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The Story Of Mobile vs TV

For 50 years television has taken a unique place in our lives. But the incoming media ecology is making the traditonal TV business model look pre-historic, say Tomi Ahonen and Alan Moore, authors of 'Communities Dominate Brands'...

Is that a flat screen in your pocket... or are you just pleased to see me?
The story of Mobile vs TV

By Tomi Ahonen and Alan Moore

[Register and post your own comments on this article below...]

Over the last 50 years television has taken a unique place in our lives, culture and homes. Not only do we spend hours in front of the ‘box’, but, there are hundreds of magazines and websites devoted to TV. We even plan the layouts of our homes around the TV set or plasma screen. But TV's role as the ‘key’ channel to the consumer, are today numbered.

Even with the appeal of music videos and reality TV, we have observed the younger generations shifting their time from TV to the internet via MSN, video-gaming and the mobile phone. Television and broadcast plays an increasingly different role for Generation ‘C’ or the Community Generation.

TV here today – where tomorrow?

But of course at the moment TV advertising spend is still increasing - The comfy cardy of the 30 sec spot lives on. It is very cosy. And it’s not that TV advertising will go away - its just that the notion that we have to get everybody all in front of the box - ALL at the same time, to get the eyeballs etc. Is looking pretty prehistoric - shrinking TV audiences are coveted still – but as Bob Garfield wrote in a recent AdAge article.

“they are the last vestige of mass media and marketing”

In fact, we argue that the term ‘mass media’ is becoming an oxymoron. Quoting Andrew Robertson, the CEO of the BBDO advertising agency (the world's third largest), on April 7, the FT's front page headline stated “mobile phones will replace TV as most important medium." BBDO quoted a study of 3,000 consumers around the world, who placed the mobile phone ahead of TV as the device they preferred. In fact with the mobile phone and the internet, TV finished a distant third.

And here are some nitty-gritty stats –

• According to Nielsen, network TV audience has eroded an average of 2% a year for a decade, although in the same period the U.S. population increased by 30 million.

• In the last sweeps period, for the first time, cable commanded a larger audience than broadcast.

• The cost of reaching 1,000 households in prime time has jumped from $7.64 in 1994 to $19.85 in 2004.

• A 2000 Veronis Suhler Stevenson survey showed that Americans devoted an average of 866 hours to broadcast TV annually and 107 to the Internet, a ratio of 8:1. The projection for 2005 had the TV/Internet ratio at 785 hours to 200, or just under 4:1

In preparing the research for our latest book, Communities Dominate Brands, Alan Moore and I found the TV broadcast industry struggling with multiple overlapping disruptive elements. On the one hand there is the explosive expansion of channels, from a handful in the analogue days to hundreds that are now available on digital and satellite systems. The content owners have multiple technical means to deliver the branded content, from DVD sales to internet programming to videogaming and mobile phones. Consumers are changing, and arming themselves increasingly with tools to control and enhance their viewing lives. The success of TiVo and Sky+ are based in part on the ability to skip past TV ads. And of equal importance is that we have become the schedulers and editors of what we watch, when we watch, where we watch audio-visual content.

Most alarmingly for traditional TV, the business model is under attack. Television still has the largest share of advertising revenues worldwide, but TV ads are increasingly being seen as ineffective. More and more alternative options emerge for the marketing communications budgets from the internet and mobile phone ads to product placement and more innovative methods. For TV producers themselves, new revenue streams are emerging, in particular the rapidly popular mobile phone-based participation, such as voting on reality TV shows like Pop Idol. Endemol the owner of Big Brother already earns a quarter of its revenues from telecoms related income streams.

“It’s an inevitable kind of slow collapse of the entire mass media advertising market,” says J.D. Lasica, author of Darknet: Remixing the Future of Entertainment and president of the Social Media Group consultancy. “What we’re seeing is that not only does television have to reinvent itself from the content point of view, it has to reinvent itself as an advertising medium.

