Friday, December 16, 2011

"By Mutual Agreement"

This example comes from an arena that I happen to know something about. But I imagine you could come up with similar examples from your own lives, or from observing the world around you, that closely resemble this hallucinatory hocus-pocus.

Here’s the set-up: (We’re talking about commercial television.)

Commercial television is called commercial television, because the money that supports it derives entirely from television commercials.

So far, so logical. Now…

The television networks pay the program suppliers – studios, independent production companies, etc. – what they call “licensing fees”, in exchange for which the program suppliers supply the television networks with programs.

The program suppliers’ production team – from the actors and directors down to the people who pick up the lunches – are paid their portion of that “licensing fee” by the program suppliers, the program suppliers allocating a substantial, though not always well earned chunk of that “licensing fee” to themselves.

The networks are re-paid for that “licensing fee” and then some (their profit), by the sponsors who buy airtime to promote their products during the program suppliers’ programs’ numerous commercial breaks.

The ad agencies are paid for, one – serving as middlemen between the sponsors and the networks in the purchasing of that airtime, and two – for producing the commercials themselves.

The ad agencies production team – See “Television Suppliers’ Production Team” above, replacing “are paid…by the program suppliers” with “are paid by the ad agencies” who, as mentioned, are paid by the sponsors, who also pay the networks for the airtime, the networks, going around again, paying the program suppliers for their programs, the point being, they are all in it together.

(I am not overlooking the dozens of ancillary businesses that benefit from servicing the requirements of commercial television. For this exercise, however, we will stick exclusively to the “biggies.”)

The hub of this multi-billion dollar “Wheel of Profit” is the commercial sponsor, which makes sense, because, as mentioned in “Paragraph Two”, we are talking about commercial television. Through their purchasing of airtime, the sponsors indirectly pay for all the programs. The sponsors, as mentioned, also pay for the production of the commercials.

Why does the sponsor do all that paying? They do it under the premise that advertising their products on television is beneficial to their business, and is, therefore, worth the money.

The commercials for the sponsors’ products are aired, the viewers watch those commercials, a hopefully substantial number of them are persuaded to purchase the sponsors’ products, and as a result of those purchases, the sponsors recoup their expenditures and then some (their profit) on the “mark-up.”

This entire commercial television enterprise is grounded in the belief that the television viewers are watching the commercials.

The question is,

What if they aren’t?

What if the whole commercial television operation is based on a belief that is horrendously out of date?

When I originally published my post about not liking to watch commercials, a dissenting commenter named Diane asserted that she liked watching (at least certain) commercials.

The question is (a refinement of the previous “The question is”:)

Are there more people like me, or are there more people like Diane? And even if there are more people like Diane, is it possible that there are anywhere near the number television viewers watching commercials today as in the past, to the extent that commercial-backed television holds up as a still credible business model?

The answer is:

It doesn’t matter.

The “biggies” seem to have agreed not to examine that question. The result:
The smooth sailing of the S.S. Business As Usual.

The sponsors continue subsidizing the programming, seemingly ignoring the fact that who knows how many, perhaps most, television viewers are no longer watching the commercials. If there is statistical proof that they are out of, perhaps, some sense of duty to the people providing the entertainment, it has not crossed my path. A common sense assessment, plus the advancements in “commercial avoidance” technology, however, suggest otherwise.

If the sponsors were to acknowledge the current state of television-viewer commercial watching, they would have to accept that they are paying humongous sums of money for little or no reason, they would desist from doing so anymore (or look really stupid if they didn’t), and as a result of this precipitous loss of revenues, the e├čntire commercial television system would immediately come crashing to the ground.

And nobody wants that.

So they continue to believe that people are still watching the commercials.

And everybody’s happy.

Except for one guy who you happen to be reading at the moment, who would be considerably happier if this bizarre arrangement, and paralleling arrangements regarding many of our other major institutions, all of which we pretend work despite persuasive evidence that they don’t, made just a little bit more sense.


Alan said...

