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Advertiser-Funded
Programming: A Potential Paradigm
for Television Advertising
SIMONE
VANGELISTA
Master of Science Thesis
Stockholm, Sweden 2010
Advertiser-Funded
Programming: A Potential Paradigm
for Television Advertising
SIMONE
VANGELISTA
Master’s Thesis in Media Technology (30 ECTS credits)
at the Media Management Master Programme
Royal Institute of Technology year 2010
Supervisor was Christopher Rosenqvist, SSE
Examiner was Nils Enlund
TRITA-CSC-E 2010:080
ISRN-KTH/CSC/E--10/080-SE
ISSN-1653-5715
Royal Institute of Technology
School of Computer Science and Communication
KTH CSC
SE-100 44 Stockholm, Sweden
URL: www.kth.se/csc
Advertiser-funded Programming: A Potential Paradigm
for Television Advertising
Abstract
This research seeks to analyze the dynamics behind the production of AFP-advertiser-funded
programming by bringing together published literature and industry perspectives of different
players in the television and advertising market.
The purpose of the research is to create an understanding of the dynamics of advertiser-funded
programming as a new business and production model for television advertising, as well as for
television program production. Caused by the change in the current television advertising and a
fierce competition of the web, AFP can be considered as an effective way for advertisers and
TV channels to engage deeply with consumers while providing high quality and relevant
television contents.
Using two main perspectives, the aim would be to trace suggestions and possible
implementations for the production process as well as for the advertising strategy. On one hand,
the analysis of the network of actors involved in advertiser-funded programming can help to
understand the creation of superior value for the partners within the network as well as for the
end consumers. On the other hand, the focus on the creation of engagement and loyalty, through
the TV programming, would be useful to clarify the potential powerful of this type of television
productions.
A qualitative methodology has been chosen and semi-structured interviews have been
conducted, as well as business-to-business and consumers marketing theories have been used to
explain, support and criticize key characteristics and factors of advertiser-funded programming
production.
Though it does not deduce any theory, it adds suggestion on how the production can be shaped
better. Thus, the partnerships within the network of players assumes a crucial role in order to
develop a clear understanding of the goals, as well as to try to standardized the production
process in order to be more cost and timing efficient. At the same time a deeper involvement of
consumers, using social networks and creating off-air activities, can help to create an engaged
and loyal audience, which in turn can make the overall success of the TV program.
Advertiser-funded Programming: En potentiell
paradigm för TV-reklam
Sammanfattning
Detta forskningsprojekt analyserar dynamiken bakom produktionen av annonsörfinansierade
program (AFP) genom att sammanställa publicerad litteratur och ett industriperspektiv med
aktörer inom TV- och reklam- marknaden.
Syftet med forskningsprojektet är att skapa en förståelse för dynamiken i annonsörfinansierade
program som en ny affär och produktionsmodell för TV-reklam och program produktion. På
grund av förändringar i nuvarande TV-reklam och tuff konkurrens från webbaserade tjänster,
AFP kan bli sett som en effektiv metod för annonsörer och TV-kanaler att kommunicera med
konsumenter och samtidigt tillhandahålla hög kvalité och relevant TV-material.
Målet var att spåra förslag och möjliga implementeringar av produktionsprocessen samt av
reklamstrategin genom användning av två huvudperspektiv. Å ena sidan, analysen av nätverket
av involverade aktörer i annonsörfinansierade program kan öka förståelsen för värdeskapande
för partners inom nätverkat samt för slutanvändare. Å andra sidan, fokuset på skapandet av
engagemanget och lojaliteten, genom TV program, skulle vara användbart för att klarlägga den
möjliga genomslagskraften för den här typen av TV-produktioner.
En kvalitativ metodik valdes och semistrukturerade intervjuer har utfärdats.
Marknadsföringsteorier mellan företag och mot konsument har använts för att förklara, stödja
och kritisera nyckelegenskaper och faktorer hos annonsörfinansierad programproduktion.
Även om denna studie inte härleder några teorier så föreslår den hur produktionen kan utformas
på ett bättre sätt. Samarbetet mellan aktörer inom nätverket är därför mycket viktigt för att
utveckla an klar förståelse av målen samt för att standardisera produktionsprocesser och göra
dem mer kostnad och tidseffektiva. Djupare konsumentinvolvering, genom användning av
sociala nätverk och externa aktiviteter, kan hjälpa till att skapa en engagerad och lojal publik
vilket även leder till ett generellt mer lyckat TV program.
