In a TiVo World, Television Turns Marketing Efforts to New Media
September, 6 2006
The New York Times, 09.05.06
Much of the ferment that is remaking Madison Avenue is centered on the changes in television, still the largest and arguably most powerful advertising medium. Two deals that are scheduled to be announced today are indicative of the ways TV is headed in new directions to meet the new needs of marketers.
One deal involves CBS, part of the CBS Corporation, and TiVo, the leader in digital video recorder technology. The agreement is intended to make it easier for TiVo subscribers to sample the four new series on the CBS schedule this fall: “The Class,” “Jericho,” “Shark” and “Smith.”
For instance, for a week beginning Monday, TiVo will offer its 4.4 million subscribers a preview of the premiere episode of “The Class,” a sitcom that broadcasts Sept. 18 on CBS.
The agreement is the first time that TiVo, which is trying to change its image as being unfriendly to advertisers, and a broadcast network have teamed up for a sneak peak of a new series. Previous preview deals struck by the broadcasters have been off television, offering computer users a chance to watch streaming video on Web sites like msn.com and yahoo.com.
The other agreement involves ITN Networks, a media sales company in New York with estimated annual billings of $300 million. ITN assembles customized national TV networks for advertisers from the commercial time it buys from local broadcast stations. ITN clients include Burger King, Capital One, Clorox, GlaxoSmithKline, Johnson & Johnson, Pfizer, Sara Lee and Sears.
A group of media heavyweights — Sony Pictures Television, Veronis Suhler Stevenson and the Zelnick Media Corporation — is buying a majority stake in ITN, spending an estimated $200 million initially as part of plans to eventually invest up to $250 million. The group also intends to expand ITN beyond broadcast TV into other realms like cable and satellite TV, the Internet and video games.
For all the focus on new media, “people will not stop watching television anytime soon,” said Strauss Zelnick, chief executive at Zelnick Media in New York, who will take the new post of chairman at ITN.
The problem with television is that “for years, it’s been a one-size-fits-all medium, when advertisers want to reach targeted audiences more effectively,” Mr. Zelnick said. “We’re trying to look around the corner and benefit from where the media market is going in the future.”
The agreement between CBS and TiVo was developed with Interpublic Media, part of the Interpublic Group of Companies. TiVo signed a multimillion-dollar advertising agreement with Interpublic last May, which was followed last week by a similar deal with the Omnicom Media Group division of the Omnicom Group.
“We now have comprehensive agreements with two of the top three advertising holding companies,” said Tom Rogers, chief executive at TiVo in Alviso, Calif. (The third is the WPP Group.)
“A year or more ago, TiVo was a real pariah in advertising circles,” Mr. Rogers said, because of fears it would enable viewers to more efficiently avoid commercials by zipping through or zapping them as they watched shows on their DVR’s.
Now, advertisers and agencies understand that spot-dodging “is a fact of modern television viewing behavior,” he added, “and how TiVo can be a force to make advertising more effective.” For example, a service called TiVo Product Watch gives viewers the option to download on demand commercials that are meant to be more creative and informative than conventional spots.
As part of the deal between TiVo and CBS, TiVo subscribers will be able, with one click of their remote controls, to record the premieres of all four CBS series newcomers when they are broadcast on Sept. 18 (“The Class”), Sept. 19 (“Smith”), Sept. 20 (“Jericho”) and Sept. 21 (“Shark”). It will be the first time that TiVo has grouped network shows to be recorded as a bundle.
The TiVo agreement is among various efforts by CBS to let consumers sample its prime-time series for the 2006-7 season. There will also be previews of “The Class” and “Shark” on 40,000 American Airlines flights this month and streaming video of “Jericho” on yahoo.com.
George F. Schweitzer, president at the CBS Marketing Group division of CBS, calls it part of an “outer-Net strategy” to attract viewers in a cluttered market. Other offbeat examples include advertising on eggs, postage stamps, water coolers, elevator doors and cruise ships.
“We’re in all the mainstream media, too,” Mr. Schweitzer said, “but we like being in the edgier places where our competitors are not.”
ITN, founded in 1983, is not an actual network like CBS, although it is included in the national Nielsen people meter ratings. Rather, ITN forms ad hoc networks on behalf of its clients based on viewer characteristics like age and sex. For instance, if Clorox wants to reach women ages 25 to 54 to sell them a new bleach, ITN buys commercial time on local TV stations in programs that appeal to those viewers.
The deal with the investment group “provides us with an opportunity to take the concept to a higher level,” said Todd Watson, president and chief operating officer at ITN, “and target viewers based on lifestyles and behaviors.”
One such effort is already under way, he said, which ITN calls the Mom’s Time Network, intended to help three marketers of packaged goods better aim their pitches at working women with children.
•The current managers of ITN will continue in their posts. In addition to Mr. Watson, they include Timothy J. Connors Jr., chief executive. Mr. Connors and Michael Kammerer have been the owners of ITN; they will retain a minority stake.
Zelnick Media also owns interests in Columbia Music Entertainment; National Lampoon; OTX, an online market research company; SkyMall, the in-flight catalog company; Time Life, the seller of recorded music; and UGO Networks, for online game players. ITN is its “second deal in the advertising space,” Mr. Zelnick said, after Naylor Publications, a trade publisher.
Executives from Veronis Suhler Stevenson and Sony Pictures Television will also join the ITN board, along with Mr. Zelnick. They include Kevin S. Waldman, managing director at Veronis Suhler Stevenson, an investment bank specializing in the media and information industries, and Steve Mosko, president at Sony Pictures Television.
Sony Pictures Television produces shows like “Days of Our Lives,” “Jeopardy,” “Rescue Me” and “Wheel of Fortune.” It is part of the Sony Pictures Entertainment division of the Sony Corporation of America, owned by the Sony Corporation of Japan.