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Published: January 1, 2008 at 06:37 PM GMT
Last Updated: March 20, 2008 at 06:37 PM GMT
Originally published: February 6, 2007
At the recent Davos conference, Bill Gates announced "the Internet is set to revolutionize TV within two years." By way of vague explanation he suggested "TV is moving into being [sic] delivered over the Internet and some of the big phone companies are building the infrastructure…"
The principals at Boston-based Backchannelmedia take a different tact: "TV will revolutionize the Internet in two years."
Sound like they're holding onto the past? Far from it. In fact, media consultant Erwin Ephron, an advisor and self-proclaimed fan, says Backchannelmedia has developed "an interactive TV model that allows for better targeting and allows for immediate feedback to a TV exposure, making TV advertising a far more attractive (I almost said "accountable") selling tool."
That's the objective that Backchannelmedia founder Michael Kokernak set seventeen years ago and has been evangelizing since. In the past week, more than 1,400 agency and media executives, trade association leaders and even FCC officials have received a detailed PowerPoint description of Backchannelmedia's proposed radical overhaul of the back-end infrastructure of media advertising planning, buying and selling.
In an exclusive interview with Jack Myers Media Business Report, Kokernak said he hopes to upend Gates' conceit: "What our research has shown is that TV itself will remain the primary platform. In short shrift it will begin to affect everything on the Internet. The Internet will begin to play a lesser role than it does today as broadcast and cable shake off their Internet hangover once they realize that the $200 billion of infrastructure they installed since the Telecommunications Act of 1996 can facilitate distribution in a new way. That is the story of 2007."
In just the past ten years, the cable industry has ponied up $116 billion to run 130,000 miles of fiber, build Interconnects, and install digital set top boxes in millions of homes. Broadcasters, during the same period, have invested between $60 and $80 billion for new digital towers for over 1,400 TV stations, plus funding digital satellite transponders and network architecture.
Backchannelmedia, which yesterday announced the hiring of former Citigroup CIO Harvey Koeppel as COO and has several more high profile hires in the wings, launched in 2000 and has bootstrapped itself as a direct response media buying and planning company. Kokernak's understanding of the power of television as a direct response medium has been a motivating factor in his passion for applying similar principles to all advertising, anticipating that digital technologies would enable immediate and constant feedback on consumers' viewing patterns. Kokernak contends the minute-to-minute audience for broadcast television will continue to dwarf the size and influence of the Web. He points to 2009, when all broadcast networks are required to return their analog spectrum to the government, as a seminal year for the media and advertising businesses.
"This will be a major event in the history of television and will open up opportunities for targeting, interactivity, and direct response advertising for broadcasters," exclaims Kokernak. Both Comcast and Cablevision have announced their imminent adoption of switched digital video, which frees up bandwidth for high definition television and also makes it more efficient to incorporate two-way interactivity and viewer tracking into the broadcast signal.
Backchannel has been busily aggregating patents to control rights to that "backchannel" return-path metadata and its integration with program and audience data, direct and retail sales, and back-room media administration systems. By 2009 all broadcasts must simultaneously carry multiple video, audio, and data programs. Metadata can capture content changes at a speed of 30 frames per-second and Kokernak plans to have virtually every click of the TV remote control and IPTV-connected keyboard captured by Backchannelmedia's servers. Kokernak claims the patent-pending technologies that access this wealth of information and graft it onto both sales results and pricing/media-planning systems will make impression-based television advertising obsolete.
Ephron believes it is Kokernak's "vision of feedback-based pricing that has made Google Search a star. And it's ironic," he says, "that the poster child of new advertising started with the bastard of old advertising -- direct response." Ephron believes Backchannelmedia "is onto the growing irrelevance of the audience model to advertising payback. The Nielsen six-stream commercial minute (each priced separately) is a distraction that is more about the Nielsen P&L than more effective advertising. The Nielsen standard for television," Ephron explains, "requires that advertisers accept that 'sets tuned to commercials' is the same as people seeing commercials. We all know that's not true." Although Kokernak is reluctant to acknowledge it publicly, he is convinced that data mining of digital viewing information will ultimately disintermediate Nielsen, Donovan and other traditional analog-based systems and administrative services.
In Backchannelmedia's patent for "Systems and Methods for Accountable Media Planning," it says it has invented an accountable advertising system that captures consumer responses from interactive commercials and uploads the responses to user selected shopping carts (think Stop & Shop, Kroger's, Target). These responses reside on a hosted web portal (Comcast, Time Warner, Cox, Cablevision, Charter) and are recorded based on a one-button click on a radio or television remote control or a cell phone keypad.
Kokernak describes a scenario in which media buyers and direct advertisers will be able to buy ads based on an auction model that accepts bids on a daypart, program genre and program-specific basis and that identifies the most efficient media buy based on projected "purchase" clicks the system estimates will be delivered to the Digital Gateway, based on historical category-specific results.
Advertisers can also track results on a real-time basis, constantly evaluating the effectiveness of a commercial message and moving commercials to programming that is generating the optimum results and limiting exposure when audience response begins to wane.
Kokernak is convinced his model will result in ads that are more targeted and relevant to audiences, increasing the value of key placements and enabling programmers to scale back the actual amount of ad inventory. He points out "in 1965 twenty percent of viewers were able to recall at least one commercial among those they viewed in the previous commercial break, That figure has now bottomed out at six percent. Backchannel's first prescription is to reduce ad breaks to four to five minutes per hour from what is now averaging fifteen minutes. There's only so much you can jam down a consumer's throat," he argues. "A contraction has to occur."
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