Summary
1. Introduction................................................................................................................................ 1
1.1 AFP - An Introduction ......................................................................................................... 1
1.2 Definition of AFP phenomenon........................................................................................... 1
1.3 Purposes and success factors ............................................................................................... 3
1.4 Research methodology and process..................................................................................... 4
1.4.1 Primary data............................................................................................................................... 5
1.4.2 Secondary data........................................................................................................................... 6
1.4.3 Mini Cases ................................................................................................................................. 6
1.4.4 Reliability and validity .............................................................................................................. 7
1.4.5 Source of criticism ..................................................................................................................... 7
2. Theory........................................................................................................................................ 8
2.1 Choice of theories ................................................................................................................ 8
2.2 Business-to-Business theories ............................................................................................. 8
2.2.1 Business network ....................................................................................................................... 9
2.2.2 Functions of business relationships ........................................................................................... 9
2.2.3 Value Chain and Value-creating Networks ............................................................................. 10
2.3 Business-to-Consumer theories ......................................................................................... 11
2.3.1 Choice of media and frequency ............................................................................................... 11
2.3.2 Television content as the message ........................................................................................... 11
2.3.3 Attitude .................................................................................................................................... 12
2.3.4 Customer Satisfaction, Engagement and Loyalty.................................................................... 12
3. TV Advertising ........................................................................................................................ 14
3.1 Current situation ................................................................................................................ 14
3.1.1 Types of traditional TV ads ..................................................................................................... 17
3.1.2 Product placement ................................................................................................................... 19
3.2 The traditional business model in TV ads ......................................................................... 20
4. AFP - New type of TV ad, new type of TV show ................................................................... 22
4.1 Brief history of advertiser-funded programming............................................................... 22
4.2 AFP's characteristics .......................................................................................................... 23
4.3 The main actors involved in AFP ...................................................................................... 23
4.3.1 The Advertiser .......................................................................................................................... 24
4.3.2 The TV Channel ....................................................................................................................... 25
4.3.3 The Media Agency ................................................................................................................... 26
4.3.4 The Production Company ......................................................................................................... 27
4.4 Type of productions ........................................................................................................... 28
4.4.1 Most popular TV format ........................................................................................................... 30
5. Beyond the AFP - Strategies.................................................................................................... 35
5.1 The value constellation in AFP.......................................................................................... 35
5.1.1 Partnership's characteristics ...................................................................................................... 37
5.1.2 Partnership and network's goals................................................................................................ 39
5.2 The TV show as a spin-off................................................................................................. 40
5.2.1 The off-air activities ................................................................................................................. 41
5.3 Implications and suggestions for a better network strategy............................................... 44
6. Effectiveness in AFP ............................................................................................................... 46
6.1 Content and Engagement ................................................................................................... 46
6.1.1 Content to increase customer satisfaction and retation............................................................. 47
6.1.2 The value of qualitative content ............................................................................................... 47
6.2 Engagenment and Brand Experience................................................................................. 48
6.2.1 Emotional connection ............................................................................................................... 49
6.2.2 Experience economy in AFP .................................................................................................... 50
6.2.3 From the experience to loyalty ................................................................................................. 50
6.3 Implications and suggestions to increase engagement and loyalty in AFP ....................... 52
7. Future prospects and possible drawbacks of AFP ................................................................... 54
7.1 Social and educational prospective of AFP ....................................................................... 54
7.2 Product placement; will it help AFP to grow?................................................................... 55
7.3 Problem of measurement ................................................................................................... 55
8. Conclusion ............................................................................................................................... 57
8.1 Partners' network and value constellation is at the core of AFP........................................ 57
8.2 Consumers' involvement as a way to increase engagement and loyalty ........................... 58
1.Introduction
The TV industry is facing, what is called by professionals, the “the perfect storm”. The
storm we are now handling is “the digital revolution” that has totally changed the
media industry, as we used to know it. But, if it is true that after every revolution there
is a new beginning, this is already started. In a more fragmented and cluttered TV
market the role of advertising is changing and new models of communication with
consumers are emerging. Here, the narrow space between entertainment and
advertising seems to be the new “revolutionary” idea, producing television contents
and advertising at the same time.
1.1 AFP – An Introduction
AFP - advertiser-funded programming is one of the most interesting phenomena in the TV and
broadcasting industry as well as in the advertising industry today. Also known as branded
content or branded entertainment, AFP is a method of television funding that repositions
advertisers from just being buyers of advertising spaces around TV programs to instead
financing the TV programs themselves, creating strong relationships between brands or
companies, broadcasters and production companies in the development of editorial content.
Brand entertainment is best defined as where a brand creates consumer entertainment that would
not have existed without that brand and where consumers choose their involvement. It is clearly
differentiated from product placement, where a brand is placed in someone else’s content – a
film or TV programming.1
Typically programs have been funded by a broadcaster and they recouped the money through
selling advertising space around the content. This has worked fine for decades, but new
technological advances and consumers habits have forced broadcasters and advertisers to rethink their relationship. This was caused by a sort of decrease in traditional advertising
investments, by a proliferation of niche and tailored television channels, which needs more
contents to fill their daily schedule and by new requests, from the advertiser, to engage
consumers and also to entertain them. Within the television and media industry the discussion
about AFP has been around in the last decade, identifying it as the new interesting model for
television and advertising production.
Today, advertiser-funded programming seems to be entering a golden age and it is definitely
becoming a hot topic in the media business. Both advertisers and broadcasters are trying to
design new businesses models and strategies that can be effective in the changing media
environment and that will secure future revenues and retain consumers and viewers.
1.2 Definition of AFP phenomenon
In the last few years the TV landscape has experienced a surge in the number of TV channels,
digital and satellite. Broadcasters started to create what are called “family channels”, each one
tailored to a specific target audience, and niche channels for different subjects and topics. In
1
N. Dawson, M. Hall, “That’s brand entertainment” for “World Advertising Research Center” February 2007
1
doing so, TV networks are now desperately searching for good content to fill the schedules of
thousands of new channels, in order to successfully compete in the market and also to contain
the threats from the web and online entertainment. Audience fragmentation makes the
competition greater and the quality and success of content is a crucial issue in order to maintain
or gain the competitive advantage in the TV market. At the same time, it is well known that, to
produce good television content, broadcasters need to invest substantial resources to finance and
support the production efforts, funding that can be raised both from subscription fees and from
advertisers. Nevertheless, that may not be enough.
Figure 01 – example of family channels, TV 4, Sweden
On the other hand, advertisers and TV networks these days are facing a shift of power in favor
of the viewers who have more and more control, as well as choice, in terms of television
consumption. There are now multiple distribution ways by which consumers can access content.
This gives the consumer much greater freedom and choice. Rather than be told by the media
industry what to consume and when, they now have the freedom to access individual products at
flexible and tailored prices rather than fixed average prices. Media consumers will increasingly
have access to content when they want it, rather than having to wait for the release schedule of
the TV channels.2 Thus, the television schedule is more customizable, liquid and fragmented,
and viewers, using personal video recorders (PVR's), such as the famous TiVo, can record and
watch TV contents on their own time. In doing so, the classical idea of “primetime” has been
skewed, and the power of the traditional 30-second TV advertising spot has declined. These
technologies make it easy to understand how the traditional model of television advertising has
become less and less effective in reaching consumers and why advertisers are trying to occupy
new positions in the TV schedule.
