Dave, John, Gordon Paddison and Pravin cracking each other up.

At this year’s CES, we’ve had more chance meetings with clients, partners, ex-colleagues and old friends all over Las Vegas than at any other time we can remember. So, the highlight of CES for me isn’t a device or a box or a gizmo, it’s serendipity. In one of those moments earlier today, we ran into Gordon Paddison outside the North Hall of LVCC. We got 5 minutes of laughs in some much needed fresh air before getting back to meetings and press interviews.

We discussed what we’ve learned over the last two years in packaging and selling television advertising. We’ve gotten plenty of emails asking for a copy of the presentation.

It’s embedded below.

There are, of course, rising numbers of connected peripheral devices such as gaming consoles or alternative set-top boxes (including Roku and Boxee). Mobile devices and laptops also provide an increasingly significant means of accessing internet-based content which runs parallel to traditional TV. And of course, today’s set-top boxes are a means by which today’s video distributors can offer connected services using existing software and hardware (but is less likely to incorporate as much innovation as can be found in devices consumers are able to buy on an unbundled basis).

Connected TVs could theoretically offer innovative internet-connected services to the widest possible audience given the ubiquity of today’s television sets. But how real is this potential? To assess the opportunity properly it is first necessary to understand the market for connected TVs.

The Consumer Electronics Association, a US trade body, recently indicated that it expects 10.4 million “network-enabled” TV-like displays will ship during 2011. Extrapolating from this, we can envision that within several years, a sizeable majority of the 30+ million TV sets sold annually in the United States will be network-enabled. Over time, this will translate into significant household penetration of network-enabled TVs.

What needs to happen in order to ensure that a high percentage of these network-enabled sets are transformed into connected TVs?

• More ubiquitous access to broadband services. Broadband service access remains relatively low in the United States, with 68% of homes expected to possess broadband internet access by the end of 2011, according to Magna Global. Affordability is an issue for many of the homes not presently accessing online services via broadband connections, and so a wider range of price points, service levels or bundles may be required in order to foster further expansion.
• More in-home connectivity. Most Americans live in multi-room homes, and broadband modems often reside in a different room than the one which will host the network-enabled TV set. Many households will either need to extend an Ethernet cable into the network-enabled TV set room or otherwise procure, set up and manage a router with wi-fi transponders.
• Improved interfaces and consumer-interaction devices. Most existing user interfaces and remote controls used to access the television set are provided by cable, satellite and telco-based video services. While it is possible to exit those services b? for example, by switching the input via the video monitor’s remote control this involves some degree of sophistication or “tech-savvy”. To that end consumers will require some education (beyond that which is provided in the user manual) about how to use their devices to the fullest.
• Killer apps. Ultimately there will need to be an underlying reason for consumers to want to connect their TV sets. For some, single screen access to a video service such as NetFlix is a reason. For others, access to music or gaming via the video monitor will be a motivation. Undoubtedly, the most successful applications have yet to be developed.

Expanded broadband access, better in-home connectivity, and improved interfaces all relate to the relationships that todayb?s video services providers are well situated to solve, if only because of the “feet on the ground” they already possess. Killer apps by themselves will not be sufficient to catalyze the market, and so the consumer electronics and video services businesses will need to establish business models that are mutually satisfactory for the market to reach its potential.

Once deployments are broader, a final major issue relates to fragmentation. Consumer electronics manufacturers will be able to expand their individual opportunities to the extent they co-operate in establishing common technological standards. This will facilitate deployment of identical applications across all manufacturers, which in turn will offer application developers, programmers and advertisers much larger scale in supporting connected TV services.

For the present time, the bulk of connected TV experiences will occur in parallel, as consumers have ready access to their computers and mobile devices. These are the devices which have the most scale today, and will offer the best opportunities for the industry to experiment, learn and deploy profitable new businesses until the time comes when the promise of the connected TV can be fully realized.

Television advertisements can be the most effective pieces of commercial art ever created.

The annual Cannes Festival of Advertising is the world’s showcase for all forms of advertising. The power of 30 seconds of sight-sound-and-motion was fully evident during screenings for all work entered in the Film, Film Craft, and Titanium and Integrated Lions categories, which I was fortunate enough to attend last month.B Hundreds and hundreds of campaigns which had previously been exposed to millions and millions of individuals around the world were shown as part of these screenings.

