Strata

TV apps are hot, but ad boom is a ways off

Tweet

There are a number of issues that must first be resolved


Originally appearing in Media Life Magazine by Mike Stern, Jun 1, 2011

It’s a story we’ve heard a thousand times before. A new app comes out, and zoom, it’s downloaded by great hordes of iPad owners. And so it was that when on April 29 HBO rolled out its app, HBOGo, which offers subscribers access to the network’s library of movies and shows. In the weeks that followed it was downloaded more than a million times.

Similarly, a Time Warner Cable app that allows subscribers to watch approximately 40 different networks on their iPads was downloaded more than 300,000 times the first week it was available.

That TV apps are so popular should hardly be surprising, opening up as they do a whole new platform for viewers to watch TV wherever they are, 24/7.

And of course all those new viewing opportunities open up all sorts of new opportunities for advertising.

Imagine the possibilities: targeting iPad users by demographic, by time of day, even by location, say within 10 blocks of a restaurant as the dinner hour approaches. It could signal a whole new era in television advertising.

“The world has changed and it’s important to be there,” says Matt Murphy, senior vice president of Digital Video Distribution for Disney and ESPN Networks, which recently released an app that delivers content from several of the sports channel’s networks including their flagship and ESPN2.

But while TV viewing through apps may be set to take off, it could be some time before we’ll see a flush of new opportunities for advertisers. It could be a year or two away.

A number of issues need to be cleared up first.

“Until there is some sort of overall understanding of how it’s being run it’s not something we would participate with,” says Michelle Freed-Gold, president of Intellimedia, the media division of Diccicco Battista Communications of Conshohocken, Pa.

One major issue, and a headline grabber in recent months, is who does and doesn’t have the rights to stream content to iPads and similar devices. Is it the content creator, a cable network, say, or the cable provider?

It’s not hard to see how each could claim the right to deliver content via iPads and other mobile devices. The content creators can argue that their content belongs to them to distribute how they please, as long as it doesn’t directly violate an existing distribution agreement.

The cable distributors can argue that in paying for programming to deliver to their subscribers, they obtain the right to distribute it via whatever means they choose, including apps.

That’s exactly the argument made by Time Warner when it launched its app. News Corp, Viacom and Discovery disagreed and asked that their networks be removed. Viacom even filed a lawsuit, which has yet to be resolved.

“This is very common whenever new media come into the public sphere. There are usually a lot of competing interests and a lot of scrambling,” says Paul Levinson, a media professor at Fordham University.

“When Time Warner made deals with [cable networks] nobody foresaw that apps would be some kind of issue. That’s why now everyone is trying to claim as much as they can get.”

But when it comes to advertising via apps, the legal issues, while interesting, are not likely to slow things down;  both cable providers and networks are continuing to push ahead with their app strategies as the legal issues are worked through.

A far bigger issue for media buyers is how TV viewing through apps will be measured.

Nielsen plans to include iPad viewing as part of the company’s “extended screen model,” used to measure video viewed on desktop and laptop computers.

But under that system ads on the stream have to match those of the broadcast exactly; otherwise they won’t be counted.

That requirement denies the networks and cable providers the opportunity to serve separate sets of ads to iPad viewers—ads that could potentially be targeted to consumers’ likes and preferences the same way other online advertising is served.

Until a different measurement system emerges, much of the advertising potential of apps will remain unleashed.

But even if targeted ads were measurable, advertisers would stay face a significant hurdle: tracking their ads.

Currently only Apple has access to that information, explains John Shelton, CEO of STRATA, which develops software to connect media buyers and sellers. “That’s an issue the cable companies and Apple are discussing.”

Even when those measurement and targeting issues are resolved, there remains the question of just how effective iPad advertising will be. It’s a whole new screen and a whole new viewing experience.

“What are [viewers] doing when the commercial comes on?” Intellimedia’s Freed-Gold wonders.

“Are they minimizing and doing something else? If so the model may need to be more about click-through, so we know how many are paying attention.”

Story originally appeared at www.medialifemagazine.com: http://www.medialifemagazine.com/artman2/publish/Research_25/TV-apps-are-hot-but-ad-boom-is-a-ways-off.asp

ABOUT STRATA

STRATA is the nation’s leading provider of media buying and selling software.  The custom solutions supplied by STRATA empower clients to sell and efficiently purchase all media types including cable, broadcast, newspaper, radio, outdoor and digital advertising mediums.  On average, over $50 Billion in advertising dollars flow through STRATA systems per year. 

The whole-scale changes that are occurring in this fragmented media landscape require a customizable and convergent solution. STRATA provides the technology to enable organizations to lead rather than react.  By transforming the way advertisements are placed and tracked, STRATA adds efficiency and precision across traditional and emerging platforms.

Headquartered in Chicago, STRATA has been supplying solutions to the media buying and selling industry since 1983.  STRATA is owned by Comcast Cable http://www.comcast.com/.  For more information, visit www.gotostrata.com http://www.gotostrata.com or call (800) 9 STRATA

For more information: www.gotostrata.com,
www.facebook.com/STRATA and on Twitter - @gotostrata

For Further Information
Contact: J.D. Miller
Director, Marketing and Communications
STRATA             
312) 222-1555