A corollary to the conceit that people aren’t watching commercials is the notion that the commercials are aimed at people who don’t even watch television any more.
Most advertising campaigns are aimed at the magic demographic of 18-29 – those people who are between the ages of 18-29, who, it has been proven (at least in my little focus group/family), are not watching commercial television but are busy texting, catching up on current movies via Netflix, time shifting (and thereby zapping through commercials) and a whole raft of other communications jargon the meanings of which I had forgotten the moment I heard them.
When I asked a friend who was making a fortune in the media buying business why companies were focusing on this useless (to them) demographic, he replied, “Clients don’t want to think they’re not cool, and their media departments are entry level positions, populated by people who are 25 years old.
Welcome to Wonderland.

Jon88 said...

Well, yes, but .... I've been watching television since before the remote control (and its mute button), and commercial breaks have always been an opportunity to talk, make a phone call, grab a snack, pee, glance at a magazine, whatever. The VCR and the DVR didn't invent ad-skipping; they've merely made it easier.

Anonymous said...

My perspective on commercials comes from a background in retail. The car business to be specific. So I've been looking at and wondering what works and what doesn't in advertising for a long time.

Apparently even negative notice is good, as Lowe's has received more attention lately for pulling their ads from the cable show American Muslims than they ever got from people watching the show. That, of course, is because there is no viewership. The ratings are terribly low, which is why Lowe's removed their ads. But someone is crying foul and that makes for excellent headlines. What a convoluted world we live in.

Thanks for mentioning my comment. It made me feel like the Santa in the M&M's commercial - They do exist! You made my day!

Frank said...

The only ad I will watch is the Chia Obama ad as I never tire of watching chia grow.

Mac said...

Alan's post is bang-on. Quite apart from the "not cool" syndrome, which is bizarrely true, there's also a theory that 18-29 year-olds haven't decided what they want yet, aren't set in their ways, so are more susceptible to persuasion.
Despite the evidence that older people watch far more TV, and have much more disposable income, they keep chasing this mythic demographic - and the larger potential audience of older viewers with more money switch off.

That apart, Earl's right - people aren't watching commercials, they record shows on hard drive and fast-forward through the ads.

So you've got nobody watching commercials that are aimed at a demographic that doesn't watch TV, and has less money to spend than those who do.

Given the crazy money that's still thrown at commercials, I can't see anyone rocking the boat anytime soon.

PG said...

This all reminds me of "The Emperor's New Clothes".
Plus ca change, plus ca la meme chose....or whatever.
(sorry, I don't know how to make the keys do the accents)

Johnny Walker said...

Surely the sponsors do care if their advertising money is making a difference...?

I know from my work on commercial websites that spikes in visitors are expected after the airing of a commercial, or after editorials/features about their company (another, more subtle, form of advertising). So somebody must be watching? (Maybe Diane and her friends?)

What I wonder about, however, is ratings. I have heard (and perhaps someone can correct or confirm this?) that they are still done with pen and paper in a smaller number of homes around the nation.

Is it possible that this system is not only woefully outdated, but extremely inaccurate? That quality shows are being cancelled because of a faulty system that doesn't accurately reflect the nation's viewing habits?

Apparently nobody wants to foot the bill for implementing the required electronic systems, and so we're stuck with the old-fashioned pen and paper method.

Which could also mean that sponsors are spending their advertising dollars based on inaccurate data...?

Anyone know if there's any truth to this?

Blaze said...

Jon88 has a point, but he must've been lightning fast to do those alternate activities Back in the Day. The commercial breaks back then were very short.

My sister once had a TV with a dandy feature. When the commercials started, she could press a timer on her remote and then channel surf without keeping an eye on the clock. When the timer ran out, the TV yanked her back to her original channel/program.

The maximum amount for that timer was three minutes. When she first got the TV, she rarely needed three. Then three became more the standard. Then came the day when the timer ended and she was brought back to her channel...and the commercials were still going and going and going.

The buyers of commercial air time and the programmers thereof are shooting themselves in the foot. Back in the day Jon88 is remembering, a trip to pee had to be done quick and no wasted moves. Nowadays, a commercial break is a very useable unit of time. Back then, a quick blitzkrieg of hucksterism could be endured, because it would soon be over. Now, sitting thru an entire segment of commercials is a marathon of boredom. Anyone who doesn't start reading or eating or peeing or otherwise find something to do must be a literal couch potato.

And that means even fewer people are watching the miserable things

Ruby Claire said...

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Aabid Farooque said...

The benefits of mutual agreement totally ignored, if i read out all comments. Well, I must say, you guys should look at Joint Venture Agreement