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5 Ways Television Changed Dramatically in 2014

For ratings, reality TV and streaming, it was a wild year

It's called "television," it just doesn't involve a TV anymore.

Television advertising has been a pretty conservative marketplace: You buy Nielsen ratings, you make 30-second advertisements and sometimes you buy product placement.

But the sudden ascent of non-Nielsen-rated content has created a gaping void in the measurement world. And popular genres like horror, with shows such as The Walking Dead, Game of Thrones and American Horror Story, aren't super friendly to adjacencies and product placement. Who wants to see consecutive bites taken out of a leg and a cheeseburger? (Game of Thrones, of course, isn't even ad-supported).

So here are a few ways the industry is changing, and what it means for 2015.

1. Ratings went crazy.

What happened?
The measurement world's lack of visibility into the mobile and tablet spaces generated shrugs until fairly recently.

It's become spectacularly—maybe horribly—easy to spy on computer users' surfing habits (no, "incognito mode" does not hide you from anybody except your mom). But your cell phone and your iPad are still difficult to track, mostly because in-browser viewing isn't the norm. Video apps like Hulu are much harder to track with cookies because you aren't in your browser. And that's where a huge, valuable chunk of viewing takes place.

So Nielsen (which suffered a serious black eye at the beginning of the season by spilling coffee on the keyboard or something on a bunch of its Live+SD figures, resulting in some major corrections) is racing to make its gross ratings point tool, the one advertisers pay for in non-theoretical money, the standard across not just linear cable and broadcast, but new media, as well. It's not there yet, partly because there's still significant dispute over whether or not an ad delivered on a smartphone is worth the same amount of money as an ad delivered on a 50-inch plasma screen.

Where does that leave us?
In flux. Nielsen competitor ComScore is trying hard to create a product that will loosen Nielsen's grip on TV ratings, but that's a nearly impossible task. The question is less whether Nielsen's TV ratings will go away than whether traditional linear cable agreements will eventually go away and Nielsen's ratings system will become obsolete. If it does, it will take several years, and by that time there may be new solutions. And new problems, of course.

2. Reality TV lost its mojo.

What happened?
Various things: On broadcast, people just got sick of American Idol, and then Utopia, the show Fox hoped desperately would replace it, turned out to be a Coke II-level bad idea and ended up canceled before Christmas. There are still reality shows that do OK on broadcast, of course, but everything not called MasterChef Jr. is down. And most reality programs, including NBC's flagship, The Voice, are down double digits.

On cable it's much, much worse. This summer, which is traditionally the time for cable programming to shine, the biggest and baddest of the reality networks were down by huge numbers: History was off 24 percent, A&E was down by 30 percent, Discovery was off by 15. The reality networks, with a few exceptions (Discovery's all-murder-all-the-time network ID among the main ones), are underperforming. So one of the best ways to get your brand seen—integrated ads on reality TV—is losing traction. NBCU shut down G4, but rebranding Style as Esquire has seen the network do worse, if anything (it's down by 25 percent for Q3). Again: This isn't a marketing failure. The whole cable landscape is changing. But reality is the canary in the coal mine.

Where does that leave us?
Likely with fewer networks on the dial in the next couple of years. There's just too much that's too similar on TV, and the wars of attrition with cable operators mean all packages just aren't going to contain all channels anymore. They can't afford to.

The industry has long pretended the rise of Netflix just means viewers prefer their content on demand; another way of looking at it is that they probably also prefer reruns of Murder, She Wrote and Star Trek: The Next Generation to deadening tragedy about pawn shops and neglectful parenting.

3. Data brokers came out of the shadows.

What happened?
You remember the direct marketing boom in the 1990s? Not only did those guys not go away, they have more information on you than you ever thought imaginable, and they can scale it up and leverage it to people who want to sell you things. And yes, they use it all—there's a company called Argus that has your credit card bills.

Third parties like Acxiom and Experian have an incredible amount of information, and the CEO of Acxiom told us consumers should have to pay to prevent their financial data from circulating among anybody who wants to buy it, basically like getting an upgrade on an airline. It's not entirely dissimilar from three guys in cheap suits explaining that you don't want anything to "happen" to your new store, either, but so far it's legal, and these companies are desperate to keep it unregulated by the government.

Where does that leave us?
Hard to say. The Consumer Financial Protection Bureau is scrutinizing these businesses, but they're also patronizing them (possibly in order to scrutinize them?), spending six figures to learn what companies like Argus know. ROI data is worth more than gold—worth more than ratings, arguably. It's fair to point out this data isn't necessarily that accurate—Acxiom doesn't have my correct address on file—but in the country of the blind, the one-eyed man is king.

4. We saw the first crop of streaming shows as good as premium cable.

What happened?
If you've been to the interminable Digital Content NewFront presentations in New York in the last few years, you've spent, for example, four butt-numbing hours in 2013 hearing content execs at AOL go on about celebrity vanity projects and reality shows that look too cheap for basic cable.

But this year something changed, likely spurred by Netflix's good, if overpraised, House of Cards: Netflix doubled down. Then Amazon followed suit with Transparent. Then Yahoo Screen announced it would pick up the longed-for sixth season of Community and retain its budget. Then Hulu nabbed well-regarded content exec Craig Erwich and told viewers it would shoot the works on a big-ticket miniseries adaptation of Stephen King's thick-as-it-is-tall bestseller 11/22/63. By the end of the year, we had two streaming originals on our Best of 2014 list, and they were in good company.

Where does that leave us?
As consumers? In hog heaven. If you're an advertiser, there's a lot to think about here, especially the integrations that companies like Netflix are quietly selling to defray the cost of producing jaw-droppingly expensive fare like House of Cards. With reality on the rocks and scripted shows in a constant battle for the best teleplay, it's worth hitching your wagon to the right star.

5. TV learned to love programmatic.

What happened?
I said a while back that linear cable would never sell premium inventory programmatically; I'm sticking with that. What's changed is linear cable likely will be unrecognizable in 10 years—even HBO is decoupling its highly prized service from a traditional cable sub because, hey, most of the cable providers also sell Internet access, so the money's all going to the same place, right?

One of the unintended consequences of this kind of change may be the freezing out of satellite services such as Dish and DirecTV (it also may not be unintended—those two carriers account for more than their share of blackouts and New Year's Eve deal renewals). But ultimately, TV subscriptions are getting sold differently as consumers express their displeasure with the ever-pricier cable subscription model. That means more and more inventory is delivered in apps and through browsers. And that means programmatic sales, for sure.

Where does that leave us?
Well, consensus seems to be that it leaves advertisers scrambling to move money from linear cable to digital. That gets characterized without fail as a vote of no confidence in network programming, but it's really not; it's a vote of no confidence in the cable industry.

People are still consuming TV content, even though there's plenty of good stuff on streaming. They're just consuming it when they want to, rather than when networks broadcast it, and that creates challenges—you have to buy better, and you have to know more about programming strategy in order to buy. That leaves everyone a little high and dry because it moves purchases closer to air date and messes up predictive budgeting. But it may also increase effectiveness in the short term. And in the long term, it may very well end up being the only way business gets done.

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