TV-to-mobile convergence

The shift to ever more subscription services on TV has already seen the USA become the first country where subscription revenues exceed advertising revenues. The UK saw that cross-over point just a few months ago. What is perhaps even more revealing is the impact of mobile phones to TV. In Finland, the country where mobile phones first reached total population penetration back in 1998, the TV industry is innovating rapidly with mobile services. Converged digital services include the SMS-to-TV chat boards that run on all commercial TV channels all night, replacing the infomercials, and generate 1000 premium SMS text messages per hour. Games and Avatars have been introduced and the latest gimmicks is "SMS-to-TV rap" - by which young rapper wannabes send their rap lyrics to the virtual rapper on TV, and two live DJ's comment on the lyrics.

Broadcast terrestrial television has enormous power and influence. But with digital convergence and new technologies, TV has to evolve. For the first time over the past few years it has become practical to engage the viewership, from sending in comments to news shows to sending in picture snapshots taken with cameraphones. In theory this was also possible with the internet, and could be done with the interactive buttons of digital TV. Yet TV viewers all over the world have indicated clearly that their preference is to use the mobile phone as the interface to interactivity with TV.

Where does that bring us? On the one hand there is an enormous opportunity. Customers are willing to spend their own money in premium SMS messages to be able to participate. The ability of the mobile phone to cannibalise other communication and payment forms is phenomenal. In a recent London charity occasion for children run on radio, 40% of all donations came via premium SMS text messaging.

A new media ecology

On the other hand TV production companies, advertising and the programmes themselves need to evolve to engage the viewer. The time for interruptive advertising is drawing to a close. Viewers will simply tune out or skip the TV ads that interrupt. Marketing professionals need to learn a new skill, how to invite viewers to become active with the brand, to share in it, to engage.

It's not about the big audience anymore – it's about attracting communities of interest around content that has significant value to them. Scale disappears.

The key thing is economics of scale is going to disappear. That’s really what the issue is. Our business has been built on the economics of scale. And instead we’re going to go into the economics of re-aggregation. Which is how do you get 10, 20, 30, 40 thousand people instead of taking in 250 million and making them into 12 and 30 million dollar segments. How do you re-aggregate one at a time into the tens of thousands?” as Rishad Tobaccowala argues - and that content could be delivered on a multiplicity of devices.

This is a radical turn-around in the communication model. Previously TV ruled above all others, whilst TV ads were King. TV once was the sole destination for information, entertainment etcetera, so it made sense that this is where the battleground for influencing consumers was. Not today - today we live in, and experience a media ecology, made up of the mobile phone, the internet, MSN, VOD VoiP TV, Cinema, email, etc., It’s a very different world that requires very different solutions.

It's not a question of “IF” its more a question of “WHEN” and are we ready?

[Register and post your own comments on this article below...]

--------------------------

This is the second in a series of four articles Alan Moore and Tomi Ahonen are writing for NMK exploring themes from their new book 'Communities Dominate Brands'. Check back for more articles between now and the end of May.

Read the first article: From Customer To Community

About the Authors:

Alan Moore, branding and advertising expert, is CEO of SMLXL, the engagement marketing specialist firm. www.smlxtralarge.com. Alan is speaking at the conference In The City Interactive (London) on 7 June at the ICA which will bring together content creators and distributors to explore the issues and opportunities facing us in the convergence era.

Tomi T Ahonen is a bestselling writer and a consultant in technology and telecoms, especially the emerging areas of next generation wireless. Ahonen set up and headed Nokia's Global 3G Business Consultancy Department and wrote the world's first book on 3G services ‘Services for UMTS’ (2002) and its follow-up, ‘3G Marketing: Communities and Strategic Partnerships’ (2004). www.tomiahonen.com

About The Book:

‘Communities Dominate Brands’ by Tomi Ahonen and Alan Moore is published by and available to buy from Futuretext in April 2005. www.communities.futuretext.com

The book also has its own blog at http://communities-dominate.blogs.com