Embrace the Video iPod

It's not the end of TV advertising as we know it
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Chicken Little analysts are always foreseeing doom for “old” media every time some form of “new” media pops up.

As if podcasts, blogs and cellphone TV weren't bad enough, some on Madison Avenue are perturbed by Walt Disney Co.'s decision to distribute ABC prime time series such as Desperate Housewives and Lost as iPod video downloads. They fear that the downloads will undercut regular TV ad sales.

But the sky isn't falling. Indeed, the clouds are lifting. While the move raises big questions for traditional ad agencies, it is not the end of TV advertising as we know it.

Think about it. iPod video releases don't have advertising in them—at least not initially—and maybe not in big numbers ever. They are a factor more in product-placement deals where the brands are integrated into the content. “I don't think it's going to hurt the ratings of any of these programs by having it available on iPod, because the people who will download these programs are not the type of people who are likely to be at home to watch them in the first place,” says Steve Sternberg, executive VP/director of audience analysis at Interpublic's Magna Global USA media-buying unit.

Agency executives see the networks' foray into new media mainly as an experiment. Down the road, certainly, the download model could influence programming decisions. “What do the networks do if a program does not get good ratings on a traditional broadcast but is one of the most downloaded shows over the Internet?” asks Sternberg.

Ultimately, the networks have no choice but to embrace online media and marketing platforms that give more control to consumers.

“They're acknowledging that there is a new customer state of mind. In the case of broadcast television, the customer is the viewer, and their state of mind is one of involvement and entitlement,” says Tom Beeby, executive creative director at interactive-media agency Modem Media. “Consumers now feel entitled to interact with the brands and entertainment properties that they patronize. They want to be able to shape them, comment on them and influence their content. They want to affect how they evolve. The smart money acknowledges and plays to that.”

That's especially true with younger demos. They are more apt to use different media—especially TV and the Internet—simultaneously. According to Carat Fusion, the interactive unit of media giant Carat USA, 18- to 24-year-olds can use about four types of media at the same time.

Networks are still trying to find their way with consumers. Beeby describes the use of online polling in Fox's American Idol as “admirable” but calls efforts like prime time blogs “amateurish.”

“It seems like they're just trying to get in on the newest thing,” he says, referring to CBS' recent fanfare announcement that it is “bringing blogs to prime time,” enlisting the stars, writers and producers of its prime time hits to post regular Web logs for viewers.

The move comes as some Madison Avenue insiders predict the blog craze is ready to bust. Even though some in the industry estimate that 8,000 new blogs are created each day, interactive-agency executives say it is mainly a grassroots movement of consumers communicating with each other with little commercial application. Blog networks have been formed to sell advertising, and one—Weblogs Inc.—was recently acquired by Time Warner's America Online unit. Agencies and marketers are also mining data from blogs to measure online buzz surrounding products, brands or media, but they so far have found few—if any—ways of marketing directly through them.

“If it's reached the point where it's become a propaganda machine, then it defeats the whole point of what blogs were supposed to be about,” says T.S. Kelly, director of research and insight at Media Contact, digital unit of media agency MPG USA.

Some think social networks—online communities that cater to the specific interests of certain types of people—hold the most promise for integration with marketing and selling. NBC used MySpace.com to preview prime time series The Office. Recently, News Corp. bought Intermix Media Inc., the parent of MySpace.com, for $580 million, a move intended to make the company a bigger player on the Internet; it may also be the basis for helping to promote other properties, such as Fox's prime time shows.

Cory Treffiletti, a senior VP at Carat Fusion, says the strategy makes sense for networks like Fox and NBC because they can create buzz for “tribes” of demographically connected groups.

“If you want to be in the content business, you have to play in different formats on a multitude of new platforms,” says Media Contact's Kelly. “iPods are just one of them.”

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