Broadcasting in Digital1 Jul, 2008 By: Jacqueline Renfrow Response
The 2009 transition will eventually change the way that Americans watch TV and the way that marketers buy media for broadcasting on sets, mobile phones and the Internet.
As far as marketers are concerned, "The ad business is relatively unworried; however, it has questions and measurement is one of them. How are we going to figure out where the pockets of unready homes are?" says Gary Belis, vice president of communication, Television Bureau of Advertising (TBA). "But I haven't been picking up on a lot of concern. The markets of opportunity ... that map isn't going to change."
MediaFLO just signed a deal with AT&T and already partners with Verizon Wireless to offer time-shifted television programs on mobile devices. After the 2009 digital transition, the company expects to see an increase in advertising created specifically for this format.
Further down the line, Belis does anticipate that digital substations will affect what markets advertisers buy, since there will be more choices and a larger demographic pool. But Belis notes there are innovations coming down the line that are already dealing with that change.
Dan Zifkin, president and CEO of Chicago-based Zephyr Media Group, says that eventually the transition will have an effect on what channels consumers choose with a paid service as a result of the increased amount of free choices on the spectrum.
"Those networks that are already large will keep subscriber growth," says Zifkin, "but it may increase subscribership for some smaller channels." The challenge is going to be how cable companies will package deals so that they can keep subscribers and not lose them to free programming.
"Everything has viewership to some degree, then it's about if the price is right," adds Zifkin. He also points out broadcast's increasing competition with video streaming on the Internet, digital video recorders (DVRs) and video downloading to mobile phones.
Rus Sarnoff, founder of Los Angeles-based Integrated Marketing, says that the digital switch may not be all good news for the marketing industry.
"Consumer behavior over the last decade has become more and more deeply impacted by new customer acquisition online," he says. While it used to be only a small percentage of new business came from online, that number is now somewhere between 40 and 50 percent. "The importance of the Internet cannot be underestimated by DR marketers, especially those working in the traditional DRTV space."
Why is online in direct competition with broadcasting? Because online advertising is relatively cheap, if not free. "This convergence, where traditional broadcast content is about to merge with online content, is going to force more and more free offers; more and more lead generation," says Sarnoff. Therefore, DRTV marketers are going to be forced to start working more closely with online content and switching up their offers accordingly.
Broadcasting Outside the Box
While traditional DRTV marketers prepare for the 2009 television transition, they are also keeping an eye on the emerging popularity of broadcast to mobile. Gary Levy is the director of marketing at Sunnyvale, Calif.-based Telegent, a company started in 2004 that designs technology for mobile television. Telegent's technology works with existing broadcasting mechanisms, such as the signals and towers, and makes the signal smaller and lower-powered for phones (known as free-to-air). Telegent believes in tapping into a large market that already exists, rather than reinventing the wheel.
"At the end of the day, consumers have shown they're not interested in paying for content if they don't know what it is," says Levy. He also says that consumers don't want their programming time shifted. Telegent's technology offers consumers the news and sports in real-time, so they can catch updates on the train to work or on a lunch hour. Currently Telegent primarily markets itself — through mobile phone companies and operator stores — as an entertainment device. But its uses go beyond that. For example, in China, free-to-air played a large role in the recent earthquake. People in remote villages were able to watch news broadcasts on phones to stay updated and to gain hope that rescue workers were on the way.