Figure. 02 TiVo’s Digital Video Recorder
2
A. Aris, J. Bughin, “Managing Media Companies”, Wiley, 2009
2
The impact of spot advertising is declining as commercial channels lose audience share,
meaning that AFP is increasingly seen as a particular type of sponsorship which can re-engage
viewers with brands.3 To avoid the marginal position that could affect the power of TV
advertising campaigns, companies need to locate their brands as close as possible to the
attractive editorial content in order not to be skipped over by the viewers. Programs thus
acquire a central role for advertisers and so companies need to be more than willing to finance
production of programs that support their brands. Douglas Scott, President of Ogilvy
Entertainment (USA), one of the most important media-creative agencies specializing in
branded content, explained well the current situation during the last Mip TV conference in
Cannes with an evocative metaphor: “There is really this changing of roles that is taking place
in the media business right now which we refer to as “the perfect storm”: there are three ships
in the water that are the consumer, the producer and distributor of the content and there are the
brands. Some days the water seems to be more tumultuous then others but really there are pros
and cons that are playing into the overall model which is driven by technology. The consumers
are becoming more powerful, they can create contents, they can share contents, they can view
contents, when, where and how they want. Brands really have a great opportunity to get into the
creative side but also into the targeting side, really identifying who they are and what they want
to communicate with. For a producer/distributor prospective costs are going up, the audience is
going down for the fragmentation of the TV market and the need to continue with the old model
of production is very much a process that needs to be innovated. [..]”4
1.3 Purpose and success factors
With this thesis report the author tries to investigate the whole phenomenon of advertiserfunded programming, considering the different actors involved and using examples from
existing and past productions. The most attention will be given to media companies such as
broadcasters, media agency and production companies but, at the same time, the crucial and
essential role of advertisers will be analyzed in depth in terms of branding and communication
strategies.
The analysis will follow two main paths. On one hand, a more business-to-business approach
will be used, with the purpose to investigate how the network of players, involved in the
production of AFP projects, can generate greater value for the actors and for the consumers. The
understanding of the ways to manage the network will be helpful to shape a better strategy that
will lead hopefully to a more qualitative production.
On the other hand, a business-to-consumer focus will be chosen, investigating the effect of
loyalty, engagement and commitment that AFP can convey to consumers. Thus, branding and
communication strategies effects, especially useful for the advertiser, will be given to media and
television professionals in order to provide them with the right framework of knowledge in
AFP. Those would be hopefully be suggestions especially important for the whole media
industry in order to attract investments and, at the same time, to show advertisers how much
value can be delivered to consumers using AFP productions.
Having explained the two main goals of this thesis report, the two research questions that have
been chosen are:
3
4
L. Rouse “Will branded content work for your brand?” in Media Week June 2007
MiP TV International Conference, Cannes, France, April 2010
3
1- How can the network and the constellation increase value for the actors involved in
AFP?
2- How can engagement and loyalty be created through AFP projects in order to
increase its effectiveness?
1.4 Research methodology and process
The aim of this research is to investigate which factors are the most important in creating
effective and successful advertiser-funded programming, identifying points of difference in the
various productions and different strategies of AFP productions.
To carry out the intentions of the author and his supervisor, the research on this topic has been
done in a span of four months as a journey around and within the main aspects of the topic,
exploring the current situation, collecting and analyzing primary and secondary data and
suggesting potentially applicable frameworks.
Phase 1: In the period from the 1st of February 2010 to the 15th of March 2010, the argument of
the thesis was developed and general data was collected. In this phase, the literature review was
consolidated and contacts with industry respondents established.
Phase 2: In the period from the 16th of March 2010 to the 17th of April 2010, primary data was
collected across the market, professionals were interviewed to determine the perspectives of the
various actors to find out what they consider to be the opportunities and the threats in the
production of this television products.
Phase 3: In the period from the18th of April 2010 to the 19th of May 2010, the data collected,
through interviews and market analysis, was analyzed and concluded. The research report was
written.
Phase 4: In the period from the 20th of May 2010 to the 1st of June 2010, the report was
finalized and was written in all its parts and sections. A presentation has been prepared for
discussion.
Having traced the main phases of what has been the thesis journey, it is important to outline the
main methodology characteristics that I used in order to accomplish the research in a relevant
and scientific way. As stated above, qualitative research has been used in order to explore
different views within the TV and advertising industries, using interviews with professionals in
order to get a deeper understanding of the phenomenon. According to Bryman and Bell (2007)5
qualitative research must have “an epistemological position described as interpretive, meaning
that, in contrast to the adoption of a natural scientific model in quantitative research, the stress
is on the understanding of the social world through an explanation of the interpretation of that
world by its participants”. Based on this, my research tried to understand and interpret words
and actions of companies, consultants and authors in relation to the theme, as well as use
interviews to understand professional perspectives.
5
A. Bryman, E. Bell, “Business Research Methods”, Oxford University Press, 2007
4
Moreover, based on Bryman and Bell (2007), I utilized a constructivist approach, which states
that social phenomena and trends are continually shaped by social actors who are not statistical
entities, but are in a constant state of change. As a matter of fact, the concept of AFP cannot be
considered a science but more as a market trend in the television and advertising industries, and
so it will not present precise theories and methods. At the same time, my wish has been to
formalize the current trends within the market and to try to build a reasonable and, in some way,
an applicable framework of business implications and suggestions that appeared to be relevant
during the investigation of the phenomenon. As regarding my intention of using interviews for
the qualitative research, according to Corbetta (2003)6, a qualitative interview “can be defined
as a conversation that has the following characteristics: it is elicited by the interviewer,
interviewees are selected on the basis of the data-gathering plan, […] it is based on a flexible,
non-standardized pattern of questioning…”. Based on this idea, the selection of the respondents
has been as broad as possible in order to gain a deeper understanding of the industry’s processes
and dynamics. The qualitative research strategy helped me to explore, and then understand,
different views and approaches in the television and advertising industries to use as a basis for a
later interpretation of the entire phenomenon. Finally, based on Corbetta (2003), the qualitative
interviews have been semi-structured or unstructured interviews. The interviews had a set of
questions but they didn’t have any rigid or pre-determined sequences. Any additional and
complementary information and issues that were raised during the interviews have been used as
findings if relevant to the investigation.
1.4.1 Primary data
Primary data consisted of interviews with professionals conducted in different ways. Based on
the time that every interviewee was able to give me, different methods were used in order to be
as collaborative as possible with usually very busy professionals. As long as their other
commitments permitted it, I conducted face-to-face interviews, phone interviews and even
questionnaire-based interviews. The different advantages and disadvantages in those types of
interviews were clear; face-to-face interviews allowed me to have a deeper understanding of the
arguments touched, observing also body language and facial expression in order to help me gain
a better interpretation. Using phone interviews made it more difficult to interact with
respondents and thus a less deep understanding was possible. With questionnaire interviews,
though, on the one hand the respondents were quite clear and straightforward, explaining
concisely the subjects touched in the questions, on the other hand, the lack of debate between
interviewer and respondents affected the opportunity to develop more topics and discussions.