Yet, given the depth of creativity applied to commercials today, why does it often seem like there are so many bad commercials airing on TV today? The fragmentation of TV is at the heart of this problem.

Today’s audience panels are sufficient to measure broad-reaching network TV viewing and many of the most popular cable networks during prime time. But cable programming now accounts for a majority of television viewing, and non-prime dayparts account for a majority of cable viewing.B Small panels are simply insufficient to measure this fragmentation. There are hundreds of viewing choices available to the average consumer, but many of those choices as much as 40% of viewing by our estimate go essentially un-measured.

Large brands conventionally avoid this advertising inventory, and consequently cable programmers and cable operators rely heavily on direct response advertisements. With few exceptions, direct response commercials are far from the quality we saw in Cannes. Low quality creative is undoubtedly grating to audiences and (unfortunately for cable programmers) probably causes audiences to tune away.

We believe that better approaches to measuring television viewing will solve this problem, increasing the chances that commercials viewed by consumers at any time of day and on any network are as engaging and creative as those seen on network prime time. Happily, many companies are working on solutions today.

At Simulmedia, we have established a panel involving millions of set-top boxes, enough to accurately measure all television viewing across the country. Because our set-top data panel is highly correlated with Nielsen’s panels, we can identify Nielsen targeting attributes across all television advertising inventory including that inventory which otherwise goes unmeasured. Between our approach and the efforts of others, we think many large brand advertisers will ultimately become comfortable buying audiences during times of the day and on networks which may otherwise have deemed undesirable.

There is an ongoing creative renaissance in television advertising the world over. As a result of the industryb’s efforts to improve measurement of viewing, Americans will get to see more of this creative renaissance for themselves.

(This post originally ran on MediaPost’s Media Daily News Commentary on July 7^th, 2011.)

Electronic Super Highway by Nam June Paik

A narrower definition of the TRP could provide a panacea for advertisers and agencies that are hard-pressed to increase budgets to match the price increases media owners have introduced in the current upfront marketplace. Better-defined TRPs will drive business outcomes more cost-effectively.

CBS and Nielsen have found that advertisements reaching a high concentration of consumers who purchase specific product categories have a significantly higher correlation with sales outcomes. Thus, advertisers facing budgetary constraints could benefit by using better-defined TRPs in their media negotiations.

By contrast, advertisers that continue to focus on broadly defined GRPs reaching audiences outside of their targets may only satisfy general awareness outcomes among audiences ill suited to becoming good customers. Advertisers who pour their media budget into better-defined, TRP-focused inventory will reduce waste. The corollary to this is that, when an advertiserb?s goal is increased product sales, buying GRPs without a narrow target produces significant waste.

Several steps are required to shift to more narrowly defined TRPs as a core media negotiation focus. Many of these steps were impossible to accomplish until recent advances in data collection and processing. They include:

• Aggregation of sales data, which may come from a syndicated data provider or a retailer
• Aggregation of granular viewing data, using either respondent-level or set-top box-based data sets
• Identification of best- fit statistical models correlating audiences and sales data
• Development of predictive algorithms which identify future audience behaviors
• Negotiation of units of inventory which over-index against those target audiences

Buyers and media directors alike know that the traditional response to increases in the price of media is to downgrade the mix of programming on a media plan, using less network inventory and more run-of-schedule cable inventory. Clearly, using better-targeted TRPs is superior at both a tactical and strategic level, although it will inevitably require different competencies, technology providers and ad sales models. But advertisers looking to manage against the very real constraints they face will work to make this model happen and significantly improve the efficiency of their media budgets as a result.

Some highlights:

• Dave explains matter-of-factly how Simulmedia believes TV advertising can be better. Simply put, while the traditional way of buying media works, we believe we can improve it by separating the people from the program.
• He puts the magnitude of data that Simulmedia manages into context: every day, we process 70 million hours of anonymous television viewing data in support of the predictive algorithms that find audience targets for our clients
• He describes the importance of people watching Everybody Loves Raymond on a Wednesday to movie studio marketing Romantic Comedies
• He discusses the accolades web?pve received for our work with CBS promoting the series premiere of Hawaii Five-O.

