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2017-05-23 09:49:02
Advertising: Networks Offer Taste of TV’s Ad Future. Marketers Are Hungry for More.

America’s biggest television networks invited advertisers to New York institutions like Carnegie Hall and Lincoln Center last week, giving them an early glimpse at their fall lineups and treating them to lavish parties and a parade of stars including Stephen Colbert, Kim Kardashian and Tony Romo, all with the aim of attracting billions of dollars in advertising by the end of the summer.

The tradition dates to the 1960s, when viewing habits were entirely different. And while the networks have spent the past few years trying to convince marketers of their digital prowess despite falling ratings and new platforms for watching TV, Silicon Valley seemed to cast an especially long shadow this year.

There was lots of talk about brand safety and snarky comments from the stage about online giants like Facebook and Google — NBCUniversal’s sales chief said that “an algorithm” could not have predicted the success of “This Is Us” or the latest season of “Saturday Night Live” — but there was also an acknowledgment that, although the television ad market remains remarkably strong, the shift to digital platforms is undeniable, and their continued growth is inevitable.

“Most networks are starting to recognize that the standard model of 18 minutes of 30-second spots in a 60-minute show will never grow and is probably not sustainable,” said Ben Winkler, the chief investment officer at the agency OMD. “Just making more compelling shows is not going to solve that problem.

“That goose continues to lay golden eggs; they’re just smaller every year,” he continued, adding, “This is the same challenge the record companies had: How fast do you shift to a new model at the risk of your existing, lucrative one?”

Turner Broadcasting, which owns channels like CNN, TBS and TNT, especially impressed advertisers with its presentation. The company emphasized its willingness to experiment with new, longer formats for traditional commercials and said it would continue to reduce the number of ads it runs during shows. It is risky to cut back on ad inventory, especially as ratings decline, but the company contends that doing so creates a better viewer experience and more effective, engaging commercials.

Turner also highlighted its new data and audience-targeting collaboration with its rivals Viacom and Fox Networks Group and the number of video-on-demand rentals its properties commanded in the first quarter.

“I was really kind of blown away by Turner,” said Lou Paskalis, an executive at Bank of America Merrill Lynch who oversees paid media investments. He said the company’s presentation, as well as some of the new advertising ideas discussed by Fox Networks Group and CBS, addressed the major concern that he and other marketers shared: How do you compete for consumers’ attention, especially as they move to block ads and turn to platforms like Netflix, where running commercials is not an option?

“If the consumer’s in control, you have to figure out how to adapt your consumer experience to the device they’re going to consume your content on,” he said.

Ad buyers were intrigued by the Fox group’s decision to stop selling traditional commercials on the FX network’s digital and on-demand properties, and by the potential for marketers to be a show’s sole sponsor. (In those cases, viewers can choose to watch a 60-second message from a brand at the start of a show in exchange for watching the rest of it without commercial breaks.)

The Fox group also discussed a new system for measuring the effectiveness of ads on its online properties to help marketers determine which versions to use just hours later on traditional TV.

That fits into a broader narrative in the TV industry, in which executives have long complained that as Americans increasingly watch shows on an array of devices, and do so outside the three- or seven-day windows that are now measured, networks are not getting full credit for their total audience figures.

It was clear during the presentations last week that the networks believed advertisers were giving technology companies too much credit. As expected, each network touched on brand safety, an obvious topic amid the revelation that ads for brands like AT&T had been discovered on YouTube videos with terrorist-related and racist content. But the criticisms extended beyond that.

Joe Marchese, Fox Networks Group’s new ad sales chief, dismissed Facebook’s claim that it could offer advertisers a “Super Bowl on mobile every day,” saying that the number of video ad minutes available in Fox’s prime-time broadcasts “dwarf” those on YouTube and Facebook.

Linda Yaccarino, NBCUniversal’s ad sales chief, expressed skepticism that people “liking” an ad or product on Facebook actually led to sales. And Les Moonves, the chief executive of CBS, cited Amazon, Apple and Google as companies that, like the network, were “all about mass audience” while noting that all three also paid to advertise with CBS.

Still, the new ideas about advertising did not dominate the presentations, in part because the concepts are still evolving but mostly because the traditional way of selling TV ads remains the biggest moneymaker for the networks.

“The statement used to be ‘digital pennies for TV dollars,’” said Mike Law, executive vice president for video investments at Amplifi, Dentsu Aegis Network’s investment arm. “Now it may be digital nickels for TV dollars, but the vast amount of revenue these networks are generating is coming from TV. In a marketplace we think will be down a little bit in spend volume, networks getting their fair share of revenue is critical to them.”

That may have to change, particularly now that networks have given marketers a taste of new possibilities. Mr. Paskalis of Bank of America, for one, was left wanting more.

“The thing I’d like to see the most, frankly, is even more focus on user experience and opportunities for marketers to join the conversation around the programming than just advertise adjacent to the programming,” Mr. Paskalis said. He offered examples like creating polls in advance for marketers to run related to particular plot developments in scripted shows and allowing brands to sponsor limited commercial interruptions.

“How can marketers do more to add to the experience,” he said, rather “than just be the tax you have to pay to enjoy the experience?”