From the giant cups of Coca-Cola featured on every America Idol, to the two and half hour GM car commercial Michael Bay called Transformers, product placement can provoke a lot of eye-rolling.  There’s something so inauthentic about it, and really if something looked inauthentic in Transformers, that’s saying something. And behold Stephen Colbert, reading a memo from sponsor Wheat Thins, detailing how he could incorporate the crackers into his show:

Yes it can be bad, really bad.

However, we are forced to admit to enjoying how Niemen Marcus and Target promoted their joint holiday collection during the November 11^th episode of our guilty viewing pleasure—Revenge. The retailers were the only sponsors for the whole show and the long-form commercials were in effect a “story within a story,” featuring the show’s actors. In each spot a character was sent a fancy piece of clothing and told to meet at a secluded location revealed in the last ad, and both of us watched each and every one.

So, why did two people, with DVRs and a dislike of product placement, sit through what amounted to roughly ten whole minutes of commercials?

• Athena says: The ads really looked like part of the show. I didn’t speed through them because at first I wasn’t sure they were commercials at all. Making the ads so seamless clearly took a lot of effort; the retailers partnered with the show’s writers and designers and it really showed in how the ads were staged and shot.
  

• Caitlin says: Because I’m already invested in the characters on the show it wasn’t a stretch to watch the commercials. The character, Nolan, who turns out to have sent the gifts, is a millionaire, but very young, quirky and a nice guy. The rich but accessible angle fit perfectly with the Neiman/Target partnership.

And we both agreed they did a great job focusing on the items from the collection. The tissue paper in the boxes had the logos, and the clothes looked like clothing the characters would really wear, especially the Lela Rose dress worn by Charlotte.

Ultimately the ads worked because they told a story, both of us genuinely wanted to know how the story ended, and after the show Athena Googled the collection to take a closer look. Now that we have so many ways to avoid ads, it takes something special to make people stop, watch, and maybe as Target and Niemen’s hope, even buy something.

Athena is Team Director for CMB’s Financial Services practice. Caitlin Dailey is a Senior Associate Researcher on our Retail practice. They’re both looking forward to shopping the collection, which debuts on December 1^st and finding out if Jack and “Amanda” make it through the holidays.

Join us Wednesday September 12 to discover the who, what, and how of the new rules of television viewing.

CMB's Chris Neal maps out the needs and priorities of different consumers to help forecast how they'll react to future technologies, platforms and service bundles as the industry continues to evolve.

Topics include:

• Online viewership of TV shows and movies among age segments.
• Device viewership scenarios.
• Preferred TV viewing device by occasion.
• Online viewing pain points and barriers.
• Needs analysis of new technology platforms.

Register here

Download our free Consumer Pulse report: The New Age of Television

 

 

Remember the heyday of the music industry? Remember how the big music companies pulled off a nearly unthinkable feat—convincing consumers to re-buy previously purchased products (vinyl) on a new medium (CD)? That’s what can happen when you’re the only game in town.

In addition to generating “found” revenue, the move from vinyl (including vinyl 45s) to CD had another profound impact—it solidified the album as the industry's unit of purchase. Hear a song you like? Hand over ten or fifteen dollars and you can own it. We’ll of course throw in other songs; maybe you'll like them, maybe you won’t. But you really have no other choice.

Somewhere along the line, young consumers—college students especially—got it into their heads that they no longer wanted to pay for music. And, as hard as it is to believe, they were even less interested in paying for music they didn’t want in the first place. File-sharing sites like Napster were happy to oblige. Not only did consumers begin downloading music for free, but perhaps more significantly, they also embraced a new type of music business model—an à la carte, unbundled model, where they could choose only the music they wanted.  How quickly did the music industry adapt? Well, you know how that played out….

Young consumers appear to be at it again, poised to disrupt another industry that's built its fortunes on a bundled-service business model and on being the only game in town: the pay TV industry. The numbers aren't huge yet, but 5% of consumers in our recent New Age of Television study say they've never had a pay TV subscription. If you’re thinking that these are the folks with aluminum-foil rabbit ears on their TV sets, think again. Half of these "never had pay TV" household decisionmakers are 22-30 years old (more than double the percentage in the study’s total sample) and 63% have college degrees (also higher than the norm) Their income is lower than average, but they've chosen to spend their money on broadband service (they had to have broadband to be included in our study), and not on cable and satellite.

