Television's Best Days Are Ahead

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We've all heard the claims (usually made by people working at tech companies) that television is doomed. These claims are backed up by evidence that at first blush looks compelling, including TV's declining share of audience time, the proliferation of time-shifting digital devices such as Tivo, and the increasing availability and popularity of non-TV forms of video, including YouTube and its competitors.

But television, a form of media that has been with us for more than 70 years, isn't about to lie down and die. It will adapt, as it has adapted before, to new threats, and in fact, its role in media consumption will likely increase in the next few years, driven by innovations that only now are beginning to arrive.

By far the most significant of these is the FCC's requirement that all televisions sold from March 2007 and beyond must contain digital decoder circuitry, and that traditional analog broadcasting will cease in February of 2009 (Americans who have not already upgraded their sets by this deadline will be eligible to receive coupons letting them purchase 3rd-party digital decoders).

So within two years -- a very short time -- "dumb TVs" will be consigned to the dustbin of history, and programming, wherever it comes from (airwaves, cable, satellite, or Internet) will flow within the digital domain. This change, in the works for more than a decade, represents the biggest technical change in television in many years, and has important ramifications for programming, advertising, and the economics of the business. It also will change and enhance television's role in the overall media ecosystem in many ways. Here are some of them:

1. Convergence (Real, not Imagined)

We've been hearing about "convergence" for more than 10 years now, and there have been numerous attempts to launch "convergence" devices and platforms (remember WebTV?). But digital televisions will naturally serve as central display devices for the consumer's entire smorgasbord of digital devices, changing the consumption landscape significantly. We've already got a good inkling of what this future might look like, thanks to Apple TV and devices like the Slingbox, which can wirelessly beam multiple media streams effortlessly among discrete devices. Add e-mail, search, and Web content to these streaming channels and you've got a real convergence device that, for the first time, interfaces with the way people traditionally enjoy television: in the den.

2. Transparency and Targeting

Smart TVs will provide automatic capabilities to disclose actual media consumption that provide the potential for a much more robust advertising medium than hitherto provided by analog broadcasting and its estimation-based rating services. Advertisers will be able to see, in real-time, the effectiveness of a given ad campaign using criteria similar to those used by search marketers. This transparency, along with better targeting, will benefit advertisers (who will be able to create more winning campaigns) and users as well (who will see fewer useless ads). The result may well be a renaissance of performance-based, permission-oriented marketing.

3. User Control

The new generation of smart TVs will give users, already exercising control thanks to Tivo, increased power to personalize their viewing experience and screen out irrelevant or intrusive commercial messages. It also will let them increasingly participate in what historically has been a one-way entertainment experience. For example, the latest Tivo devices provide consumers a way to create digital video content and "broadcast" it to Tivo users who might want to see it. This environment will erase the arbitrary barrier between programming consumers and programming creators, creating an entirely new level of "engagement."

4. More, Not Less Quality

Much has been made of the so-called "media chaos scenario," in which networks and production companies, faced with a declining, less desirable TV audience due to audience fragmentation, are thrust into a self-reinforcing death spiral, resulting in cheaper, less desirable programming, ratings declines, and so on. While it's clear that the traditional broadcasting industry model is subject to change and transformation, the "chaos scenario" only pertains to traditional ad-supported television, not forms of television supported in other ways. The highest quality television shows today are subscriber-supported, and smart TV's will enable much wider access to similarly compelling pay-per-view, view-on-demand forms of programming.

5. A Greater Role for Search (and Search Marketing)

If you've suffered through the process of searching and selecting programming using today's generation of cable boxes, you know that these interfaces badly need upgrading. Smart TVs will incorporate search as easily as today's Web browsers accommodate search query boxes, because there is no better way to find and intelligently filter the vast quantity of video assets which smart TVs will have access to. But search will not just be limited to video, but will be the central mechanism to access the full range of resources on the Web and beyond. As search query volumes increase through smart TVs, so will the opportunity for search marketers (both organic and paid) to service this new generation of searchers.

For marketers, the advent of smart TVs provides unique potentials, but also, an expanded range of problems very similar to those seen today in search marketing. Because technology provides the ability to precisely target users, the old "one size fits all" method of creating and distributing ads will soon fall by the wayside, and so will the old methods of pricing advertising (e.g. CPM). The level of complexity required to carry out such customized, automated campaigns will certainly increase, as marketers and viewers are each empowered with more choices. The exact form of the model that will replace this isn't yet known, but the smartest ad agencies are working on it, and the first marketers to fully exploit smart TV's will be big winners.

Smart TV's are just around the corner, and they're going to change the media game completely. They will include all the power of a desktop computer and all the programming diversity and interactive possibilities of the Web. They will liberate us from the absurd situation we tolerate today, in which a multitude of different digital devices are needed to experience all the wonders of digital media.

February of 2009 isn't that far in the future. If your agency isn't working on the challenges of programming and marketing to smart TVs now, they might not be as smart as you think.

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