The iTunes TV Network?

One of the bigger topics of discussion in the media world this week (fueled by a feature story in The New York Times) is Apple's push to lower the price of TV shows on iTunes to 99 cents, roughly half the current price. Apple's position is that 99 cents is the ideal number, proven by the massive success of music downloads at this price; and they are aggressively trying to get their TV network suppliers to agree.

I started buying TV shows and movies on iTunes just about a year ago and now watch almost as much TV on my iPod and lap top as I do on the 40" plasma screen in my living room. I am basically paying for this content twice, once to Apple on my credit card and a second time to TW Cable in my monthly cable bill.

For me, the iTunes option is purely a business travel survival tactic.  I am OK paying 34.95 for an entire season of my favorite show, "30 Rock", to have on my iPod/laptop and ease the pain of a long business trips. But I was reluctant to pay $9.99 per episode (or $54.95 for all six segments) of the Ken burns documentary "The National Parks - America's Best Idea", as I was some other shows.

I would certainly sample at a lower price, which probably would lead to a purchase of more episodes. I buy dozens of songs every month on iTunes without ever thinking twice.

As reported in the NY Times article only 375 million TV episodes have been downloaded from iTunes compared to 10 billion songs. iTunes clearly remains a music store and will need to do something dramatic to grow the TV side of their business.

The latest news is that CBS, the highest rated network, may be willing to test a few shows under a dollar in the near future.

If the networks cooperate and Apple has even a quarter of the success with TV that they are having with music, the implications for the TV industry will be enormous.

Two billion dollar questions:

1. Will the new revenue from iTunes (and the other services like Netflix and Amazon who would be likely invited to participate) offset the lost revenue from broadcast advertising as more viewers migrate to this new platform?

2. What will be the impact be to the existing television subscription providers (cable, telco and satellite) as consumers bypass them and create their own a-la-carte programming packages?

Advertising In the Super Bowl is a Good Bet

A few years ago a friend of mine who ran a digital agency was outspoken in his belief that advertising in the Super Bowl was a colossal waste of money. At the time, for less than the cost of one thirty-second ad in the game, an advertiser could take over the home page of MSN, Yahoo and AOL for an entire day, reaching an even bigger audience and engaging them in a more direct manner. His view, albeit a self-serving one, was that this was a much better way to make a splash with a couple of million dollars; and I agreed.

After all, the game could be a blowout or a yawn; and creating a buzz-worthy commercial is always an expensive gamble. And then there is the jaw-dropping mathematical calculation: $2+ million = 30 seconds = $68,000 per second.

But the emergence of the social media engine has changed everything. Weeks prior to this year's Super Bowl, the "stream" was flowing with news and gossip about who was going to be in the game and who wasn't (Pepsi actually received millions of dollars in attention for choosing to sit out), and whose ads were going to be naughty (Go Daddy) and nice (Google).

During the game, millions of Tweets provided real time viewer commentary on the popularity (and effectiveness?) of the ads. For days after the game, even the ads that ranked towards the bottom of the popularity polls were getting written about and linked to in the blogosphere and garnering millions of additional views on You Tube, NFL.com, their own sites and other video destinations.

Stuart Elliot wrote in the New York Times  the other day about renewed interest in a trend he calls "big event television" which he went on to describe as programs "that can attract large, involved audiences at a time when consumers have been atomized into tiny niche markets."

Seems every advertiser with the means should consider the Super Bowl, and start planning the creative and social media executions a year in advance.

Facebook's Advertising Potential

I have become more active on Facebook of late. Of the 350 million registered users, I am now one of the 175 million that log in every day and one of the 35 million that update their status. Other statistics from Facebook's own press room are even more eye opening:

•  2.5 billion photos uploaded to the site each month
•  3.5 billion pieces of content (web links, news stories, blog posts, notes, photo albums, etc.) shared each week
• 3.5 million events created each month
• Fan pages have created more than 5.3 billion fans

With such enormous reach and such a bounty of user data, how big can Facebook's advertising business become? Can it possibly approach Google? Estimates peg Facebook's ad revenue to be in the $1 billion range for 2010, a tiny fraction of Google's estimated $25 billion. Yet traffic to both platforms is similar.

I spent the last week documenting every ad I was exposed to while logged into Facebook. Most of the ads were from direct marketers - insurance brokers, credit card companies, online games from Zynga such as Mafia Wars, as well as ads promoting Facebook ads. Many of the ads screamed out my age or college alma mater, along with an offer of some sort that provided a cheesy peek at Facebook's targeting capability. Another peek, less cheesy, came when I included a photo in a status update and was immediately served an ad for a new camera; although this might have been a coincidence?

Google's ad revenue has grown so explosively because the company connects advertisers with customers who are actually looking for things and only charges when an action is taken. Facebook provides marketers something much different, but perhaps even more compelling.

A blogger describes Google's ads as "pull advertising" (the consumer is actively pulling the information) and Facebook advertising as "push" advertising (the advertiser is pushing their info in front of a much larger group of consumers who are ideally targeted, but not necessarily in market at that moment.)

Or as an another blogger puts it: "While Google is fundamentally keyword-targeted, meaning advertisers bid on keywords, Facebook Ads are fundamentally profile-targeted, meaning advertisers bid on people."

And while both companies go to great lengths to protect the user experience, Facebook's ads are significantly bigger than Google's and include images.

It seems Facebook is just getting their ad business going and is relying mainly on low hanging fruit from direct marketers (Zynga alone represents a significant percent of Facebooks entire ad revenue) and their sales partnership with Microsoft. But with the ability to target ads based on user profile data along with other user information and activities to an audience of millions, Facebook is sitting on an enormous potential ad business that will appeal to direct marketers and brand marketers alike. (Google is overly dependent on direct marketers and aggressively investing and developing products to engage the brand marketers who represent much bigger budgets.)

Additionally, Facebook's brand fan pages, which are free to use, have become an essential ingredient in every business's marketing plan.

A recent Mashable article concluded: "Today, Facebook stands on the precipice Google inhabited just before it became a top money-maker. By taking a page from the Google playbook, and aggressively marketing — and explaining — its power to influence buying decisions, Facebook ads could become as essential to 21st Century marketing as the yellow pages were in the 20th Century."