purple motes

Most television watching is best modeled as a two-stage decision process. First, a person decides to watch television. That means the person sits on a couch and stares vacantly at a large screen a few yards away. Then the person decides what to watch. That means choosing among current, salient video programming offerings. These two decisions are very loosely connected.

The behavior of persons who own a digital video recorder (DVR) is consistent with this decision model. In the U.S., households with a DVR use it for at most 25% of their television viewing time.[1] In the UK, households with a DVR use it even less -- about 14% of television viewing time.[2] Most of the time, persons can't be bothered to record and watch programs pre-selected from the huge universe of programs available to be recorded.

Persons don't even bother to record programs so that they can skip advertising. When UK DVR owners were asked about how they use their DVR, 40% reported regularly fast-forwarding through adverts, while 42% reported never fast-forwarding through adverts. When specifically asked, 78% claimed to always or almost always fast-forward through adverts when using the DVR.[3] Evidently persons can't remember well their immediate viewing behavior with respect to adverts. More significantly, persons who aren't using their DVR surely aren't fast-forwarding through adverts.

Average time spent watching television is likely to change neither quickly nor by a large amount in response to changes in the relative value of media use opportunities. Differences in video programming have little effect on aggregate television viewing time. New services offered on computer screens and mobile screens --- video sharing, social networking, community news and information, in-depth learning opportunities -- are similarly likely to have little effect on aggregate television view time. The amount of leisure time available (total working hours, weekday versus weekend) and socio-economic characteristics affecting broad patterns of life -- educational attainment, employment status, presence of children at home -- largely control television viewing time.

A recent IBM-sponsored survey has media pundits discussing the decline or explosion of television, but the survey actually provides rather weak evidence. The survey was an Internet-based survey, not a random sample of some relevant universe. Persons who respond to an Internet-based survey are likely to use the Internet more than average adults. U.S. respondents to the survey were 71% women and 27% persons ages 18-24, while U.S. adults (persons 18 and over) are 51% women and 13% ages 18-24.[4] Thus the survey demographics highly over-represent women and young adults.

Most significantly, persons who have commented on the results of the survey generally don't seem to understand what was reported. The press release for the survey reported that "personal Internet time rivals TV time." In the survey, "personal Internet time" meant Internet use at home and on "personal time at work."[5] A survey in 2002 of a representative sample of U.S. adults found that employees with web access spent 3.7 hours per week in personal use of the Internet at work, and 5.9 hours per week using the Internet for work-related purposes at home. Both these time uses apparently count as "personal Internet use" in the IBM survey. Television isn't a feasible alternative for either of those time uses. Most workers in the cushy private sector don't have televisions in their offices, and watching television is almost never a work-related activity at home.

The challenge for traditional television isn't that television viewing time will decline rapidly. The challenge is that traditional television advertising, compared to personalized, action-oriented, performance-measurable advertising, will decline rapidly in market value.

Notes:

[1] Reporting on a telephone survey, June-July 2007, of a random sample of 1,800 adults in households with a TV (and a telephone), Leichtman Research Group stated that "over one in every five households" had a DVR and estimated that "95% of all TV viewing in the U.S. is still of live TV." These data imply that no less than 75% of DVR owners' TV viewing time is live viewing, i.e. distributor-scheduled programming. The extent to which persons record and watch television programs on analog videocassette recorders raises the estimated DVR owners' live TV viewing time. So does the extent to which DVR ownership is over 20%. An IBM-sponsored Internet survey found 24% of persons in the U.S. owned a DVR in April, 2007. See U.S. findings, p. 9. As discussed subsequently above, this sample isn't representative of the U.S. adult population.

[2] Spring, 2006 BARB measurements in households with Sky+ DVR.

[3] Ofcom, The Communications Market 2007, Section 1 Converging communications markets, p. 85. In Q1 2007, 15% of UK homes had DVRs, almost double the 2006 figure. See id. p. 69.

[4] See U.S. study findings, p. 4, compared to U.S. census data.

[5] U.S. study findings, p. 7, comparing "Daily Personal Internet Usage; Home and Personal Time at Work" to "Daily Television Viewing."

Tags: advertising, Internet, television, time use

3 Comments

Steve Outing observes:

For years, sports enthusiasts have read about their sports in magazines, mostly — with advice and celebrity profiles written by professional journalists and freelancers, and the occasional athlete. But what we’re seeing with the EG sites [here] (which are primarily about climbers/bikers/runners/et al sharing their own stories and images) is that people like being the writers and photographers themselves, and viewing the amateur musings of fellow enthusiasts who they can interact with easily and directly.

