OK, no one has been writing about what may be the most dangerous thing to locally owned business since Wal-Mart: satellite television. That’s right, the little ugly dish pointing to the Southwestern sky that is popping up all over the place.
I own a small but mighty ad agency. Most of our clients are local. We need to reach market segments the same way national advertisers do. Want to hit teens, you buy MTV, housewives in midlife crisis, E!, Oxygen, HGTV, sports nuts, ESPN and FoxSports- you get the picture. Used to be 100% of the market had access to broadcast, 80% had cable which included the local broadcasters and about 10% watched on their dish. They did this because the big cable guys had a state sponsored monopoly and kept raising rates to the point that Satellite became competitive, if not cheaper.
Cable also was slow to deliver HD programming- offering only 1 HBO, 1 Showtime and the broadcast stations, albeit late. So, people started buying dishes. Me, I have a 51” HD Sony that was begging for more HD programming, so I went with VOOM- which offered 35 basic HD channels- plus 2 HD HBO and with an integrated HD tuner for the locals- which came in at about the same price as I was paying for Cable, even when I kept the very basic cable for the locals on my other sets- plus the public access channels that the cable company thinks no one watches (I know that at least in Dayton OH, they have no clue how popular public access is).
Now, cable should be cheaper- they have more homes, so they should be able to distribute their costs over a larger base, but on top of all that- they have the ability to sell and insert commercials locally. This is the lifeblood of local businesses that want to be able to target their markets just like the nationals- but with cable penetration dropping with more satellite households, cables ability to deliver eyeballs is dropping, while their ad rates aren’t.
Cable is responding by bundling Voice over Internet Protocol (VoIP) telephony and broadband Internet, and even cell phone service as a single provider. But, until they get out of that fat cat mind set, they are going to gouge themselves into obscurity. The simple fact is, we are moving to delivery of all content over the net with direct IP delivery of programming. Think of the special shows that pop up on your TiVo- delivered overnight direct to your hard drive- that’s the future- with programming and commercials custom tailored to you- the viewer.
But, by the time the kinks are worked out of direct deliver by IP- we may not have very many choices on where to buy from. There will be Wal-Mart, Target, Amazon.com, 2 global banks, and one grocery chain.
Consolidation of ownership in radio has actually driven up the rates to the point that broadcast TV is cheaper in this market. Newspapers are losing readership to the Internet, and TV viewing is dropping off for younger viewers.
Finding new customers is going to be harder and harder through “traditional” advertising methods as the markets become more and more fractured, and the people in charge of our best media tools are asleep at the wheel.
There is another whole entry to write about outdoor advertising, big box stores and tax abatements, but I’ll leave that for another day.
So, when you get right down to it, I am a traitor. My switch to Voom is like divorcing myself from my community and local businesses that are our lifeblood. Is it going to kill my small agency, The Next Wave? In the long run- probably not, since we are media agnostic and work hard to innovate our way into the hearts and minds of our client’s customers. But, remember, you read it here first as cable loses it’s place as the primary pipeline for TV audiences.
What do you think- let me know.