Regardless of form, after every interview the data gathered was immediately formalized in text,
so as to increase the reliability of data and to ensure the inclusion of everything touched upon
and discussed during the interviews.
The persons interviewed were:
Andreas Erenius, Vice President at OTW Media AB– production company
Lars Bilk, Creative Director at Bond Street Film AB– production company
Andreas Stenberg, Responsible for Content-related Business at TV4 AB – TV network
Sebastian Ljung, Head of Commercial Content Program at Kanal5 AB – TV network
Håkan Gustafsson, Managing Director Carat Nordic AB – media agency
Mikael Ekelöf, Broadcast Director at Starcomm AB – media agency
6
P. Corbetta, “Social research: theory, methods and techniques”, SAGE Publications Ltd, 2003
5
1.4.2 Secondary data
Secondary data are information other researchers have collected, usually also called meta-data.
Secondary data are usually, and often, previously gathered together for other purposes, thus it is
important to take into account when the data are processed. The majority of the secondary data
presented in this report are qualitative, although some quantitative data, such as statistics,
records and surveys, are present to a lesser extent.
The data collected have been, as much as possible, examined critically because sometimes the
authors of the information are several stages behind the original source. The main secondary
sources used in this report come from media, such newspapers and trade journals, published
literature and various web sites. However, in relation to the subject of the thesis, many sources
and information have been collected watching documentaries about the subject and videos in
general to understand the characteristics of advertiser-funded programming in depth. Using
video sharing web sites (such YouTube) helped the investigation of the whole phenomenon,
having the opportunity to watch television formats and programming from all around the world.
For this reason a specific session in the bibliography is related to video material used in this
report.
Moreover, I had the unique chance to follow and watch in streaming mode two interesting and
very useful conventions about television, advertising and media in general. Those conferences
gave me important insights about the state-of-the-art of the media field and also the opportunity
to listen to very interesting speeches from the most relevant and cutting-edge professionals in
the industry from all around the world.
Conferences:
-MipTV, April 12-16 April 2010, Cannes
-Festival of Media, April 18-20 April 2010, Valencia
Contributions from:
Charlie Crowe CEO, C Squared (UK), business publishing and information company
Douglas Scott President, Ogilvy Entertainment (USA), media-creative agency
Robert Friedman President, @radical media (USA), media-creative agency
Catherine Krokos-Leroy, Head of Branded Entertainment, Banijay Entertainment (FR), media
and production company
Guy Duncan, Head of Creative Excellence Europe, Coca Cola Company (EU), manufacture
company
1.4.3 Mini Cases
In order to have a clearer and as complete as possible picture of the phenomenon, I’ve also
conducted research based on AFP productions around the world and I summarized it in different
mini-cases. It was the starting point of the thesis, having used those examples as a basis of
analysis of the entire production and business model. The mini-cases helped me to have a first
hand look at how the programming was designed and to understand the different levels of
6
involvement of advertisers within the editorial content, which came up as a crucial aspect of the
overall phenomenon.
The mini-cases have been successively used as examples to show how dynamics between actors
were handled and how the message was differently designed in relation to the target audience
and the format of the TV show. Moreover, I had the chance to investigate the different off-air
activities, how each AFP project was organized and how communications and business
strategies were conducted for each program finding similarities and differences between them.
1.4.4 Reliability and validity
As Kirk and Millet (1986)7 state, a successful data collection should meet two requirements: it
shall be (1) valid and (2) reliable. Validity can be divided into internal and external validity. On
one hand, the internal validity means that relationships and conclusions should be based on
cause-effect relationships. However in this kind of research, identifying success factors of AFP,
it is virtually impossible to state that success has cause and effect relationships. It is possible to
say with certainty that some general rules will help the final result of the product but, for
example, with products that are influenced by trends and emotional implications, it is hard to be
totally sure about relationships between input and output. On the other hand, external validity
relates to the general results. However, even if it were possible and desirable, the suggestions
that will be given as results of this thesis might not be applicable generally to every AFP
production.
Regarding the reliability of the data collected, this potentially can be affected by what is called
the “interview effect”, that the respondent’s answers may be influenced by the interview
situation. Moreover, the personal situation of the interviewer can also be affected by the
particular situation, presumably new to him, even if the interviewer personally tries to act as
professional as possible, staying focused on the discussion as well as taking detailed notes about
the responses.
1.4.5 Source of criticism
Since AFP is still an unexplored phenomenon and many debates are still going on around it, it
has been difficult to exactly understand where the truth starts and ends when processing the data
collected. Many times opinions within the industry differed from person to person, from
observer to observer, from player to player and to discern which side maybe the most relevant
was not easy. However, having used an inductive method of approach, which uses observations
to develop general principles about a specific subject, I’ve tried to balance the different
positions related to the subject in order to propose the most common perspective.
7
J. Kirk, M. L. Miller, “Reliability and Validity in Qualitative Research”, SAGE Publications, 1986
7
2. THEORY
This chapter will present the theories that will be used in the analysis of the advertiserfunded programming phenomenon in order to give the reader the theoretical framework
necessary to understand which characteristics have been analyzed and how. It will
touch on both business-to-business and business-to-consumer marketing theories, which
have been the two main perspectives of analysis used.
2.1 Choice of theories
In order to study the phenomenon of AFP, different marketing theories have been chosen to be
able to provide a framework for the analysis as well as to help the investigation to dig deeper
into the dynamics behind advertiser-funded programming.
It has been decided to investigate the overall AFP phenomenon considering two different
perspectives and at the same time, two approaches of marketing theories. On one side, the roles
and dynamics between the actors usually involved in advertiser-funded programming will be
presented. In order to analyze these relationships between the players business-to-business
theories were used to allow a deeper investigation of the characteristics of the relationships. On
the other side, in order to investigate the results and to see how to maximize the effectiveness of
advertiser funded programming, a range of theories were selected more focused on business-toconsumer marketing, which can be relevant in order to identify which properties an AFP should
have to better and more easily meet the consumers’ requests.
