In Search of the Next Nielsen: A Q&A with TV Programmer Tom Hoban

By: Ashu Garg, General Partner

Everywhere you go these days, media and advertising professionals are talking about the move to digital, the need for more content across an increasing landscape of platforms, and how best to target their respective audiences. But despite all of this talk, there don’t seem to be too many answers . . . yet. To see if we could find a few, we spoke to Tom Hoban, a TV programmer who most recently worked for Viacom’s TV Land. Tom shared his thoughts on the impact that the move to digital is making on advertising and the kinds of industry-wide gaps that startups should be looking to solve.

Ashu: I’d like to start by asking you about how advertising is being impacted by the new ways people are consuming content — after all, you were there right when this trend of digital content consumption began, right?

Tom: Yeah, that was originally how I got into multiplatform scheduling. It was somewhere around 2005, YouTube wasn’t really a thing yet, and Apple had just started selling TV shows on the new video iPod. I was at TV Land, and we had original shows — so we asked, “Can we sell these on iTunes?” And it was such a new thing that none of us knew the answer. So we figured it out — and nowadays, almost every cable network thinks of itself as a multiplatform brand.

Ashu: I guess the real question is — if everyone is thinking of themselves as multiplatform brands, how many of them are actually succeeding?

Tom: Honestly, it’s hard to tell. Other than ratings for regular network and cable TV, the data we have is wildly insufficient to measure or even properly define “success.” It’s really difficult — you’re trying to aggregate viewing not just on-air but on your website, through an app, on a Roku, or on Hulu — and there are different metrics for every platform. For example, Hulu can tell you how many views you had, but on-air, you can get a detailed look at demographics or see how many people dropped off after the first 10 minutes of a show. The only way we’ll be able to really start figuring out what’s working is to find a cross-platform metric for success.

Ashu: In the absence of that metric, how is digital consumption affecting the way advertising on TV is bought and sold today?

Tom: Not a whole lot. By far the lion’s share of revenue for any ad-supported cable network is coming from standard ad sales. Nielsen is the key issue here because they have all the data, and they only measure what happens on network and cable TV — so that’s where advertisers still invest the most money. And everyone is very comfortable with this. It’s an old business model, but a lot of people make and spend a lot of money based on it. Billions of dollars are spent every year. So trying to drag that industry into 2015? It’s hard enough to try to get them into 2010.

When we are talking about HBO — that’s different because they don’t rely on ad sales, but until recently they relied on cable companies for distribution. In return, the cable companies make millions every year on HBO subscriber fees — so now with HBO and Showtime releasing OTT (over-the-top) products, that’s a big challenge for the cable companies, too.

However, I think the key distribution model for HBO NOW won’t be like Netflix, where you get billed every month. I think it’ll be an add-on to your Internet bill, which keeps cable companies with some skin in the game. You know, Netflix is just collecting their monthly fees from subscribers, and cable companies don’t get any of that, even though customers are paying for broadband and using cable’s pipes to get the content. I think HBO is going to offer cable companies a slightly more attractive proposition because a sort of overlooked thing about HBO is how important cable companies are [to their business model]. HBO spends tons of money on marketing, but all they have to market is their shows. The “Subscribe to HBO” message is all done for them, essentially for free, by cable companies because cable companies have skin in that game. It’s a mutually beneficial relationship, so I think they’ll find a way to make it work. Cablevision is the only provider offering HBO NOW as an add-on to its broadband service so far, and they are very specifically marketing to cord-cutters. I think we’re likely to see more of this kind of thing from cable companies in the future. In fact, if that happens maybe we need a different name than cord-cutters. Cord-frayers?

Ashu: So are you saying that getting HBO and other content a la carte through apps is not the wave of the future like everyone predicts it’s going to be?

Tom: It’s tough to say. A la carte is one of the things that people always say they want, and I understand it’s a very seductive proposition on paper. But there are two points I want to make about this. First, everybody’s viewing habits in the cable ecosystem are subsidizing everyone else’s. The dozen channels you watch are different than the dozen channels your neighbor watches, and without both of you paying for the channels you do and you don’t watch, none of them would be able to stay in business, much less offer content a la carte.

