NEW YORK When the CW Network was formed last year, it tapped Bill Morningstar to be evp of national ad sales. Morningstar previously held the same post at the WB network, one of the CW's predecessors.
Since launching last season, the CW has aggressively tested new ad formats designed to improve viewer attentiveness to commercials as the industry grapples with the distraction of DVRs, ad clutter and an array of new media platforms. This season, as the CW has gotten off to a rocky start in the ratings, with the sharpest declines of any network, it continues to test new ad forms.
Last week, in a phone interview with Adweek media editor Steve McClellan, Morningstar discussed some of those techniques, what they've accomplished and how the network and its clients are reacting to the steep audience declines.
Q: Your core audience is down 25 percent this year. How is that affecting your sales effort?
A: Obviously, we're watching it very closely. It's still early. We believe in the power of the shows. We think there is a lot of sampling going on right now, and we're, like a lot of people, trying to make heads or tails of the numbers. We're really preaching patience because there is only one week of ratings that constitute the new currency [average commercial minute ratings that factor in three days of DVR playback]. We are watching it very closely and taking it very seriously.
How are clients feeling at this point?
The good news is people believe in what we're doing and want us to succeed. They also know you can't knee jerk, you've got to believe in your shows and keep fighting the fight. Clients have been encouraging and, obviously, we're going to do the right thing by them as well.
With content wraps, 10-second "cwickies" and a program with no ads in it, the CW seems more willing than other networks to experiment with new advertising formats. Why?
Our belief is that the 30-second commercial is still incredibly powerful and, I believe, the most effective medium for marketers to move product and reach consumers. But the world is changing and we think that the 30-second commercial, when done in conjunction with shorter spots and branded content, is a great opportunity to make it an even more meaningful connection.
Does research tell you that?
Research shows that the sum of the parts is greater when you can blend entertainment with commercial messaging: The consumer has positive perceptions, great recall, and they appreciate it and want more.
If the ratings don't turn around, will it force the network to be even more innovative?
We still think that we have a powerful sales proposition in delivering young adults, but we know that young adults are a tricky audience and we need to be aggressive in how we work with advertisers to keep defining ways to connect with them above and beyond the television. We have a few tricks up our sleeve that we're working on in the laboratory.
I can't tell you more than that right now.
How do cwickies work?
It's a different form of storytelling, where we have the same sponsor airing three 10-second shorts leading into a long-form commercial, like a two-minute spot.
How many of those have aired?
Two so far. The first was Electronic Arts' John Madden '08 [videogame] release. That was just two months ago. Last month we did one with New Line for the release of Mr. Woodcock.
How did the cwickie idea come about?
That really came about from our on-air marketing—realizing how effective it can be with a quick hit.
Promoting your own shows?
Yeah, it stops you in your tracks sometimes when you see a quick burst like that. The reaction is, "Whoa, what was that?" And that's what they're designed to do is get that whoa-what-was-that appeal from the viewer.
Your new magazine show CW Now doesn't have traditional ads, but the segments are all branded content. Is it working?
Well the sponsor of the first episode was Wal-Mart promoting Halo 3, and sales went through the roof, so we like to take full credit for that [laughs]. I think there were five times more sales of Halo 3 games than people watching the show. More than that. But seriously, it's never one thing that helps advertisers achieve successful results.
The ratings for the show have not been strong out of the gate, something like a .2 or .3. How problematic is that?
You always like your ratings to be higher. But the show and the integrations have evolved. Each week it's gotten better, and we've learned a lot, and these are exactly the types of things in today's environment that we should be trying with advertisers.
You've sold the entire first season of CW Now to Publicis Groupe's MediaVest. Does that mean it's safe for the full first run?
It's a partnership. At certain times during the season we have checkpoints, and we'll look at each and say, "How do you feel, do you want to keep going?" So we're fully committed to it, but at the same time we want to make sure we're both feeling good about the process.
If a client wanted a five-second spot, would you sell it to them?
If you can tell a story in five seconds, we'll sit down and try to figure it out. We want to make sure that it works for a given program or a given night.
What's the craziest idea for a new ad format that you've turned down?
They're like my kids, I love them all. I don't want to throw anyone under the bus.
CW developed so-called "content wraps" that take over a commercial pod with a branded-content segment featuring the show's stars and the sponsor's brand. Is that a proven format yet or still in test mode?
It's proven and successful. The retention and engagement results you can't dismiss. But with a lot of these things it's as much about the learning as it is about results. With each content wrap we do we learn a little more, from where to position the pods to how best to blend talent into the wraps to driving people online after you do it for an even deeper level of engagement. The learning is invaluable.
Do you have advertisers lined up for those?
