TORONTO – Consumers’ evolving media consumption habits are driving changes in the business models adopted by traditional media players, resulting in once-unlikely partnerships and new branded content opportunities for advertisers.
Today’s media consumers increasingly seek free content, dislike interrupted viewing, want relevant and engaging content, and don’t mind giving up personal information such as their hobbies if it means they can connect to others with similar interests – that’s according to Michael Kelley, partner for advisory services in the entertainment, media, communications and technology sector of PricewaterhouseCoopers.
Kelley was moderating an all-U.S. panel of media players on Monday at the Canadian Telecom Summit happening this week in Toronto.
Advertisers are now moving into the content creation arena themselves, to “stretch” their brands to new media channels, such as mobile and the Internet, in an effort to form a two-way ongoing relationship with their consumers, Kelley said.
The emerging branded-content approach to advertising actually harkens back to the days of sponsored radio programs in the 1920s or TV productions in the 1950s, said Doug Scott, senior partner and executive director of branded content and entertainment for Ogilvy North America. Scott’s group develops branded content for its advertising clients, including Unilever, Cisco, Yahoo!, and IBM.
“We don’t do product placement. We don’t do product integration,” Scott said. “It’s truly about brands owning entertainment, rather than renting….But mostly it’s about engagement with the consumer.”
Mobile technology is the key to that customer engagement, Scott said, “because we all have a way in which to engage with a brand, in our pocket, every day.”
Scott said the ROI acronym (return on investment) could now be redefined as “return on innovation” – as in IBM’s advertising campaign – or “return on interaction”. The question of consumer interaction is the critical point that marketers today are trying to figure out, he said.
“(Marketers) really need to target and understand who their consumers are, when they’re in the market for a product, and need to be able to engage with them on their terms,” Scott said.
Faced with the increasing consumer demand for free online video content and the proliferation of user-generated content, NBC Universal saw that its traditional dominant position as a producer and distributor of premium content was being threatened, said Jessica Schell, vice-president of NBC Universal’s digital media group.
With so many more channels, content aggregators and distribution networks opening up in the media industry, NBC Universal decided it needed to figure out how to capitalize on this strategy, “rather than let them eat our lunch”, Schell said.
In what some longtime media industry watchers might view as an unlikely pairing, NBC Universal and News Corp. (parent of the Fox Broadcasting Company) announced a joint venture in March to deliver premium branded video content free to consumers on the Internet. Aggregating content from third parties is also in NBC Universal’s plans.
In addition, NBC Universal and News Corp. have signed a number of distribution deals with MSN, Yahoo!, AOL and MySpace, and hope to work out a deal with Google, Schell said. One aim of the venture was to ensure content providers get their fair share of revenue, she said. The companies’ Internet video distribution network is expected to launch by the end of the summer.
Evan Shapiro, executive vice-president and general manager of The Independent Film Channel (IFC), said watching NBC and Fox partner on the venture is “mind blowing”.
One of the challenges that IFC faces is creating the right partnerships with advertisers without alienating its viewers, Shapiro said.
“We can’t work with every advertiser. If we partnered with Wal-Mart, our consumers would rebel,” Shapiro said, adding that IFC’s viewers would probably accept branded content from Target, on the other hand.
Shapiro also said his channel’s audience looks for good stories and characters in the video content they consume, whether it’s a short film, documentary or television ad. At the same time, video content has become a commodity now, which is a dangerous reality for content producers, he said.
In terms of advertisers producing branded content that they want to push to consumers’ mobile phones, Shapiro offered this advice: “If you’re going to invade that screen, invade that space, you better say something relevant and important to them.”
Ogilvy’s Scott said the question that marketers and media companies are currently trying to answer is how to use today’s mixed channel environment in order to create the best experience for consumers. Taking a fully integrated approach to brand advertising is all about using the right medium for the right message at the right time, Scott said.
In a keynote address earlier in the day, Nadir Mohamed, president and COO of the communications group of Rogers Communications, spoke about some of the areas in which his company is currently focusing investments. These include wireless video, fixed wireless, fixed/mobile convergence, and service convergence of its wireline, wireless and cable services.
“All of these things suggest that the lines are going to be blurred. It’s going to be a customer saying, ‘I want to watch this particular program, on this device, at this place, right now.’ And that really is at the essence of service convergence,” Mohamed said.
“People want to watch television. It doesn’t matter if it’s delivered on a TV set or a PC. That’s the new world that we are working towards,” he said.
Linda Stuart is a Toronto-based writer covering the Canadian Telecom Summit in Toronto this week.
