Mark Cuban, an internet media entrepreneur who made his billions in the first dotcom wave, and who is never short of an opinion, woke up the Cable Telecommunications Association for Marketing (CTAM) conference in Washington last month by declaring: "The internet is dead." He added: "The future is actually television itself," which was a refreshing rejoinder to the calls TV in the US was on its last legs.
But Cuban might well have a vested interest. You see, he is an investor in HDNet, which is a high-definition TV business. But he is putting his money where his mouth is, and so too are advertisers, according to the recent TV upfronts, the annual ritual where media agencies negotiate broadcast buy commitments for clients up to 18 months in advance.
This year was the one where it was all supposed to go very wrong for TV. Network TV audiences aged between 18 and 49 were down 10 per cent, coinciding with worries over the shift in trading currency from programme to ad break ratings.
Digital video recorders are expected to reach 30 per cent of homes, undermining TV's advertising commercial value. What's more, we are also glimpsing signs of a softening consumer market feeling the effects of easing house prices that we saw in the UK a few years ago. If it is a truism retailers feel the pinch first, maybe there's something in the fact that Wal-Mart, Best Buy, Sears, JC Penney and Kmart switched their agencies in the past six months. And, of course, the internet is the elephant in the room, whose rise is meant to come at the expense of TV.
Yet, marketers' belief in TV advertising carries on. The TV upfront sales market has taken $18 billion, a rise of 5 per cent year on year. Prices have also risen between 7 and 9 per cent. And broadcasters seem intent on establishing a firm beachhead in the digital arena, selling video-on-demand more aggressively, with more interactive applications.
Comcast Network, a cable operator, commented that three years ago, one of every ten deals had some sort of a digital extension to it. Now, it's 50 per cent. And for the first year, all five networks are developing digital programme properties. NBC, for instance, has created "The Office 360", a digital offshoot of the show, which allows users to pretend they work at Dunder-Mifflin, the company where the sitcom is set.
The CW TV network's new programme Gossip Girl will invite virtual visitors to attend exclusive concerts and screenings online. Every one of these digital extensions is for sale, and with the scalability of the audience creating experiences, that makes them a genuine commercial proposition for advertisers.
So TV is back. It's the future. And Madison Avenue is continuing to work out how to leverage the medium in order to grow brands.
- Antony Young is the president of Optimedia US.