Friday, February 27, 2015

Customized TV Ads and Cultural Fragmentation

I've been reading about talks by Comcast to acquire Visible World, a company with technology that allows advertisers to quickly create different versions of the same TV ad for various markets. Clearly, this is an advance that has long been waiting to happen in the TV industry.

Online, the problem marketers face is that while it's really easy to send users targeted ads, and even to create targeted ads (in Google's case, simply by choosing the appropriate ad from the millions of candidates), it is not as easy to track users effectively. There are technical workarounds that function admirably, but fundamentally, the advertiser faces an uphill battle. IP addresses can change, cookies can be deleted, users can be on a proxy server - the list of pitfalls is enormous.

In TV land, the problem is the opposite. It's actually pretty easy for companies to know who is watching cable or satellite TV, because they know the precise address of each viewer. Some households may have older folks and young children, but there are far fewer degrees of freedom than in the web case. However, it is extremely hard to make and choose targeted ads, because TV ads are produced in an entirely different context. They are so much more expensive than web ads that spending the necessary time and money to shoot even 10 different versions of the same ad is incredibly expensive for any non-trivial ad.

In that sense, a technology that bridges that gap for TV is a clear win. Users get ads that are more compelling (no more denture ads for me during Jeopardy!), advertisers get to target appropriate segments instead of blasting out generic broadcasts, and media companies get to own networks that are more valuable, simply because the total value of the interactions on them is higher.

But I would caution us to think of some interesting and not immediately obvious long-term consequences. A few decades ago, most people who watched TV did so over-the-air, and there were only a few large national networks. Those people saw the same ads and the same shows and the same movies, and that, while being less rewarding as a short-term entertainment experience, provided a side benefit of cultural cohesion. If you saw something you liked on TV, chances are that many people all around you saw it too, or heard about it, because there were only 5 channels anyway! These days, it can be pretty hard to find someone who watches all the same shows as you do, and pretty easy to find one show that you like that no one else around you seems ever to have heard of. The only thing that TV watchers really have in common anymore is ads, especially the big campaigns from major retail brands like Coke and Bud. I think there is some non-zero value to the kind of cultural baseline provided by common TV experience, and I worry that the revenue-maximizing logical endpoint of the targeted advertising paradigm (individually targeted ads based on historical revealed preferences) will leave us feeling more isolated and fragmented as a society, not to mention a bit embarrassed when our friends come over to watch TV...

No comments: