Is Programmatic Advertising Killing Sales Jobs?

There is no doubt speed, effectiveness, and efficiency with technology that makes programmatic advertising a win for buyers and sellers of media.  Programmatic has been the buzz word of late, which fairly simply automates the purchasing and trafficking of advertising into available spots.  It is most connected to the digital world but continues to creep into traditional television advertising models.  In essence it removes human interaction from the equation and it is a disruptive technology.  

As a result of all this automation, media companies are able to cut back on employees.  In fact, AOL announced a couple weeks ago, ahead of its quarterly earnings, that it was laying off "150 employees Friday, or 3% of its staff.  The bulk of the layoffs, or close to 100, were in sales, a result of the company's surging growth in so-called programmatic ad sales, according to a person with direct knowledge of the situation who was not authorized to speak on the record", according to USA Today.

AOL is not alone in these efforts and this is not the first time that technology has replaced labor.  Look no further then the assembly line that once required huge numbers of factory workers and now can be done with machines.  But it is a first for media, that less ad sales people are needed to drive the revenue for the business.  Will it replace humans completely, the answer is obviously no.  The key differentiater is creativity and the ability to develop innovative advertising programs that ad buyers want.  Content partnership, product integration, and cross marketing integration still requires the human touch.  But buying and placing a digital ad or 30 second commercial can more easily and efficiently be done without the hard sell or human negotiation.

The key success behind programmatic advertising seems to be the research that lives across all the data and the ability to decipher it in meaningful ways to best choose which media and in what combination makes for the best campaign.  And post advertising, the proof will be in the results the campaign generates.  Who is engaging with the content, when are they consuming, why are they interested can now all be captured digitally.  And that information, across set top boxes, web platforms, credit card information, and more are being absorbed, analyzed, and released.  Ask the right questions and your ad can reach exactly the type of person you seek to create engagement with.  And with hopefully a higher percentage that you are reaching only those likely to be interested in the first place.  Bottom line, successful financial results means that programmatic ad buying will then become the new norm. 

Target Ticket Follows Redbox Instant To Close

Building a streaming aggregator is not an easy task.  It takes content deals, it takes customers, and it takes a solid infrastructure to manage the end to end delivery.  It doesn't take much for it to go wrong.  And it takes a sound strategy and firm execution to be successful.  Netflix and Amazon Instant have easily become the standouts of success.

Sling TV has just launched and word is that they are facing some difficult technological issues managing its streaming activity.  And while they push forward, Target Ticket, a streaming service created by Target to compete against other retailers like Walmart, has decided to shut down.  Never heard of Target Ticket, you are probably not alone.  I am a frequent visitor to Target and can't recollect ever seeing any marketing in-store or in their circulars. 

Their demise means that consumers that purchased digital product will have to switch to CinemaNow to continue to get access.  But with content that CinemaNow does not have rights to, customers will get credits instead.  That certainly is the biggest challenge when owning digital content that you don't have direct ownership of.  So what is next?  How long till CinemaNow, Walmart's Vudu service or even UltraViolet or another streaming service decides it can no longer compete with Apple and Amazon?  The loss of Target Ticket may simply be a precursor for more to come. 

NBC Mishandling Brian Williams Apology

It is my humble opinion that NBC and the PR team at NBC are mishandling the fallout of the Brian Williams misremembering crisis.  That he "conflated" the episode in Iraq may have been the least of his problems, but using a vocabulary word that few know didn't help his effort at a half-asses apology.  And as Mr. Williams takes some time to withdraw from all public appearances, including a scheduled visit to The Late Show With David Letterman on rival CBS, it begs the question, could this PR nightmare been better handled.

I believe that NBC is using the wrong playbook.  To me, the better way to have handled this outcry would be to face it straight on with minimal delay.  I cite case book examples in the world of business from Tylenol, Coke and even Netflix to illustrate how a fast response can avert a greater disaster.  Tylenol did it by quickly recalling all product, apologizing and announcing efforts to use different packaging to demonstrate safety was their highest priority.  Coke tried a new coke formula but was quick to pull from market and announce the return of its classic formula.  And Netflix thought it could divide the company into two entities, DVD and streaming; they heard the backlash and were quick to stop the split and respond directly.

Yet the team working with Brian Williams has chosen to not follow these examples.  The apology was not to the point and direct; rather, muddled by shades of gray.  Had he then stayed out in the public, talking directly to anyone who wanted to hear his apology and how he was contrite and eager to demonstrate his trustworthiness, I believe this incident would have been minimized and Mr. Williams would have retained his good standing among the public.  Withdrawing from appearances, removing himself from his own nightly news program, has only added to the problem.  And it may now be too late for him to fully recover his good stature and high ratings. 

Are We Being Watched And Listened To?

I most recently met a colleague who had taped over the camera on her laptop.  She was concerned that the device could be accessed without her knowledge and she could be watched without knowing it.  Her concern may be a valid one; Cameras have become a way of life, whether used for traffic enforcement, shoplifting, security.  And we seem to be ok with it.

The latest concern is that the next generation of smart TVs from Samsung may also be listening to us as well.  With a capability to use verbal commands to instruct the television set what functions to initiate, comes some interesting news.  But buried deep in the privacy policy for their set is a notice that the set will also share all communication that it hears.  Surprising, it shouldn't be.  Business Insider also tells us that "the Siri dictation feature is sent to servers that reside in the US and that Apple, its related companies and agents have access to the contents of what is dictated."

Privacy may simply be a thing of the past.  As more and more devices connect to the internet, our actions and our words get more easily captured.  What others decide to do with it, whether to use for safety and security, advertising, or to uncover private and personal information remains to be seen.  But what should not be a surprise is that someone is watching and listening to us.  And so we become more responsible for our actions.  

Will Apple Get into The Subscription Video Business?

Just Monday, I mentioned Sony's plan to create an OTT video subscription service through their Playstation platform called Vue.  We also heard about Dish's plan as well with their service, Sling TV.  And of course there is Amazon Prime, Hulu, Netflix, and others with either linear or on demand streams of TV and movie content.  Now, it may be Apple's turn.

According to re/code, "Industry executives say Apple is in talks with TV programmers about deals that would allow Apple to offer an “over the top” pay-TV service".  Given their purchase last year of Beats and its music subscription service, the idea of video subscription is not far-fetched.  Apple has been thinking about such a move for quite a while.  And Apple already does quite well with video rental and purchase through its itune store.  Why not a subscription OTT service, too.

The decision to move in such a direction may lead to two possibilities, build from scratch or purchase another existing business.  Verizon tried with Redbox Instant and failed miserably.  They are trying again with the purchase of Intel's OnCue service last year.  One doubts if that acquisition will follow the same path as Redbox Instant.  It doesn't look good.    Maybe Apple sees an opportunity buying Dish and not only getting Sling TV but access to all that spectrum.  With so much cash in reserve, Apple could perhaps even buy Netflix.  A hostile bid perhaps, but who knows.

Building from scratch and negotiating license fees with today's cable and broadcast networks is a more difficult and circuitous path.  The timing might finally be right to try again but the ROI might take some time to grow.  But regardless of which path Apple chooses, the timing to add a subscription video business to its mix seems timely and right to do. 

Amazon Might Want Some Radio Shack Stores

What a shame that Radio Shack couldn't figure out a way to rebound from a dying business strategy and re-emerge as a leader again in a new mobile world.  But stuck with a name that reflects old technology, and a marketing campaign that fell flat, Radio Shack is on the verge of bankruptcy.

But others may benefit from the Radio Shack failure.  Amazon has watched as Apple has used a retail strategy to build stronger customer relationships and grow business.  Microsoft is also starting to venture into the retail world.  And now it might be Amazon's turn to create a retail presence.  By opening up stores using some of the Radio Shack footprint, Amazon would be able to let customers better interact with its product line, especially as its products are not currently getting much market share.  They could push better the Amazon brand and value and let consumers interact with its devices, including the Kindle, Fire tablet, and of course its Fire smartphone.  It would also provide a point of purchase for service issues as well as marketing events.

The challenge of acquiring Radio Shack locations might be the initial size of some stores.  In many malls, they occupy a much smaller square footage than say an Apple store and thus would limit foot traffic.  But that might be a short term problem as they renegotiate leases with malls for larger spaces.  Having a retail presence seems a strong strategic move to compete better in the product marketplace. 

Broadband To Be Considered A Utility Service

As our President faces the last 2 years of office, he no longer has to worry about reelection, rather about his legacy.  And so, as it pertains to the world of the web, he is pushing all out for full net neutrality.  Like water, electricity, and gas and oil to the home, Obama and the FCC want to regulate broadband service just as fiercely. 

Net neutrality assures that no matter what the content, whether a simple email message or full HD video, the internet would treat both pieces of data exactly the same, transmitting them at the same speed as everything else.  No blocking of content, no throttling or slow down of speed of certain data.  All will be treated exactly the same.

But it is that same heavy use of government oversight and regulation that can also slow down or even stop a free economy from doing what it does best, innovate to create new solutions to old problems.  With such freedom comes new opportunities, new industries, and new businesses.  But add government to the mix and while data is free, innovation may be what gets throttled instead.  That is certainly the line that broadband providers like Comcast and others fear buy a heavily regulated broadband industry.

Content creators and other users of the web hope that net neutrality assures that their work gets equal access and that they do not have to resort to paying broadband providers to get into the HOV lane.  Netflix agreed to pay providers to assure that their subscription service wasn't penalized; they would love to not have to pay for play. 

Is there a middle ground that assures equal access without over regulating the process?  Ultimately, a solution is needed.  Broadband access has become more essential to the home then ever before.  Some might even rank it above heat and water.  Still, at the end of the day, what is most needed is to lower barriers to entry in broadband platforms and encourage more competition.  That is ultimately what will enable consumers to find the best possible value for the best price. 

More OTT Aggregators Coming

As cable prices continue to rise, consumers eager for more provider alternatives will soon have multiple ways to watch TV networks without a cable subscription. Certainly shows from different cable networks end up coming to Hulu, Amazon, and of course Netflix, but they tend to be from past seasons and not the current one that is airing on the respective network.  But now these networks are making distribution deals with OTT services to offer their networks across streaming platforms.

Recently, Dish announced its own OTT service called Sling TV.  And now we have Sony, working through its Playstation division deliver its OTT streaming service, dubbed Vue.  According to Gigaom, "Sony announced in recent months that it has struck agreements with CBS, NBC and Fox as well as Viacom, Scripps and Discovery for Vue."  That means that networks like HGTV, Food, Discovery Channel, MTV and others will be included in this service.  Most interesting, NBC, owned by Comcast Cable, will also offer both its broadcast network as well as its cable channels including Bravo, CNBC, USA, and more.

Given the threat of cord cutting and the desire to be accessible to the next generation of consumers, the move to streaming is a necessary one.  Certainly the cable companies need to also create an authenticated streaming version of their entire cable line-up, accessible through streaming and available inside and outside the home, to best compete with competitors like Sling TV and Vue.  At the same time, the networks need to not lose their relevancy against other OTT providers like Netflix who value the show over the network and are pursuing their own original programming strategy.  Otherwise, these same networks will fear a complete erosion of not only their license fee model, but eyeballs to their network and the ad dollars they charge. 

Networks Starting to Say Who Needs Cable

License fee negotiations between network and cable operator tends to be acrimonious these days.  Where once this relationship was more friend than enemy, today, that frenemy relationship has become a more business relationship.  As a result, each time a network is up for license fee renewal, the likely outcome includes a period of being dropped before returning to the line-up.

But networks are also watching the success of subscription services like Netflix, Hulu, and Amazon, and are pushing forward with more OTT deals outside the cable-network boundaries.  Last year, CBS and HBO unveiled each of their OTT subscription services.  And Showtime soon followed the HBO announcement.  WWE offered a subscription service and just this week announced that they have reached one million subscribers.  Today, we have Viacom announcing that their children's network, Nickelodeon, is also planning to sell an OTT, direct to consumer, subscription service too.  Its success could lead to other networks in its stable, MTV, VH1, and Comedy Central doing the same thing.  And not having to work with a middleman like the cable operator may become more appealing as consumers get tired of paying high cable rates.

Consumers wanted a la carte and now they are likely to get it.  Unfortunately, buy too many of these OTT subscription services and your entertainment costs will soon exceed the cost of your cable subscription. The bundling of cable networks may have driven the total costs too high, but it did offer something for everyone.  A la carte may seem cheaper but only if a small portion is all you desire.  Cable operators had fair warning to fix their programming strategy but it got out of control.  Its time to revisit and fix their offerings and pricing. Enable TV Everywhere to authenticated customers to create a better must have subscription.  Cable can fix this mess but the time is now.