Some recent research is consistent with this view:

Advertisements featuring endorsements by celebrities such as David Beckham are less effective than those featuring ordinary people, new research suggests. This is because keeping up with the Jones's rather than with famous people is the main motivation behind many people's choice of which product to buy.[1]

Personally, I'm keen to keep up with my brother Dwight. But he is, in fact, a celebrity.

Note:

[1] Quoted from University of Bath press release (separate paragraphs condensed). The research that is the basis for this press release seems to be Torsten Tomczak, Daniel Wentzel, and Martin Brett, "Consumer Susceptibility to Normative Influence," forthcoming in Journal of Advertising, 2007. While that journal bills itself as "the premier journal devoted to the development of advertising theory and its relationship to practice," not making the paper and associated data freely available on the web makes this research less credible.

Tags: advertising, celebrities, sports, success

1 Comment

Content is glamorous. Stars, drama, action, romance, suspense. But if you want to understand how Internet video distribution will evolve, you've gotta get your nose into dull facts and the dismal science.

Video content has little relevance to aggregate patterns of video consumption. Growth in discretionary (leisure) time is closely correlated with time spent watching television. From 1925 to 1995 in the U.S., discretionary time increased by 15 hours per week. Over the same period, television watching time increased from 0 to 16 hours per week.[1] Television viewing time has expanded to fill growth in leisure time.

Television watching generates common patterns of human behavior irrespective of video content choices. Compare the US to the USSR in the mid-1980s:

In the mid-1980s television programming and broadcasting in the USSR was state-owned, state-controlled, and highly centralized. Households had little opportunity to choose between programs: 68% of households received two or fewer program channels. In contrast, television in the US in the mid-1980s was privately owned and commercially driven, and television offered viewers many programming choices; 88% of households received five or more over-the-air television signals, while cable systems, with median capacity of over 30 channels, passed 76% of households.

Despite these and other sharp contrasts between the US and the USSR, the television set, the way television was watched, and time spent watching television were remarkably similar. In both the US and the USSR the average viewer sat on a couch and watched a rectangular colored screen about two meters away. In the US in 1985 television viewing times for employed men and women were 14.6 and 12.1 hours per week respectively. In Pskov, USSR in 1986, television viewing times for employed men and women were 14.5 and 10.7 hours per week respectively.[2]

The sensory form of video, much more than its content, shapes the physical characteristics of viewing and the amount of viewing time.

Channel repertoire data also indicate common behavior across different content circumstances. In Beijing, China, in 2002, households received on average 37 channels of television. Viewers watched for more than ten minutes per week on average 13.5 channels. Viewers similarly watched per day (among days that included television viewing) on average 4.5 channels.[3] For comparison, in the U.S. in 2005, households received on average 96.4 channels, and watched on average 15.4 channels per week.[4] In Mexico in 2000, viewers watched per day (among days that included television viewing) on average 4.4 channels. Whether in China, the U.S., or Mexico, viewers behave similarly in the extent to which they switch channels on the television.

Video content probably has little relevance to substitution between traditional television viewing time and viewing video available through computer screens. Television sets are ubiquitous and part of the architecture of many homes (the "TV room"). Sitting inertly, killing time in front of the television, is a deeply ingrained habit for many adults. More video choices or better quality video is unlikely to greatly affect video watching. Talk of a schism between content creation and content aggregation and distribution seems to me to miss the main point. Video content creators compete among themselves for viewers with common behavioral routines. Common behavioral routines themselves are out of the scope of persons' boundedly rational behavioral optimization.

Changing common behavioral routines is more an issue of social change than product design. Joost describes itself thus:

Joost™ is a new way of watching TV on the internet, which uses new and established technologies to provide the best of both the internet and TV worlds. We're in the process of making it as TV-like as we can, with programmes, channels and adverts. You can also see some things that we think will enhance the TV experience: searching for programmes and channels, for example, as well as social features like chat.

To the extent Joost is like TV, how will it motivate persons to get off the couch in front of the television? Is searching for programs and channels valued experience? Recently the web has been abuzz with Joost's deal with Viacom. Why will users watch Viacom's content on Joost rather than on television?

A vague report on recent research findings, which I cannot track to the source, indicates that user-generated content is "more popular" on YouTube than professionally funded content. But what makes YouTube different from television is users generating content, not the user-generated content. What makes YouTube different is users sharing content, not the content that users share. It's about what people are doing, not what specifically they are watching.

