By Mellisa Gillies | October 06, 2009

mgillies@metanmedia.com

If you think you’re witnessing a new media juggernaut with megashows like American Idol, So You Think You Can Dance and Survivor, you’re too young to remember the Golden Age of Television, where Texaco Star Theatre, The Buick Circus Hour, The Colgate Comedy Hour, Pabst Blue Ribbon Bouts, and the Ford Television Theatre dominated the TV screen with exactly the same type of programming as today’s shows. How did the content and advertising industries come full circle?

In the early 1950’s, at the dawn of the broadcast television age, nearly every primetime media show was headlined by a big star, underwritten by an advertiser, and filled with advertising from sponsors whose brand messages were shamelessly trumpeted throughout the sixty or ninety minutes of drama, comedy or music content. Television was a new medium for actors, directors and advertisers. The ad agencies played a role as both brand manager and creative director for the programs, just as they had done for the previous forty years on radio.

In fact, no one knew how to treat this new TV audience, because no one really knew what audience was tuning in to watch. Were they radio listeners (older viewers), moviegoers (younger viewers) or a new hybrid of post World War II entertainment seekers made up of young families who were staying at home, raising families and looking for cheap entertainment?  In reality, the audiences turned out to be made up of a broad cross section of age, race and gender. The advertisers had hit the mother lode thus the introduction of the Golden Age of TV.

And then came Cable TV. Initially cursed by the TV networks who saw their audiences fragment and show profits decline; and embraced by advertisers who found cheaper and better ways to reach their target audiences on niche shows, cable underwent its own metamorphosis over the next thirty years.

In the 1980’s, as cable homes populated the viewer horizon with increasing frequency, the Golden Age audience began to fracture and fragment, giving way to a new paradigm of viewership, driven by niche shows targeted toward smaller, yet more loyal and more valuable consumers. Those audiences’ interests coincided more closely with the products and brands who purchased the shows’ advertising minutes. MTV for the young generation, E! for the movie fan, ESPN for the sports nut, and the mother of all ideas, CNN for the news watcher. For nearly 30 years, cable television reached its own crossroads with shrinking bandwidth and audience critical mass.

As the 21st century unfolded, a new media alternative began to gain critical mass in America, with tens of millions of former heavy TV viewers looking for a faster and easier way to control their consumption of entertainment. Called ‘disruptive innovation’, a term coined by Harvard Professor Clayton Christensen, this viewer habit shifting describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors. 

An innovation that is disruptive allows a whole new population of consumers access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.  Think of how cell phones replaced fixed lines, how discount retailers replaced traditional department stores and of how radio, television and cable all were disrupted by their newer, cheaper and more convenient competitors (including the Internet).

Throughout the launch and growth of media platforms, branded content has always played a critical role for advertisers, the content creators and their audiences. As an industry concept, “branded entertainment marketing” integrates creative content with advertising to provide the consumer an entertainment experience that doesn’t separate the content from the sales pitch.

Back to American Idol. It’s a perfect example of how “content and commerce” partnerships work in the music industry. The American Idol producers integrate iPods and Ford Mustangs with the songs and performances of the show’s contestants. The show owns the publishing rights of the songs that are performed in and filmed in Fords, placed on iTunes and purchased by consumers. The voting results for the contestants phoned and texted into AT&T wireless create revenues for the show’s producers, as do the concert tours, merchandising and music publishing.

Acting as revenue aggregators, American Idol’s show producers own and administer a percentage of every revenue stream. More importantly, the producers expand and extend both the ‘Idol’ brand and its brand partners to a larger universe of consumers in the process.

This “360° business model” is a hedge on any branding bet. With music as the driving force, marketing strategists are using a business model that provides brands with a way to achieve more market share and customer loyalty without having to lower margins and return on investment along the way.

With production costs spiraling out of control and the aftermarket becoming more fragmented and less lucrative, show owners, record labels and movie studios are looking for new sources of funding. One example of this is product placement, which is as old as the arts industries. But the idea of advertisers owning stakes in shows, recordings, and movies in exchange for favorable advertising positions, exclusivity and script integration is the next move

This business model does not yet exist in China. The industry is two years behind the United States, but the stakes for establishing this concept are a piece of the $36 billion a year China advertising marketplace. The concept of 360° marketing is the convergence of creative content, media and marketing where the end result is a consumer difference that really can make a difference.

As we look at China for new opportunities to re-make old ideas, its clear to see how branded content helps everyone.

In the U.S., the music industry is now limited by dissolution of its traditional distribution and business models as a result of the shrinking radio formats, downloading piracy and on demand listening through a long list of options. In China, there has never been a successful traditional industry model.

In the U.S., the television industry is constrained by media fragmentation (over 300 cable channel options, VOD, IPTV, Satellite, etc.) combined with Tivo-defined, on-demand viewing and viewer habits. In China, a nascent four year old media business is embracing and consuming content on more platforms than we can count, from television, to satellite TV, to IPTV and digital outlets.

In the U.S., the ads are being zapped out by digital video recorders and online sites like Hulu.com and blip.tv. These sites provide viewers with shows that they can watch when they want to watch them. In China, online peer to peer file sharing networks and pirated DVD’s are causing similar headaches for advertisers.

Through all of the discontinuous innovation that has occurred in the Western media business, there have been winners and losers, as there will be in China over the next five years. The survivors will be the content creators, the advertisers and the distributors who provide better experiences for a fast-changing audience in China.