However, first of all, it is useful to clarify the concept of marketing in order to have the same
frame of reference regarding the subject. According to Armstrong & Kotler (2006)8 “the aim of
marketing is to identify and establish, maintain and expand, and if necessary, terminate,
relationships with customers and other parties to meet financial and other goals of all parties.
This is done by mutual exchange and to meet stated commitments”.
2.2 Business-to-Business theories
Business-to-business marketing theories are crucial in the investigation of advertiser-funded
programming for its essence as an articulated production with many actors involved. Thus, it
seems necessary to use an approach that can take into account all the different dynamics and
that can provide an efficient framework for the analysis.
8
G. Armstrong, P. Kotler, ”Marketing an introduction”, Pearson Prentice Hall, 2006
8
2.2.1 Business network
According to Anderson and Narus (2004)9, “business networks are sets of two or more
connected business relationships.” Alliance networks go even further and are described as a
clique of interrelated and coordinated business relationships formed in order to create new
markets and to bring together resources that go beyond the abilities of the single firms.
Anderson and Narus (2004) suggest that in order to analyze business networks one uses the
ARA model, which takes into account three components: Actors, Resource and Activities.
Actors are firms that perform activities and control resources. Activities include transactions
and create value through transforming resources. Resources refer to anything that actors
explicitly value, such as know-how, personnel, equipment or capital. At the same time,
Anderson and Narus (2004) formalize three concepts, helping to analyze the business network.
The “network horizon” refers to how extended an actor’s view of the network is. This depends
on the actor’s experience but also on the structure of the network. The part of the network
within the horizon is the actor’s “network context”. The network context is structured in terms
of actors, activities, and resources. Contexts are partially shared by network actors, but every
actor has its own network context, depending on other characteristics, such as experience. At the
same time, within networks the actors develop “network identities”. The identity refers to how
the firms see themselves in the network and how they are seen by other networks’ actors.
Network identity captures the uniqueness of each firm in its set of relationships. It conveys a
certain competence in terms of an actor’s perceived capability to perform certain activities.
Thus, the knowledge about networks and how the actors interact between them will be crucial
for the overall investigation and especially for the understanding of how those relationships can
help each player and the production, for a more organized and structured procedure.
2.2.2 Functions of business relationships
In order to create a more stable and successful network it is also very important to take into
account especially the relationships within the network. According to Håkansson & Johanson
(1993)10 networks are created based on those relationships that then have to be managed. They
define business relationships as “as exchange relationships between autonomous business
units”. Based on the analysis of Håkansson & Johansson (1993) it is possible to take under
consideration some aspects of those relationships which are relevant to this report.
First of all, it is important to consider the function of business relationships in linking the
activities of the parties involved to each other. Adaptations of these activities are made for
different reasons; for the relationship to even take place, to make rationalizations such as
reducing costs, and to create innovations. There are, however some problems with linking
activities, such as finding counterparts and activities to adapt to, how to handle these
adaptations and not to influence the counterparts in making the right adaptations.
Second, it should be remembered that every firm contains a unique set of resources. There are
different types of these resources, such as man-power, financial resources etc. The resource,
however, can have specific characteristics that can influence the overall relationships. In fact, a
9
J.C. Anderson, J.A. Narus, “Business Market Management”, Pearson Education, 2008
10
H. Håkansson, J. Johanson, “Industrial Functions of Business Relationships”, JAI Press, 1993
9
relationship is in itself a resource which takes time and effort to build and it has a value just as
long as the two counterparts keep it alive. At the same time, relationships can be seen as a way
to control resources. In fact, in developing a relationship, a company gives up some of the
control over its own resources in exchange for some control over the counterpart’s resources.
Finally, relationships are means to developing resources because, related to the learning process,
relationships not only facilitate learning, they can be the means to use knowledge without
acquiring the knowledge oneself; i.e. the utilization of relationships by employing the
knowledge of others without acquiring it.
At the end, the Håkansson & Johansson (1993) model of analysis of relationships is a way of
summarizing the reasons for and efforts of the parties being directly involved in a
relationship as well as the effort required by each to make the relationship succeed.
2.2.3 Value Chain and Value-creating Networks
This report has also analyzed the traditional advertising business model and its flow of
production, taking into consideration Porter’s value chain model and its successive
developments so as to be able to formally describe the process and to highlight how creative
production moved from advertiser to consumers/viewers.
Porter (1985)11 designed the value chain in order to describe a chain of activities where the
product, passing through different stages, gains some value from the overall process. In our case
the product would be the content of the advertising message that, moving through all the stages
of advertisement production, increases its value in order to be ready to be shown to consumers.
The Porter value chain categorizes broad activities that can occur in any organization. There are
the “primary activities” which include inbound logistics, production operations, outbound
logistics, marketing and sales and services. There are “support activities” which are firm
infrastructure, human resource management, technology and procurement.
Specifically in this thesis, the theories of value-creating networks, developed by Kothandaram
and Wilson (2001)12, have been used. They have been useful to highlight the different stages in
the production of advertising, taking into consideration not just one firm, but the entire network
of firms in order to understand where and how the value-adding stages are taking part in the
production. Moreover, the concept of value constellation developed by Normann and Ramirez
(2001)13 has been considered in order to allow me to be able to shape the analysis of AFP
projects in terms of knowledge and relationships. The idea of value constellation helped me to
understand the new strategy of a value-creating system, where different actors work together to
co-produce value, integrating knowledge and relationships to gain superior results. In fact as
Norman and Ramirez state: “the secret of value creation is building a better and better fit
between relationships and knowledge.”
11
12
M.E. Porter, “Competitive Advantage: Creating and Sustaining Superior Performance”, Free Press Edition, 1985
P. Kothandaraman, D.T. Wilson, “The Future of Competition: Value-Creating Networks”, Industrial Marketing, 2001
13
R. Normann, R. Ramirez, “From Value Chain to Value Constellation: Designing Interactive Strategy” Harvard Business Review,
1996
10
2.3 Business-to-Consumer theories
The other prospective I had to consider in order to analyze the entire AFP phenomenon is the
focus on the consumer point of view. The goal is to understand which factors make viewers and
customers satisfied and engaged and therefore loyal to any advertiser funded programming. To
be able to analyze those factors I had to consider marketing communication theories and
branding theories as well.
