Home > entertainment > What does a TV ad cost? Television ads monetized by Apple TV

What does a TV ad cost? Television ads monetized by Apple TV


Steven Jobs didn’t invent anything.   What he has achieved is becoming our generation’s P.T. Barnum.   He has perfected the stage walking pitch.  With multimedia spinning, zooming, flashing in and out, he mesmerizes audiences and tells them the future in words as seductive as Jesus Christ’s.

Just like P.T. Barnum, Steven Jobs doesn’t give up on an idea just because it fails the first time.   Apple TV was supposed to be the wave of the future for television viewing.   Jobs released it before networks could adequately support live television viewing and the public was not ready for the download bar on their TV set.   They wanted it right now.  Apple TV made them wait.

So Jobs sat on the Apple TV device and instead of trying to shove it down the throat of an unwilling public, he worked behind the scenes to turn it into the successor of Youtube.  The key to a new launch and creating a  following is being able to show television shows without commercials.  As television advertising groups became less and less relevant in the overall scheme of marketing and advertising, Jobs capitalized on the desire for production houses to increase their short term revenue.  He offered them cash in today’s dollars rather than having to wait for syndication.

Jobs is betting that most middle class Americans with a high speed connection will migrate from Cable TV to the endless universe of choices on Apple TV.  In addition to the paid features, Apple TV outclasses the Cable TV model with better navigation, better search, and more choices.  Look for Apple TV to be the new challenger to the dominance of YouTube in the same way that Facebook overran MySpace.

The other major change caused by the new release of Apple TV is the change to the advertising industry.  With this new release, Job’s has monetized the television advertising market. There are no more questions or negotiations about the value of a commercial.  Apple TV has established the benchmark value of a commercial on broadcast TV.  If the show is being offered to Apple TV customers, the combined ad space of a 30 minute show just became less than a dollar per viewer.   In fact once you consider the revenue share that Apple will receive on playing each television show, the ad value for that show drops to about $0.70   (If the royalty payments on Apple TV are similar to iTunes.)

The average 30 minute TV show has between 16 and 24 commercials.  If  you take 20 as the average, you can now provide a new commodity price for each set of eyeballs watching each commercial.  The price is ($0.70 / 20) $0.035

So how much is a television show worth if it has a million viewers on Apple TV?    1,000,000 X $.70 = $700,000

How much should a company pay to advertise on a television show that is being broadcast over the legacy cable systems with 1,000,000 viewers?    If they are paying the same amount to the production company as Apple TV its:

1,000,000 X $0.035 = $35,000

( 20 commercials equals the same revenue $700,000 for the production company per million viewers)

Just monetizing the advertising industry is not Steve Jobs end game.   Watch for Apple TV to offer a “View commercials and get the TV program for free” model within the next year.   There is too much money to be made on taking control of the television advertising industry for Jobs to leave it alone.   Soon we will be back to the television ad model of the 1940’s and 1950’s where the commercials would be shown before the valuable content.   The only stumbling block for Jobs is how to make sure we stay in the room while the ads run.   Look for something in the controller that lets the Apple TV device know that we are still holding it and haven’t put it down to go make popcorn.

ITIA

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