It's not like there is a rack of them and you come and you buy it. The key to success is in the customization. And that requires sitting down and identifying what is the brand, brand objectives, how that best matches up with our shows and then build something that will be meaningful to the viewer.
More than any other network, your core target is responsible for the rapidly changing media landscape. They watch video iPods, YouTube, streaming video. How are you adapting?
The good news is they are watching more television than ever before. We have to find ways to make the linear TV experience as impactful as we can because the marketers still need that scale. But now we have the ability to also put our content on these emerging platforms in unique customized ways. So marketers get scale and the ability to serve the passionate fan who wants more.
What's the current state of the TV ad market?
Scatter continues to be very strong for us and really all the networks, just as it has been for the last six months. Marketers are spending more in television right now. I think that will continue for the foreseeable future. Certainly I think scatter will remain strong for the rest of this year.
How is the new ratings system, based on viewing to commercials, changing the ad sales business?
It's about accountability. The more accountable that television is the better. Clients demand that and it's allowing us to have a greater sense of certainty when we talk to advertisers about what they're getting.
Do you see a jump to minute-by-minute ratings from the current average commercial minute ratings anytime soon?
It's hard to tell. Average commercial minute seems to be a level of data that everyone is comfortable with. That said, if something better comes along we wouldn't be doing our jobs if we didn't look at it, analyze it and see if there's it's a better metric.
If clients come to you next season demanding minute-by-minute ratings will you comply?
is open for discussion.
Thoughts about CW's new season so far?
Well, Gossip Girl is a show that has definitely struck a chord. It's the No. 1 down-loaded show on iTunes. You go to the Yahoo! Buzz Meter and it' s at the top of the charts there. It tells you that there's something going on with that show beyond what you see in the Nielsen ratings every day.
What about Reaper? Critics like it, but agencies say it's gotten off to slower than expected start in the ratings. Are you disappointed?
Creatively I think that Reaper is a fun, out-there show. It's building in the ratings. One of the trends we're are seeing in TV this year is that a lot of the shows that are really popping this year are year two- three- even four-year shows. Especially for a network like the CW we need to be even more patient. There's a lot of sampling going on right now and I don't think viewing patterns have fully been established so I think you have to stick with shows you believe in creatively, keep pushing and promoting them and hope the word of mouth picks up and that the ratings will follow.
Clients are focused more than ever on behavioral trends. Any new insights that you've discovered about the CW audience?
I think passion. The passionate fan of Gossip Girl wants to go online and talk about the show the next day. They want to learn about the music in the show. They want to know about the clothes the characters are wearing. With America's Next Top Model, they want to talk to the girl who got booted off that week. Each show has its own experience and that's what the advertisers are looking for.
Are the losers on Model available to chat on line?
What we're doing with Model is a fantasy program. You know how fantasy is really big with football fans? Well we're doing a Top Model Fantasy Challenge. You can go online and pick who you think is going to survive each week and win the challenges and points.
One recent study concluded that many marketers expect to be spending as much money on social media as traditional media within the next five years. Does that sound plausible and what impact would it have on the network TV business?
I think television is an easy target. There is a lot of experimentation going on right now. And I think that is good because the more that people experiment with these other platforms the more they realize that sight, sound and motion and the scale of TV is still the most effective platform for their brands to be on. Marketers are trying to sell product and you can't lose sight of that. While it's fashionable to sort of knock TV, and it's not cool to say it's really effective for the marketer, it is. Yes, the world is changing. The average consumer has 100 channels at their fingertips and next year it will probably be 300 channels. But TV still works and you can't lose sight of that.
What's your view on auctions to sell TV ads online?
Auctions are a funny thing. If you're trying to make a consumer connection with a brand, you need to make sure you put the right creative ad in the right show. That requires a human evaluation and level of sophistication that's beyond the auction process. With an auction you get what you pay for. If you want remnant space on the Internet you can get it. But you lose control of the environment in which your brand is being exposed. It's not something we've really considered.
How worried are you about increasing DVR viewership and commercial skipping?
I think the DVR is a great device. It's consumer friendly and it allows people to watch more television and more of what they want when they want. That speaks to the power of broadcast television. The challenge is making sure people watch the commercials within it. We'll figure that out as we move forward. That's really what all this innovation is about.
But don't you have to figure that out before DVRs become too widespread?
I'm not smart enough to predict the future. Right now it's only in 20 percent of the households. Things take time. And there is something nice at the end of the day about sitting back and watching television. We're all getting bombarded with so much information and technology and cell phones and e-mails. It's easy to forecast the end of TV as we know it. But it's still just a great experience to turn on a flat screen and watch with your kids.