2.3.1 Choice of media and frequency
Based on most marketing theories, when one is talking about advertising, the “choice of media”
is one of the first things to take into account. There are different factors that influence that
choice. First of all, the company or advertiser needs to decide how many persons they want to
reach and what percentage of their audience must be exposed to be effective. It is also important
to evaluate how many times the message should be repeated and when. According to Best
(2009)14, media selection and message frequency are two ways to design effectively a marketing
campaign. In fact, to reach the target customer effectively, the advertiser needs to have a good
understanding of the media habits of its customers. Once the right combination of media is
found, the question has to move on to how often the company should expose the message to the
target audience in order to achieve a certain level of awareness. A balance must be reached.
Sometimes, using only a few messages will probably result in a low level of awareness while
too many could irritate.
According to Best (2009), there are two ways to design a frequency strategy for the message:
“concentrated frequency”, which schedules consecutive messages in a short period of time, and
the “distributed frequency”, which plans long-run exposure of the message. The frequency
choice however, depends also on the type of product because if the concentrated frequency
would be appropriate for building awareness and comprehension for seasonal product, the same
would not be appropriate for an everyday product.
The third aspect that Best (2009) recognizes as crucial for building awareness in a marketing
strategy is the ad copy. Copy plays a key role in creating awareness, comprehension and
intentions, thus advertisers need to understand if the message is received and interpreted by the
target customers. In the case of AFP the ad copy is actually the content of the TV programming,
which, as we will see, plays an extremely important role.
2.3.2 Television content as the message
First of all, we want to highlight how Best (2009) considers the media industry as a very
competitive field with many choices and low switching costs for consumers. That is why
consumer retention should be the main goal for the actors in advertiser-funded programming. In
order to achieve this goal, AFPs need to satisfy the consumers as much as possible. The first
element that will be analyzed to increase satisfaction, is the TV content of AFP as a TV show.
What in marketing and advertising is usually called ad copy, for advertiser funded
programming, it can be called TV content.
Aris and Bughin (2009)15 describe the content produced for entertainment as a perishable
commodity. This is at the heart of every media business, it is something intangible and depends
14
15
R.J. Best, “Market-Based Management”, Eastern Economy Edition, 2005
A. Annet, J. Bughin, “Managing Media Companie”, Wiley, 2009
11
on fashion, trend and inspiration. However, if it is a commodity, the TV content is extremely
important, especially related to its quality. In relation to the integrity of the content in
advertiser-funded programming, Duncan and Moriaty (1997)16 talk about the goal of marketing
to deliver a credible message because this will sell more in terms of consumer appeal. Duncan
and Moriarty (1997) also describe how a message can be communicated from difference sources
and those sources determine the level of credibility of the message. They point out that the most
credible message is the one conveyed by other people, like word-of-mouth, which is extremely
powerful in terms of influencing decisions. This is also confirmed by Gronroos (2002)17 in his
communication cycle model that states that the verbal references have a powerful effect on the
expectations and the purchases that consumers make. At the same time, in both Duncan and
Moriaty (1997) and Calder & Malthouse (2008)18, it appears clear that talented and famous
people promoting a brand or a product, also have an important impact on consumer decision
making and increase effectiveness of the message. Thus, in determining the characteristics the
content should have, the engagement of the viewers can be increased by what Curry (2004)19
calls “emotional connection”.
2.3.3 Attitude
In marketing, “attitude” is a person’s perception in term of whether he likes or dislikes the
particular object, product, person, etc. The more positive attitude a person has, the more likely
that person is going to buy the product. However attitudes change over time and advertising has
to influence attitudes as much and as long as possible.
Rossiter & Percy (1997)20 formalized a grid to analyze the brand attitude for consumers based
on the level of involvement with the product which could be high or low, and, based on the
motivations towards the specific brand or product, which can be informational –consumers want
exhaustive information about it, or can be transformational –consumers want to have an
emotional experience. By studying this combination of factors, advertisers can try to predict or
influence future behavior. In advertiser-funded programming and branded entertainment in
general this is important in order to design a TV show with the right appeal for the viewers,
touching the right emotions.
2.3.4 Customer Satisfaction, Engagement and Loyalty
In order to formalize what characteristics drive emotional connections between consumers and
the television message, theories and articles about “experience economy” will be used. As Pine
II & Gilmore (1998)21 state, “experience occurs when a company intentionally uses services as
the stage to engage individual customers in a way that creates memorable events”. Experiences
have emerged as the next step on what is called the “progression of economic value”. Pine II &
16
T. Duncan, S. Moriarity, “Driving Brand Value: Using integrated marketing to manage profitable stakeholder relatioships”,
McGraw-Hill, 1997
17
C. Gronroos, “Service Management and Marketing”, Wiley, 2002
18
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley,
2008
19
20
21
A. Curry, “The Branding Bubble” in “The New Medium Television”, Interactive Digital Sales, 2004
J.R. Rossiter, L. Percy, “Advertising, communications and promotion management” McGraw-Hill, 1997
B.J. Pine II, J.H. Gilmore, “Welcome to the Experience Economy”, Harvard Business Review, 1998
12
Gilmore (1998) defined what they called “the four realms of an experience”, where they
categorized the four dimensions that create experiences: active participation, passive
participation, absorption and immersion.
The Calder and Malthouse (2008)22 analysis about the effect of engagement and experience on
an advertising message illustrates the characteristics that advertiser funded programming should
have in order to increase consumer loyalty. Consumer loyalty, as Best (2009)23 states, is the
maximum ambition than any company or brand should hope for if they want to retain and
increase their consumer base. Best (2009), in fact, assumes that consumer loyalty is already
present in customers’ minds and it is just a matter of how to activate it. One of the ways to
activate loyalty is by using “involvement”, that Best (2009) defines as “the level of perceived
personal importance and/or interest evoked by stimulus within a situation.” The other way
indicated by Best is activating “commitment” defined as “the belief that a relationship is worth
working on to ensure that it endures.”
