of the web – “personalization,” “one-to-one,” “narrowcasting.” The web is a great medium for what the networks are not: the delivery of highly specialized and targeted content to narrow and clearly defined audiences. The kinds of demographics that TV salespeople use to lure advertisers – “We capture the male, 18 to 45, group!” – just doesn’t cut it on the web.

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Over the next couple years, the networks (all of which are now part of huge entertainment conglomerates, but for the sake of argument and simplicity we’re focusing on the networks) will be figuring out how to use their brute force to entertain large online audiences while making sure the programming still seems targeted and focused. They will also be experimenting with ways to close the loop between advertisement and purchase.

Some people predict that a user/viewer watching a program will be able to click on a product in the program (leading to a whole new dimension in product placement) and make the purchase on the spot. In other words, if you’re watching NBC’s “Friends” and one of the characters is leaning against a Ford Explorer, you could click on the Explorer and buy the vehicle. (We won’t speculate on the implications for “The Jerry Springer Show.”)

The impact on the relationship between editorial and advertising warrants an entirely separate article.

The issue for businesses who are developing their online strategies is whether they should focus their marketing dollars in partnerships with the big media companies or whether they should try to create their own content in an attempt to lure audiences to their own sites. For most companies, unlike Amazon and other dot-coms, most marketing and advertising budgets are not unlimited.

Let’s not forget that when the web first started becoming a major communications and commercial entity, we and others were praising the potential elimination of the so-called middleman. Finally, companies could directly reach their customers en masse instead of going through the media gatekeepers. The one variable was whether companies could create compelling enough content. After all, they were going up against the experts in entertainment.

Commerce as Content

Take note: When ABC and Warner Brothers partnered for a TV/web simulcast last November, the site brought nearly two million visits to watch a beer-chugging Drew Carey. Compare that to the 1.5 million who checked out the Victoria’s Secret Lingerie Show. The Lingerie Fashion Show offered by Playboy (a media powerhouse in its own right), also in November, attracted a meager 565,000 visits.

(We won’t speculate on the American public’s preference for some overweight guy in Cleveland over scantily clad anorexic women barely old enough to vote.)

There’s still potential for businesses to create their own content and attract users to their own sites. (Granted, not all company web sites will have the kind of content that Victoria’s Secret can deliver.) Long ago in broadcast history, Procter & Gamble set the precedent of creating content to attract audiences to their products – and thus was born the “soap opera.”

But the question remains: Can advertisers draw their own audiences to their own sites without the middlemen of media giants? Here’s some age-old advice that is still relevant. Companies who want to create their own content and entertainment to draw people to their own sites need to focus on the networks’ biggest weakness: the ability to create very narrow and targeted content for their audiences.

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