Bentley College Marketing- Honors

This blog is for MK 402-H01 and the greater Bentley College population.

Tuesday, February 28, 2006

"Revenue Revolution

From The Brand Builder (2.17.06) by Oliver Blanchard

In his post entitled “Revenue Revolution,” Oliver Blanchard of The Brand Builder Blog brings to light a new potential cash cow for television networks: downloadable television programs. As capabilities of networks become more sophisticated, many are beginning to utilize their broadband connections in new and different ways. For a few, the newest additions to their money-making arsenals are downloadable TV programs. These are downloadable, commercial-free, $1.99 episodes available to consumers through their broadband connections.

For television shows with a large viewer base, this means revenue for networks, and lots of it. Blanchard puts this into perspective with numbers to ponder the implications of this, pulling information from another marketer exploring this phenomenon, Diane Mermigas. One episode of a popular television series typically generates approximately $12 million in gross ad revenue and has about 17 million viewers, breaking down to about $0.57 in ad revenue. The same downloaded episodes, commercial-free and available at the viewer’s convenience, generate approximately $15 million revenue, breaking down to a base figure of $1.44 revenue per download (70% of total $1.99 download revenue). These staggering figures mean that this medium could generate more cash flow that an organization’s advertising. The beginning of what Diane Mermigas calls the “digital broadband rollout” is ready to seriously alter the advertising landscape as it is presently known.

“Revenue Revolution” is marketing-related because it discusses possible threats and challenges on the horizon for advertising professional. The “digital broadband rollout” will likely affect a company marketing departments or advertising agencies in the near future in how they choose to spend their advertising dollars and how effectively they will be able to negotiate media buys with those dollars. The article illustrates yet another way that technology is affecting how consumers are able to be reached with product messaging.

This article informs marketers in that it attempts to map out the future landscape, or environment, in which advertisers will be forced to operate. Blanchard notes that this change means a power shift in favor of the networks, as they have been dealt this commercial-free downloadable ‘trump card.’ He does not mean to say that this is the death knell for TV advertising, as it is cost-prohibitive for frequent viewers and the elimination of TV advertising would decrease the appeal of commercial-free downloads, but he does warn marketers to be aware of the changing landscape. Advertisers must be aware of this, meaning possible reconsideration where to place advertising budgets in order to most effectively reach the consumer. Those who are adept at finding ways to neutralize this threat, possibly by identifying new mediums to reach the consumer, will succeed.

As a soon-to-be advertising professional, this article improved my understanding of the environment that I will be facing as I enter the workforce. So often in advertising textbooks and other literature, it becomes a question of what medium to use to reach the buyer: television, radio or print. It is easy to fall into the trap of thinking that mainstream mediums are the best ways to reach the masses. This article implies that marketers need to find more creative, out of the box ways to cost-effectively reach customers. The advertising landscape is changing in a way that is forcing them to. This knowledge will give me, any other marketing professional, a leg-up in the field.

This article and its links were informative in describing what the marketing landscape will be like in the near future. Although I thought that this was a very useful post and very applicable to marketing practice, it might have been beneficial for the author to have taken the idea one step further, providing some practical solutions for marketers trying to operate in this digital, downloadable age after explaining the situation at hand.

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