22
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley,
2008
23
R.J. Best, “Market-Based Management”, Eastern Economy Edition, 2005
13
3. TV Advertising
It is essential to analyze TV advertising in general, touching on the different type of TV ads
presented in the market and in the television landscape now, in order to have a starting
point from where to analyze why AFP could represent, for the entire industry, a new way
to interpret both entertaining and television advertising. An overview of traditional
television commercial production is relevant to understand the state-of-the-art in the
advertising market.
3.1 Current situation
Television advertising has always been an important and crucial tool for commercial advertisers
and for their marketing efforts. Television has been historically one of the most important media,
combining both sight and sound impression that with the right tone and message can be an
extremely powerful combination an effective advertising tool. Television has always also been an
important part of every marketing mix and the context, where the advertising message is placed,
always played a crucial role. In order to put the consumers in the right frame of mind which makes
the communication more effective, the decision regarding placement of the advertising message
before or after a specific programming is essential in order to influence the viewer perception of the
product or brand. This is what Malthouse and Calder (2008)24 call “the effect of the context”,
considered a crucial fact in designing any advertising campaign in TV. According to Malthouse
and Calder (2008) the entertainment content of the television product itself provides experiences
for the viewer that may affect the advertising as well as the entire television context where the
advertising is placed.
Figure. 05 “Cost for TV ads’ slot related to TV show” USA 2006 - chart compiled by Brian Steinberg and Kimberly D. Williams.
Having traced briefly some of the background characteristics and effects of TV ads, it is also
important to identify and analyze today’s TV advertising market. In fact, TV advertising has
24
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley, 2008
14
experienced in the last few years some modification related to changes within the media landscape
and technologies. As said before, the multiplication of TV channels, the presence of multiplatform
markets and the integration of new technologies have all influenced TV advertising in general.
On one hand, the advertisers seem to look for more focused target group, characterized by niche
needs and hobbies in order to plan a more effective message.25 On the other hand, TV channels
have generally experienced in the last year a decrease of advertising revenues caused by the general
beliefs that a mass marketing message wouldn’t be as effective anymore. In fact the ANA –
Association of National Advertisers (USA)- in the last year (2009) surveyed 104 US advertisers
representing nearly $14 billion in measured media budgets. More than half of them — 62% — told
them that TV advertising is less effective than it used to be two years ago26. “Where else in the
world can you be convinced to pay more for a commodity that is experiencing diminishing
returns.” said John Hayes, Chief Marketing Officer at American Express, as early as 2004 at the
convention “Madison+Vine – Commerce Meets Content” in Hollywood. In fact, giant advertisers
in USA like American Express were already losing faith in the traditional 30 second ads “We, as
advertisers, are paying more to reach less, the definition of insanity is to continuing to do the same
over and over and expect different results.”27 From those facts and statement, one can see that
advertisers clearly recognize the that the traditional advertising television market, at least, has
changed.
In this changing situation, the more and more central position of the web as an important medium
for the most interesting segments of consumers, has made the media landscape even more complex
for the traditional TV advertising market. Moreover, it is also possible to see an increased
competition between commercial networks that are all trying as much as possible to secure
advertisers and resulting revenues to maintain decent income. In doing so, TV networks are now
willing to cut down the price of the advertising slots starting a fierce competition to attract
advertiser with lower prices. As Andreas Stenberg, Head of Marketing and Advertisement at TV4,
stated: “for sure we are now facing increased competition within the advertising market having
more competitors [TV channels] and having a decrease in advertisers’ investments caused also by
the international financial crisis”
Fig. 06 Nielsen Media – 2007 report on US Television market
25
26
27
L. Rouse “Will branded content work for your brand?” in Media Week, June 2007
D. Cooperstein, “TV Advertising Budgets Are Under Siege”, Forrester Research, February 2010
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
15
Some observers believe that the traditional advertiser-funded, free-to-air model for TV is broken
and some figures seem to prove this point. As the above figures (fig. 06)28 represent the decrease in
advertising spending in 2007 in the USA market. As well in Europe, the 2007 annual ad revenue
for the biggest commercial channel in the UK, ITV, went down about 20%, and the network lost
$3.76 billion in 2008, along with studio closures and a 13% reduction in its work force. At the
same time, ITV’s biggest rival, Channel 4, announced it will have an annual shortfall of $207
million by 2012 after a collapse in advertising revenue29.
Though these figures in the TV advertising market are disconcerting, the future of traditional
television advertising as we’ve known up till now, cannot yet be considered completely obsolete,
even in the next few years. However, for sure, more obstacles are on the way. What is certain is
that TV networks can no longer hope for the same flow of revenues they experienced in the past.
Thus, they need to re-invent new ways to get advertising investments if they want to win in the new
highly competitive and fragmented media market. Complicating this are debates about viewers’
behaviors today. They no longer seem interested in the classic 30 second TV advertising spot and
they usually skip it, surfing around the channels during the commercial interruptions. This kind of
behavior, combined with the personal video recording or TiVo-like devices, makes the traditional
TV advertisement often ineffective and sometimes useless, losing the impact that advertisers are
looking for. According to a study conducted in 2007 by Google and DISH Network about ad
consumption using DVRs, it appeared that viewers are much more selective in their consumption
of advertising and more than 70% skipped entirely the ad breaks30.
However, the debate seems to be just starting about the future of the 30 second spot and, even
within the professionals in the media industry, there is no single position about the situation. For
example, Charlie Crowe, CEO at C Squared, a research body for television and advertising in UK,
has no doubt about the current situation and what it will be. Crowe during a conference at MiP
2010 in Cannes stated: “What brands are beginning to realize is that the old 30’’ spot, on a TV
network, is no longer really the way forward in communicating with the customers. The old model
of creating a brilliant 30 second ad and then phoning up the distributor and getting the best price
possible through a media buyer is clearly a thing of the past. So, what’s going to be the future
when it comes to integration of a great brand idea, a great narrative, into TV and into a multiple
platforms?”31 At the same time, Andreas Stenberg at TV4 has a different point of view: “We
cannot say that the traditional 30 second spot is dead. Our figures, based on the switching surveys,
showed that viewers are still watching the ads between shows. Moreover, we have figures that say
that the DVR, even if they are popular, they are not use by viewers to skip the advertising breaks
but however they are used to record other shows while watching another. Thus, now it seems that
people are watching more TV than before”.
