The Future of Television? Advertising, Technology and the Pursuit of Audiences
Total Page：16
File Type：pdf, Size：1020Kb
The Future of Television? Advertising, technology and the pursuit of audiences Marissa Gluck Radar Research Founder & Managing Partner Meritxell Roca Sales University of Southern California Visiting Professor, Annenberg School for Communication Annenberg School for Communication University of Southern California Norman Lear Center September 2008 1 The Norman Lear Center The Future of TV ADVERTISING, TECHNOLOGY & THE FUTURE OF MEDIA Advertising, Technology & the Future of Media (ATFM) is a joint project of the Internet Interdisciplinary Institute of the Open University of Catalonia, the Barcelona Media Center at the University Pompeu Fabra, and the USC Annenberg Norman Lear Center. Annenberg Professors Manuel Castells and Martin Kaplan are leading the project, which analyzes how new technologies are transforming the advertising industry and the global media business. The Norman Lear Center Marissa Gluck The Norman Lear Center is a nonpartisan research As managing partner of consulting and public policy center that studies the social, firm Radar Research, Marissa Gluck political, economic and cultural impact of is a writer, speaker and consultant entertainment on the world. The Lear Center covering the marketing and media translates its findings into action through testimony, industries. Considered to be an journalism, strategic research and innovative public expert on digital marketing and tech- outreach campaigns. On campus, from its base in nology, Gluck has often been quoted the USC Annenberg School for Communication, in media outlets such as The New the Lear Center builds bridges between schools York Times, The Wall Street Journal, and disciplines whose faculty study aspects of Advertising Age and Business Week. Additionally, she has entertainment, media and culture. Beyond campus, appeared on CNBC, CBS Marketwatch, CNNfn, and NPR. it bridges the gap between the entertainment Gluck earned a B.S. from Binghamton University and two industry and academia, and between them and the Masters Degrees in Global Media and Communication public. Through scholarship and research; through from the London School of Economics and the University its conferences, public events and publications; and of Southern California. She also serves as adjunct faculty in its attempts to illuminate and repair the world, at the University of Southern California, teaching a course the Lear Center works to be at the forefront of on virtual communities. discussion and practice in the field. For more information, please visit www.learcenter.org. Meritxell Roca Sales Meritxell Roca Sales came to the University of Southern California Annenberg School for Communication in 2008 as a visiting associate professor. She was born in Barcelona (Spain) where she currently works as a researcher at Open University of Catalonia (UOC), performing research on free software, media stereotypes and mass media in a digital environment. She also teaches journalism at Blanquerna School of Communication (Ramon Llull University). She received a B.A. in Journalism and a Ph.D. in Communication and Humanities from the Ramon Llull University. 2 The Norman Lear Center The Future of TV TABLE OF CONTENTS Executive Summary ..............................................................................................3 Introduction ......................................................................................................... 5 The crisis in the television and advertising industries ................................5 Responses to the crisis ..................................................................................9 The future of television? ............................................................................12 Historical overview .............................................................................................14 Television history: the boob tube? .............................................................14 Technological challenges ............................................................................20 Advertising history: urbanization and the origins of the ad industry .....23 Advertising's creative revolution ..............................................................25 Today's advertising industry .......................................................................27 Reasons for the crisis .........................................................................................30 More options for audiences .......................................................................32 Audience empowerment ...........................................................................40 Audience empowerment: online content ........................................41 Audience empowerment: time-shifting experiences ......................46 Audience empowerment: piracy and unlicensed content ..............50 Changing metrics and creative formats ...................................................57 Accountability creates expectations .................................................57 Measurement overview .....................................................................60 Measurement monopolies .................................................................61 Changing creative formats ................................................................69 Response of the advertising industry ................................................................74 Agency transformation ..............................................................................74 Economic changes .......................................................................................74 Budget cannibalization .....................................................................74 Compensation models .......................................................................77 Capital structures ...............................................................................82 Organizational disruptions ........................................................................83 Response of the television industry ...................................................................87 Brand integration .......................................................................................87 Online content ............................................................................................92 Online (and offline) retail sales ................................................................103 Acquisitions of digital content sites .........................................................109 Experiments with ad formats ...................................................................111 Programming adjustments .......................................................................112 Conclusion .........................................................................................................115 Bibliography ......................................................................................................132 Figures List ........................................................................................................140 Appendix A .......................................................................................................142 Appendix B .......................................................................................................159 3 The Norman Lear Center The Future of TV Executive Summary A global crisis in the advertising industry, largely linked to the impact of the Internet, is transforming the business model of media industries, the content they create and distribute, and the audiences who consume that content. New technology has transformed the global media environment from one organized around passive media consumption to a far more complex environment – mo- bile, multitasking, on-demand – where consumers have more control over where, when and how they interact with media. As audiences shift from TV and print to the Internet, advertising revenues splinter across different segments of a media industry that is increasingly diversified in its platforms for content distri- The restructuring of the advertising bution. Since advertising is the predominant financial basis of the entire media industry will have industry, the restructuring of the advertising industry will have an extraordinary an extraordinary impact on the media impact on the media landscape. landscape. This impact will vary with context, in terms of cultural differences and distinct regulatory environments. Thus, an understanding of such a major global trend will require a comparative perspective in the analysis. In order to understand the potentially profound impact that these changes will have on the global media environment, the USC Annenberg Norman Lear Center, the Open University of Catalonia, and the Barcelona Media Center of the Univer- sity Pompeu Fabra have launched a research project devoted to the study of Advertising, Technology & the Future of Media. The Future of Television? – co- authored by communication scholar Meritxell Roca Sales and media analyst Marissa Gluck – is the first research report to be issued by this project. It offers a systematic analysis of the crisis in the advertising industry in the United States 4 The Norman Lear Center The Future of TV and its effects on the broadcast television business. This report includes informa- tion gleaned from in-depth interviews with executives in the media and advertis- ing industries located in Los Angeles, and from the systematic collection of data on the crisis in the advertising industry, particularly