Upfront commitment provides zero risk

Cameron Death, talking of brand advertising [product placement and pre-roll] says “We won’t greenlight until we have brands lined up who want to be in the show”.

Looking at comments on NBC’s Gemini Division, regardless if you think the “brand integration was seamless” and “not ham handed and inoffensive“, this economic approach does not scale and create a sustainable market.

Removing upfront risk does a number of things;

1) Stifles creativity.  The ad deal process is labourious, and doesn’t scale efficiently.  If traditional TV or even banner advertising on the web worked this way, we would see a fraction of the shows (sites) we see today.

2) Puts the control firmly in the hands of the advertisers.  The studios are simply passing the investment risk onto the advertisers.  If the show doesn’t do well, how are the producers going to replace the brand advertisers?  They can’t, and after feeling burned, the advertisers will be even harder to sell to next time.

3) Limits revenue innovation.  Product placement and pre-roll advertising is exactly the same as traditional TV.  Seriously, we are 10+ years after the first online TV show, and this is the best they can do with the most interactive platform in existence to date, the Internet.

I don’t have the answers, but replicating TV on the web is not viable in the long term.  With an abundance of choice (prosumer content, indies, micro-studios, bittorrent), TV producers will have trouble driving demand for shows.  Just look at what is happening with music.

If the TV industry doesn’t start being serious about revenue innovation, the internet wont be anything more than a very risky disribution pipe.

—–

Update: A fantastic summary of the nuisance costs imposed on viewers through the advertising.  Also a great comment on the summary, “the whole series nonetheless feels like a giant marketing campaign for Intel.”

Revolution for online TV?  i don’t think so.

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6 Responses to “Upfront commitment provides zero risk”

  1. Aaron Says:

    Gordon,
    Nice work here. I agree NBC really messed up here, which is a shame, given Gemini Division’s potential. Look forward to reading more from you in the future.
    Aaron

  2. ttodd Says:

    You make some very good points. I think the phrase “removing upfront risk” is a bit of a misnomer. Even if a show is profitable before it is distributed, risk hasn’t really been removed, if anything it has just been delayed. This may be comparative to the use of credit. If a production company is engaged for the long haul, it may be that overall risk is actually greater. Long-term success depends greatly on success in the short-term as your point 2 makes clear.

    I thought I would clarify that the comments referenced above were in regard to Electric Farm Entertainment’s ad integration completely separate from NBC’s mishandling of the same. We were excited at the prospect of doing away with banner and preroll ads and enjoying content in this new way. Ad integration is a relatively new way to try to do ads and it definitely has limitations and does limit some creative opportunities. For some content it does add a sense of authenticity.

    However, I think NBC’s mishandling of Gemini Division is a case of ad integration gone bad. Our excitement for the potential of a new form of ROI was turned to dismay. NBC certainly didn’t highlight the strengths of that form of advertising. Rather, NBC and its poor handling of EFE content is what I would consider to be a worst case scenario where they have concentrated ads to a whole new level of potency.

    As an aside, I am not sure that there is a one size fits all revenue scheme in this digital media age. Rather, I think the method of revenue will vary based on content type and audience.

    All that said, it seems clear to me that NBC isn’t yet all that serious about revenue innovation and as you point out, they should be.

  3. ttodd Says:

    Gordon,

    Wanted to second Aaron’s comment. Also, thanks for the plug.

    Tim

    P.S. My phrase, “do away with” above should have been “minimize”. Instead of minimize, I guess we got maximize. 🙂

  4. heidland Says:

    Excellent post Gordon,

    As Tim said, thank you for the plug and I have added you to my favorites as well.

  5. gordonmattey Says:

    hey guys, no worries, you had some great insight so the plug was natural 🙂

    @ttodd I agree the risk is delayed, everyone suffers if this doesn’t do well.

    Does anyone know what marketing NBC is doing to drive demand? Hope we will see some stats out of this but this will only happen if it performs well.

  6. ttodd Says:

    I am not sure about NBC’s marketing, Daisy Whitney referenced numbers, but don’t think anything has been released. Here is the article by Daisy: http://www.tvweek.com/news/2008/08/column_can_buzz_lift_gemini_di.php.

    Both Doug and I like your blog and what you are about. We have added you to our links section and are looking forward to reading what you write.

    Prime Time For Change

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