Thanks for the interview Beet.TV and considering us amongst the folks at the root of the media revolution.

Dave (@davemorgannyc) will be Tweeting from the conference and while he’s running around Paris. (The Seine is no Hudson River, but it’ll have to do for a morning run.) Follow @EG8Forum or search the hashtag #eg8 on Twitter for more coverage through Wednesday.

Pravin getting ready to hold forth on our view of the landscape of targeted TV advertising.

Get a copy of the slide here or email us and we’ll send it to you.

Bruce made several great points:

- the marginal benefits of these new targeted TV advertising services will drive advertiser adoption

- measuring the benefits requires testing and analysis of a growing volume of data

- the kind of quantitative expertise to do this data management and analysis is in short supply in the advertising business

We couldn’t agree more. Bruce’s points are key reasons why we continue to make investments in the science, data management, analytics and visualization expertise necessary to help our clients prove the value of targeted TV advertising.

Thank you to ITVT for inviting us to participate and a big thanks to our fellow panelists (and effervescent moderator) for a lively and thought provoking discussion.

Simulmedia's presentation at The Festival of Media Global 2011

We were in competition against 10 other amazing start-ups with some very compelling businesses. B Needless to say, it was a big surprise. B What’s most gratifying for us is that the award was given by our peers in the advertising and media industry.

We saw some amazing work. B Two of my personal favorites…

- CoppaFeel! campaign for breast cancer awareness by archibald ingall stretton which won the Consumer Benefit Award.

- Starcom Norway’s work for Kaizers Orchestra “Hjerteknuser” won three awards. B The band Kaizers Orchestra released the sheet music of the first single before releasing their recording. Great idea. Extremely well executed. Very nice people, too.

It was great to catch-up with old friends as well as meet some new ones. B Hope to see you there in 2012.

Why do dayparts exist?

Historically advertisers exhibited preferences for different kinds of programming b? and the potential for impactful brand association in that programming b? at different times of day. This led to each broadcast network to program light news in the morning, soap operas in the afternoon, harder news in the evening, general entertainment at night and late night comedy/talk shows. .

The notion of dayparts also existed because of significant differences in the potential reach of television during those different times of day and significant differences in the profiles of viewers watching throughout the day.

There was indisputable logic to the daypart convention in the three network-world that existed in the United States prior to the 1980s. And since most advertisers were seeking the broadest reach with the fewest number of buys on the highest quality (read: most expensively produced) programming, there was a disproportionate focus on the daypart which we now call prime time.

Of course, there is still tremendous value in associating brands with certain programming for contextual impact – considered strategic programming choices. But such activity can occur equally well at any time of day given the breadth of programming options available to advertisers in the modern era.

But more critically, fragmentation of viewership has impacted dayparts’ presumed ability to most efficiently reach target audiences or specific viewer profiles. For example, while prime time is still the widest viewed daypart, this metric, reach, is no longer by itself sufficient to justify a prime time buy (instead, strategic activations are arguably the best justification for prime time purchases). Few advertisers choose to purchase the same kind of reach in a given day that they bought in the 1960s or 1970s, as it would require purchases across scores of networks today, compared to purchases across three networks forty years ago. Consequently, advertisers focus on accumulating reach over the course of a campaign that may play out in different dayparts.

As a result, it is no longer necessary to accumulate reach within only one daypart given the rise of better tools b? especially through the use of set-top-based viewing data , but also through more sophisticated models of audience viewing using conventional panel-based data b? for finding the audiences which contribute to extending reach beyond the core strategic programming an advertiser requires. Further, many sources of data and data modeling techniques allow advertisers to better understand the relationship between brand and audiences well beyond age and gender-based metrics.

Conventions are typically created for very good reasons. But conventions can only persist as long as a critical mass of market participants agrees to continue it. While it is unlikely that all advertisers will stop using the convention of the daypart in the near term, it is highly likely that increasing numbers of advertisers will look beyond this convention to reassess the ways in which they find the audiences which drive their business goals.