Lessons the Cabletelevision Advertising Bureau and Media Industry Could Learn from Baseball

As a baseball fan, I'm fascinated by how quickly the institution of Major League Baseball, team owners, players, agents and others are embracing a revolutionary technology-based system that will digitally record, track and analyze "the exact speed and location of the ball and every player on the field, allowing the most digitized of sports to be overrun anew by hundreds of innovative statistics that will rate players more accurately, almost certainly affect their compensation and perhaps alter how the game itself is played." I cannot help but compare MLB's embrace of technological advances to the quagmire the media industry finds itself in today, enmeshed in internecine warfare and struggling to hold onto the past even as billions of dollars invested in technological advances offer clear and obvious growth opportunities. In this week's commentary (available exclusively to Jack Myers Media Business Report corporate subscribers) I comment on the recent letter sent to advertisers by the Cabletelevision Advertising Bureau and the industry's stall in advancing breakthrough technology-based innovation.

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Reporting on the new defense-tracking system being tested by Major League Baseball, The New York Times commented, "teams have begun scrambling to develop uses for the new data…. knowing it will probably become the largest single advance in baseball science since the development of the box score." In online and television media, interactivity, addressability and enhanced targeting capabilities have been available since the late 1990s, yet even now implementation has been so difficult that most observers still consider universal acceptance among cable and satellite operators to be a distant dream. Recent setbacks at Canoe Ventures, the joint initiative of six cable operators, reinforce that perception. While TiVo continues to gain marketplace traction and acceptance, advertisers and agencies have been slow to embrace the company's capabilities. These are just two examples among many.

The media business must break its habit, developed over more than six decades, of blocking and delaying every advance until acceptance becomes a market necessity. Cable operators are not feeling sufficient economic pain to overcome their historic "not invented here" syndrome. Whether it's Canoe, Invidi, Navic, Visible World or any number of other ventures, addressability and enhanced targeting is a game changer for the industry – with only positive long-term benefits.

Almost all media companies – traditional and emerging, large and small – are locked into outdated business paradigms that remain dependent on traditional commoditized advertising-based business models. Paradigms such as the network television Upfront and scatter markets, costs-per-thousand impressions, age and gender demographics, :30-second commercials, inside front covers and double trucks, separation of editorial content and marketing integration, silos that segregate advertising from promotion... the list goes on and on. Media needs to look to forward-thinking and acting organizations and companies as role models. Google, Virgin, Amazon, Apple, eBay, NetFlix and a few others will be the advertising market leaders of the future unless the traditional players and others following their lead change their strategies and embrace new technological opportunities. Who would believe that baseball – the oldest and most tradition-dependent enterprise – could be a source of inspiration for media companies?

A recent example of outdated thinking is the Cabletelevision Advertising Bureau's letter sent to advertisers and selected agency executives in response to the lethargic Upfront market.

Turner Broadcasting has, for several years, been touting its "One Television World" approach to media selling and buying. Although Turner's focus is on achieving pricing parity between cable and broadcast advertising, viewers have progressed beyond the idea of a One TV World to the reality of a "Whenever, Wherever World" that extends viewing across multiple distribution platforms beyond television. It's for this reason, among many, that the recent letter sent to clients and some agency execs by CAB president Sean Cunningham was ill-advised. Live by the sword, die by the sword. Within the next few years – perhaps months – online and mobile sales execs, digital out-of-home sales execs, and others will throw Cunningham's words and ideas back in the face of the cable TV industry. According to reports, Cunningham wrote "cable's efficiencies give it a profound advantage over broadcast," and the time has come for clients to take advantage of cable's lower CPMs. According to Adweek, Cunningham commented "The letter is our way of reminding everyone that there's a way for advertisers to get what they want, even in an unprecedented economic environment." Cunningham makes an assumption that marketers want what media companies are offering today. What they really want is 1) low cost advertising exposure and 2) high value marketing connections to consumers enabled by technology.

Even now, myriad online media -- not to mention radio, out-of-home, and other media -- are making the case not only against broadcast but against cable that low-cost alternatives are available for delivering ad impressions. Within cable there is an obvious price-based hierarchy of larger, higher rated networks that command higher CPMs vs. smaller more efficient networks that often offer comparable value. A senior media agency executive told Jack Myers Media Business Report "Last year we tried to take network prime money and buy just the top rated cable programs instead. We ended up with a comparable CPM at only half the average rating. If one believes that all rating points aren't equal, then cable isn't necessarily a better value. And don't get me started on the increased clutter and ridiculous amount of promotional announcements (often in the "A" positions)."

Cunningham's letter has put media buyers in the position of justifying broadcast's superiority over cable, rather than spurring the industry to accelerate cable investments. I learned from one of my early sales managers, "Sell Your Strengths." If pricing advantages are the cable industry's greatest strength to put forth in a letter to advertisers, it's going to be a long, cold winter for the industry. Traditional media, and many digital media companies, are locked in the battle for market share, fostering a downward pricing spiral across the media landscape. At the same time hundreds of innovative companies are emerging to offer enhanced high value marketing connections that enable marketers to reach their consumers in far more effective ways. By failing to move quickly to embrace these advances, media companies are allowing their existing business to fall into a death spiral while empowering new competitors to attack them at the edges of innovation.

In his letter, Cunningham wrote "On the sell side, the stalled market is largely due to the broadcast networks' refusal to lower their CPMs in any meaningful way, despite their worst year on record for ratings performance." I expect Sean and his members will soon learn that clients are looking for across-the-board cost cutting from all vendors, and if they are successful in extracting decreases from the broadcast networks, they will be demanding equal or greater decreases from cable. The decision by broadcast networks to hold out on pricing decreases was the best case the cable industry could have hoped for. It would have been more appropriate to send a letter commending and supporting broadcast and to stand together as a One Television World.

Cunningham's outreach is just one more unfortunate example of an industry holding onto a life raft of outdated beliefs and paradigms. The CAB might consider lobbying its member MSO's to more aggressively institute addressable capabilities and interactivity to assure the industry can compete effectively in the future and deliver true marketing advantages to its clients.

Responding to the high tech analytics being introduced on the baseball field, veteran Houston Astro's scout Paul Ricciarini told The New York Times "It's the same diamond and the same distance between bases, but the way the game changes from generation to generation, you have to adapt with it." In the words of Bob Dylan,

"For he that gets hurt will be he who has stalled
There's a battle outside and it's ragin'
It'll soon shake your windows and rattle your walls
For the times they are a-changin'."

Jack Myers is a media economist and consults with media companies, agencies and marketers. He can be reached at jm@jackmyers.com.