Within hours of each other, CBS and HBO made very clear their intentions to go after “cord cutters” – consumers who have Internet access but don’t have cable subscriptions. This move is not only creating new avenues to reach new consumers, it’s also creating new avenues for advertisers and bringing us closer to the future of media consumption.
While the already-launched CBS All-Access is not much different than what Hulu Plus is currently offering, it continues the strong trend toward Internet content that media companies have been pushing toward in recent years.
“It’s not completely unique,” said Tier10 Media Director Olivia Devereux. “You can already watch programming on ABC Go and various cable network programs without having to be a cable subscriber. I think this is the way things are going, and it’s going to be able to add another layer to the media mix.”
Devereux, who’s been in media planning and buying for nearly two decades, added that this move benefits both media companies and advertisers. For the company, it will add a new revenue stream, while advertisers will have more options to reach varied audiences.
CBS, for instance, has historically had an older audience. This online package is a move to target a younger, tech-savvy audience and the estimated 10 million U.S. households that have an Internet connection but don’t have a cable subscription. The same intention can be said for HBO, whose move is a little more unique since the channel has never been available outside of a cable subscription.
If more premium channels and media companies continue this pattern, it would provide consumers with a more appealing a-la-carte channel subscription option. Why pay for a full cable package of over 100 channels when you only watch five of them?
Advertising on Internet programming will also allow for better targeting of consumers, increasing the effectiveness of an ad’s message. If consumers would rather buy channels a-la-carte and advertisers find Internet audiences more effective to reach, then the already-maligned cable companies will be forced to change.
“I would assume that cable companies are a tiny bit nervous about this, but they are developing new tools to try to stay relevant,” Devereux said. “Selling addressable advertising, for example, where they use set-top box data to target households is one direction. Cable is using big data like everybody else, and they know what type of cars people drive, their household income and exactly what they’re watching.”
Devereux said this allows for more flexibility and better targeting for a cable media buy. For instance, if a local Acura dealership is running an ad at 9:17 p.m. on a specific channel, at the same time one targeted audience will see a spot for a TLX and another will see a spot for an MDX.
The same can’t be said for Internet TV – at least right now. While the ability to geo-target an Internet audience exists, there is no unified buying program or buying source for specific websites – what Devereux calls “premium inventory.” Therefore, outside of national spots, buying at the local and county level just doesn’t easily exist yet. The fastest way to target in-market consumers now is through programmatic and buying digital ads purchased through ad networks.
“The thing with programmatic is that it’s all remnant space, and it’s a race to the bottom for the lowest cost-per-thousand,” she said. “But content and context matter, and people will pay more for premium placement and premium content. There are a lot of less-than-awesome websites out there where people are seeing ads because sites are selling their remnant inventory to these ad networks.”
In addition to added revenue for the media company, there are peace-of-mind benefits for the advertiser and the consumer when there is an ability to know exactly where your message will show up.
She added, “Your ads are associated with something positive with a proven track record. I think that audiences are aware of what they’re looking at when they see an ad. You’ll sometimes see ads that look out of place or low budget on a site. There may be a place for it, but it shouldn’t be the extent of your online advertising. There needs to be another way to buy online easily. You can do it now, it’s just not easy.”
Devereux said that it’s now just a waiting game for her and her team until someone invents that easy way to buy local, geo-targeted ads on premium sites.
“I’d like to get my hands on it,” she said. “I don’t know how long it will take. But when they do build it, we’re there.”