Internet video provides a much better platform than television for creating advertising value through serving dynamic, relevant ads. As Martin Geddes insightfully observed on the value of television content:

So whilst the remote lets you adapt the primary content to your personal tastes, you’re stuck with whatever irrelevant junk they choose to insert in the ad breaks. So there’s a large and growing opportunity to fix the broken ad business. And that’s why TiVo is screwed. They fixed the wrong problem. The issue isn’t getting people to see the right programs. It’s getting them to see the right ads. They screwed up so big, they even gave you a feature to skip the ads. On their epitaph is will say “TiVo. Forgot where the money came from”.

Inferior content with high-value advertising will make superior content with low-value advertising not worth producing.

* * *
[1] See Galbi, Douglas (2001), "Some Economics of Personal Activity and Implications for the Digital Economy," Section I.

[2] Ibid.

[3] Yuan, Elaine J. and James G. Webster (2006), "Channel Repertoires: Using Peoplemeter Data in Beijing," Journal of Broadcasting and Electronic Media 50 (3) p. 532.

[4] Report based on Nielsen Media Reporting data.

Tags: advertising, content, distribution, valuing potatoes, video

1 Comment

Microsoft's Steve Ballmer, recently honored as Bureaucrat of the Month, has identified advertising-funded business models as Microsoft's top concern:

Today, the big phenomenon that we can embrace - the big fat thing for us to think about, embrace, endorse, compete with - is what does ad-funding mean? Whether it is for search, or whether it is for business-services, or whether it’s for other online services, what does that funding mean as a competitive business model and do we embrace it as is? Do we modify it? Do we just compete with it, with more of a transaction or subscription model? But how we deal with that is a Job One issue.

Advertising spending as a share of GDP has been relatively constant across large changes in media. This past constancy provides useful background for thinking about innovations in advertising business models.

Google targets textual ads to moment-specific user desires indicated by user search queries. Demographic and interest segmentation and targeting has long been a central concern in the advertising business. Targeting advertising based on search queries effectively segments individual persons. Ads depend on what you want right now.

Less noticed has been innovation in another direction of advertising. Brand advertising typically has depended on expensive, mass-media ad campaigns. Online marketing campaigns, in contrast, depend on more diffuse patterns of example and influence. New sorts of online advertising relationships, such as pay per post, sponsorship of bloggers, or endorsements by bloggers, require working out norms of integrity, respect for personal relationships, and fair disclosure. But the challenge of working out online advertising norms shouldn't be exaggerated. Logo-branded clothing typical requires users to pay extra to advertise fashions in their daily interactions with others. That's not even controversial. Ethical online brand advertising is likely to be a major advertising growth area.

Consider, for example, Life of a Farm blog. As Jonathon Trenn notes, the blog offers the authentic voice of Joel Combs, a small farmer, describing details of his life. Joel uses a Mahindra tractor. Mahindra Tractors clearly sponsors the blog, which is hosted on a Mahindra domain and includes a Mahindra logo on the right. Mahindra Tractors' connection with Joel through this blog speaks to how they understand who they are as a company and contributes to the meaning of their brand. At the same time, each post seems to include at least one link to Mahindra Tractors. Those links don't detract at all from the personal quality of the posts. But it seems to me that the brand value of the Life of a Farm blog is not in its explicit links, but in bringing Mahindra's brand into the real life of a particular person.

This is the sort of guy who uses a Mahindra tractor:

Unfortunately my Chevy truck is on the fritz. The stupid thing will just die on you for no reason. It may go a mile or 30 miles then usually starts right back. I suspect it is the PMD (Pump Mounted Driver) on the injector pump. $389 new, wow that hurts! I’m seriously considering changing brands when I get it fixed. I have always been a GM guy, but I don’t think I will ever own another GM diesel truck. That kind of puts me in a bind though because I absolutely worship Trans Ams and I can’t see driving a Ford or Dodge truck and a completely opposite brand car. I’m sure Mustangs are fun to drive like TAs, but I like the T-tops and 6 speed tranny in the TA. Not to mention that thing still runs great at 187,000 miles.

This guy also loves a Mahindra tractor. That's an impressive endorsement of Mahindra Tractors.

Tags: advertising, business models, farming, growth

1 Comment

A product sure to make you smile. The more you eat, the better you feel. Now I know how my friend Jon achieved his championship form.

Tags: advertising, branding, flatulence, telco

Offer Comments