Secondly, we’re trying a la carte with all the different services right now — you have Amazon Prime, Netflix, HBO NOW, etc. That is what the landscape looks like today, but it’s easy to imagine that in a couple of years people start saying something like, “I just want to pay one bill and get all my Amazon, Hulu, and Netflix in one block.” Well, you’ve invented a cable company again, right? So for me, I don’t think that, in reality, a la carte would be as great as some people imagine.

Ashu: Clearly the industry is in for a change, but what that [change] is we don’t really know right now. Given the unsettled nature of it all, are there brands that are doing advertising differently or approaching combining multiplatform video in unique ways?

Tom: Well, the big trend right now — Jimmy Fallon’s producers have done a great job of this — is cutting up parts of the show and putting them online. Fallon’s producers actually structure the show in a way that makes it easier to do that. Other Comedy Central shows — Key and Peele, Amy Schumer — are all very quick to put sketches online. The challenge then, if you’re Comedy Central let’s say, is that whatever you’re putting online has to connect back to the brand. A TV network has to be more than just a place where shows come from. Comedy Central has done a really good job with their brand identity. HBO certainly has; their brand identity is ubiquitous. But there are a lot of cable networks where you could name a popular show, and people would swear it’s on a different network than it actually is.

Ashu: Are there any advertisers taking advantage of this? If all the shows are putting bits online, is anyone taking a holistic approach to placing advertising? Like on TV, in app, on website, where they can tailor the content for those mediums and also see an aggregated view of performance?

Tom: There’s a great desire to do that — definitely on the part of certain networks, and I would imagine also on the part of advertisers — but again, when you look at the numbers, all the money is coming from linear. I think people love the idea of a 360˚ media strategy with social tie-ins and all that, but it’s not really a reality right now.

Ashu: So if everything’s going to move away from linear, but no one’s quite figured out how to monetize around subscription or in-app advertising, what’s your recommendation to help the industry remain sustainable and thrive?

Tom: You know the crazy thing? People are not watching any less television than before. (As evidenced from the recently released American Time Use Survey.) From the things that I have read and learned, all the viewing on mobile and OTT devices, video game systems, and SVoD is mostly additive. People aren’t watching less television than they used to — they’re just watching even more in other ways. That’s not to say that Netflix isn’t cutting into prime-time ratings — it is, and so is DVR — but the other thing holding the linear piece firmly in place right now is sports and live events. So to answer your question, right now advertisers are doing just fine on TV. How they’ll sustain in the future is the giant question.

Ashu: If there were a silver-bullet solution that a startup or technology company could come up with to answer that question — what would it be?

Tom: What you’d be looking for is something that can aggregate all the viewing metrics across these different platforms in a way that makes sense and makes it sellable — something that can do for the rest of the platforms what Nielsen does for linear TV. If I knew the way to do that, then I would probably be a very rich man.

The tricky thing is that every network has tons of data about how their content performs on their own website and apps, but you can’t use it as a basis for selling because there’s no trusted third-party mediator like Nielsen. If I were a network — other than ethics — what would prevent me from inflating the numbers or at least presenting them in the most favorable way possible? No advertiser is just going to trust your internal data. Nielsen works because they’re an arbiter between the advertising industry and the television industry, and everybody has agreed to trust them. That’s the currency. We don’t have that in digital yet.

I think networks like MTV or Comedy Central could sell an advertiser on a significant digital ad buy because of the perception that those technologies are being used more by younger people, but in terms of an across-the-board solution, data is going to be king. We just need someone to figure out how to deliver it.

Tom Hoban is a television programmer in NYC who most recently worked in multiplatform programming for TV Land. Views expressed in this article are his own and do not represent those of any cable network.

Show your support

Clapping shows how much you appreciated Foundation Capital’s story.