Are Legacy, Analog Media Ad Sellers ‘Milking’ The Business Model?

I was surprised when I recently tripped over a Verizon SuperPages book on my Brooklyn stoop. Are there still advertisers that pay to be listed — even some that buy display ads — in these ever-shrinking, yet still mass-distributed, printed business phone directories?

Is this a case of “milking” the business model by Verizon, whose core business as a leading mobile service provider and recent purchaser of AOL is clearly digital? Does anyone under 75 actually page through such a directory to find telephone numbers?

Ironically, AOL itself has a similar legacy business. It recently reported collecting fees from 2.3 million dial-up subscription customers, which, according to this Washington Post article,  represents the bulk of company profits. Is this a conscious choice of subscribers, or some automatic “milking” of billing agreements that haven’t yet been caught and cancelled?

I suppose we can’t criticize a business that legitimately charges fees and then delivers the promised product or service. After all, aren’t we supposed to let the buyer beware?

My concern is that a similar milking of a legacy business method for profits, while its utility and performance erodes, is close at hand. I’m speaking specifically of traditional broadcast media advertising.

Last night I surfed through my hundreds of bundled cable channels after midnight to wind down after playing some late-night hockey, and clearly was not searching for commercials to watch. However that’s exactly what I found on the majority of channels I landed on.

The experience went something like this: Arrow down the Time Warner Cable program guide until I see a program I might like, select the program, see a commercial. Arrow down some more until I see another program I might like, select the program, see a commercial. Rinse and repeat several times until I land on HBO.

You get the point. My question is, who actually watches programs in the middle of the night and is not skipping away when those lengthy commercial pods come on?

The advertisers were not all direct-response or low-CPM media buyers, although there were plenty of those. But there were also quality brand advertisers that were running at this time. I suspect those were sold a portion of late-fringe or late-night inventory to reduce CPMs. But who saw those ads clumped into their lengthy strings of sales pitches? Ratings are still based on program ratings, not commercial ratings — so who saw the ads?

I believe we are at the beginning of a period where providers will “milk” legacy business models for profits, while the ad industry struggles, disagreeing on how programmatic buying can help the process and how best to handle the difference in measurement and buying currencies between digital/mobile impressions and opportunity-to-be-seen linear television/terrestrial radio ad units.

Sellers will do their jobs and hope the cash keeps flowing. Buyers will do their jobs and hope that they are savvy and smart enough not be to uncovered for buying “milk” for less value than they believe they are paying. And the question of who sees those ads may well continue to go unanswered  — until there are real commercial ratings for each and every ad on television, and equally sophisticated measurement currencies for radio.

And since the belief is that the buyer must beware, then awareness and change must come from that very buying community itself.

 

This article first appeared August 10, 2015 on Mediapost.com/publications/video-insider.

About John Osborn

John R. Osborn is an ad agency veteran, formerly Senior VP, Group Media Director BBDO/OMD. For 23 years, he led traditional and new media efforts for clients Visa, Bayer, Eli Lilly, DuPont, FedEx, GE, Charles Schwab, Discovery Networks, HBO, Lifetime Networks and more. John is a longtime advocate for and action-taker around emerging media technologies through the emergence of Cable TV (Pillsbury, DuPont - 1980s), Interactive TV and Internet (Visa, US Navy - 1990s) and online, wireless, Wi-Fi access and Advanced Television (Ultramercial - 2000s). In 1994 he won BBDO's agency-wide Founders Award for work reflecting the BBDO ethic of quality, creativity and effort. Most recently he was Director of Business Development at Ultramercial LLC, an emerging media company providing a unique business model for TV, Online, Wireless and Wi-Fi access. - Author of “The Next Business Model for Ad-Supported TV?”, published February 20th, 2009 in Ad Age Mediaworks - Facilitated and trained agency staff and clients in Creative Ideation sessions at BBDO/OMD. - “Integrating Creative Leadership” Certificate from the Creative Problem Solving Institute. - Past President and Interim Executive Director of Creative Education Foundation (CEF). - Grandson of BBDO co-founder, CEF founder, brainstorming and Creative Problem Solving process co-creator Alex Osborn.
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