And yes, they are watching TV and movies. They're just accessing that content the same way they presumably learned to do so in college—on their laptops (72% watched on a computer in the week prior to the study), and finding content from aggregators like Hulu (43%), network TV sites (33%), and file-sharing sites (10%). They’re accessing the specific programs they want without paying for unwanted programs or networks in a bundle. They may have to wait a year to watch the first season of Homeland, but that may not be a huge deal, considering how much they'd need to pay for that privilege and how much other content is available online.

The multimillion-dollar question: Will these young consumers eventually get pay TV? The answer: unlikely, at least based on what they told us. Only 15% said that they would definitely or probably sign up within the next 3 years.

Three years is practically an eternity in today’s TV world; who knows what will happen between now and then? Once these consumers settle in to a more stable life, start a family, and make more money, they could decide that the convenience of picking up a single remote for access to a ton of content is too attractive to resist. But then again, by that time someone may come up with an online solution that's just as, or even more, convenient. And maybe it will be less expensive.

We're going to keep an eye on "never had pay TV” consumers in future waves of our study. And the industry will probably want to as well. After all, it’s not as if college graduates—looking for places to live, comfortable accessing content online, and with limited finances—are going to be in short supply any time soon.

Posted by Peter Fondulas. Peter is co-author of the New Age of TV study, a CMB consultant, and President of Fondulas Strategic Research.

Download the summary report The New Age of Television: How Consumers Make Choices in a New Era of Entertainment Options

 

When we set out, in our latest CMB Consumer Pulse, to discover how consumers are navigating the unprecedented range of options for accessing TV and movies, we knew some of the things we’d find out—e.g. the number of people who have completely cut the cord is still small, Netflix streaming is very popular, and many people are watching on smartphones and tablets.  However, some things surprised us:

Completely cutting the cord may be rare, but that’s not the only, or even the most important thing to worry about

People who have completely “cut the cord” entirely are a very small group (3% of the study’s population). The more compelling finding is the number of people who may be “on deck”— those who have tried Over-the-Top TV (OTT) and/or those who are considering reducing their pay TV service.

• More than half (54%) of respondents used the Internet to watch TV at least once.  (tweet this)

• Nearly half (43%) of pay TV subscribers said that they were at least somewhat likely to cut back on premium services (like Pay-Per-View or premium channels) in the next year. (tweet this)

This suggests that a big chunk of consumers’ TV-watching dollars could shift, even if their pay TV cords remain intact.  And, that awareness and perceived value of OTT have risen to a point where consumers of all kinds are investigating OTT as an option.

The biggest screen does NOT always win, and the definition of “watching TV” is changing

Everyone knows that new devices are impacting consumer behavior.  But our research suggests technology is driving fundamental changes in how people define the “TV watching experience.” For example:

• Among people who watch TV on tablets, 58% say that they watch TV on their tablet when they’re at home. (tweet this)

• Nearly two-thirds (63%) of those people say they’ve used a tablet even when they could have watched the same show on their TV. (tweet this)

There’s no indication that people will stop using their televisions entirely. But this does suggest that mobile devices have a role in the TV experience that transcends their mobility; and there are more scenarios where people will choose something other than the biggest available screen.

Not all elements of the TV watching experience are created equal

In our survey, consumers completed an exercise that forced them to trade off different attributes of a TV service provider based on what was most important to them.  Some of the findings were obvious (e.g. people want to pay less for their TV).  But other priorities offered more of a surprise:

• Streaming Content beats Owning Content:  Consumers prefer alternatives that rent/stream video over those where you download and own the content. (tweet this)  

• More Content beats Newest Content:  More consumers say having the largest catalog of content was more important than the fastest access to new content. (tweet this)

In short, technology and features matter but complexity is a barrier to switching over completely. Today, people who want an OTT solution have to manipulate a Rubik’s cube of devices, platforms/providers, and payment models.  However, that will change as more streamlined solutions come online. In the future, the most successful offerings will be those that provide a simple solution that's built around the things that matter most to consumers.

Check out this short video:

 

We surveyed nearly 1,500 consumers in the U.S. to get a pulse on their TV and video viewing habits and what it means for the future of OTT. Learn more, download our Consumer Pulse: The New Age of Television

 

 

Posted by Jon Giegengack, Jon is a Director at CMB and leads research for digital entertainment companies in television, music, videogames, and social media. As a veteran cord cutter, he knows the good, the bad and the ugly of today’s TV options.

As we prepare for Super Bowl XLVI we thought we'd share, once again, Jim Garrity's tips for picking Super Bowl Squares. Originally published 4/4/2011.