28
29
“2007 report on US Television market”, Nielsen, 3rd Quarter 2007
E. Hall, “Still No Product Placement Allowed on U.K. TV”, in Advertising Age, March 2009
30
Various Authors “When viewers control the schedule: measuring the impact of digital recording on TV viewership”, Google, Inc. and
yDISH Network L.L.C, 2009
31
MiP TV International Conference, Cannes, France, April 2010
16
3.1.1 Types of traditional TV ads
When we talk about television advertising it necessary to make some distinctions based on which
type of format the television commercials appear. In fact, there are different types of what is
commonly called a TV ad.
Definitively the most famous, common and established type of television advertisement is the 30 or
60 second commercial. This is the classical type of advertisement that consists of an audio-visual
commercial where the advertiser promotes its brand or product during breaks in the shows or
between shows. TV networks are the ones who set and organize the advertising slots around the
daily schedule of the channel programming. The ads can be placed at different times during the day
and the slots, called also “avails”, can be purchased by the advertisers based on the TV channels’
scheduling. This is what is called “linear insertion” that refers to the process of inserting and
replacing ads in normal broadcast-style TV delivering the same content to all viewers at the same
time. The ads are inserted into a broadcast stream at the broadcast station or by a TV operator,
guided by digital or analog markers that indicate where ads should appear32. Of course the price per
each advertising slot changes based on the hour (where primetime is usually the most expensive
slot) and per type of program the commercial precedes or follows, as shown on fig. 05. The rate for
advertising is also typically based on the number of TV viewers per show, called ratings.
However, this kind of advertising can have a very important drawback that has to be considered a
critical issue. As I noted above, in its essence, the 30/60 second television commercials are placed
during breaks in TV shows and, if we consider the TV show as an experience for the consumer, the
commercial breaks can be seen as an interruption of the television experience. Calder and
Mathouse (2008)33, in fact, state: “this intrusion may produce a negative response from consumers
because the advertising harms the experience of the television content.” This negative effect can,
of course, compromise the effectiveness of the advertising leading to unexpected reactions of
consumers towards the brand.
fig. 07 – some examples of famous 30 seconds spots
Another type of television commercial is what is called sponsorship which has been in the last few
years a very successful type of ad; another way for advertisers to market themselves audio-visually
through the television. Sponsorship since the mid-1990s has gained as an alternative means of
advertising to viewers, but we will see that this kind of advertising format has different
characteristics. Sponsorship means that
a company or organization will present a program by
appearing with sponsorship signs or sponsorship billboards before and/or after the program. It is
possible to say that, for example in the UK market, since the mid-1990s and the establishment of
32
33
“Alcatel-Lucent report”, 2008
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley, 2008
17
BSkyB, which exploded the number of TV channels available, sponsorship has gained credibility
with the market and to viewers as well34.
A successful sponsorship is of course related to the success of the program and though sponsorship
can be applied to any type of TV format, it appears to be more effective as a long-term relationship
between advertiser and TV program rather then an occasional presence as sponsor of the show.
Thus, there could be also, as Brierley (2002)35 says, a more positive link between the advertiser and
the TV show as long as the program itself conveys a feeling or a message that the advertiser wants
to be associated with. The precondition seems that the TV show is popular and followed by a
precise target group, the same target audience that the advertiser wants to reach with the television
advertising. The well-established and quite effective model of sponsorship is also confirmed by the
figures from the UK market where in 2008 broadcast sponsorship revenues declined 2.3%, a
significantly less steep fall than the 4.2% fall in overall advertising revenues. The broadcast
sponsorship market is also expected to be more resilient, bouncing back with 5% growth in 2009
and breaking through the £300 million barrier during 201036.
If the influence of the advertiser over the editorial content of the TV shows is right now usually
quite limited or almost not-existent for the traditional television commercial, as stated above, the
right sponsorship is the one that can also visually relate to the TV show content in order to
communicate with the same tone and taste of the TV content itself. According to Calder and
Malthouse (2008)37 “[..] ads appearing in vehicles that are experimentally congruent with the ads
will be more effective. So it may be that advertisers should consider media experiences even in
creating the ad itself”. Moreover, it is clear that sponsorship can be more effective compared to
30/60 second commercial because the sponsors are more closely identified with the interesting
editorial content. These are what can be considered the two main types of TV advertisements which
TV channels and advertisers have utilized till now. However both types of television commercials
seem to have quite a hard time these days (especially 30/60 seconds commercials) to fully satisfy
advertisers’ need to reach the right audience.
fig.08 – frames from the Swedish reality show “Bonde soker freu”
34
35
36
37
L. Rouse, “Will branded content work for your brand?” in Media Week June 2007
S. Brierley, “The Advertising Handbook”, Routledge, 2002
“Broadcast Sponsorship - UK - October 2009”, Mintel International Group Ltd, 2009
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley, 2008
18
3.1.2 Product placement
Other types of TV advertisement, such as product placement, is quite often used as a marketing tool
for advertisers as well as a way of financing for production companies and TV networks. This type
of advertisement is more common in USA, where regulations allow it more extensively. “There are
agencies, for instance in Hollywood, who used to go to every script before it is produced and find
specific opportunities for automobiles, for beer, for virtually any product”, says Mitch Kanner,
partner at Integrated Entertainment Partners Agency in Los Angeles38. Talking about product
placement there are still debates about its effectiveness. It seems that is not possible to talk
explicitly about brand, not because regulations forbid it, but because it seems to have negative
effect on the consumer perceptions. In fact the drawbacks of a “violent” product placement strategy
can be seen in one of the worst box office disaster movies, “The Last Ride”, a 2hour movie about
muscle cars created by GM to promote the new Pontiac GTO that didn’t work at all. On the
contrary, product placement is all about how the writer and the brand engage in using that very
interesting narrow space so it feels natural. It is here where the difficulties lie.
According to Kristin Blondé and Irene Roozen’s research39, the overall value of the global product
placement market, including the barter/exposure value of non-paid placements, grew 27.9% to
$5.99 billion in 2005 (PQ Media, 2006). The forecast for 2010 is that global paid product
placement spending will grow at a compound annual rate of 27.9% to $7.55 billion, as product
placement growth continues to significantly outpace that of traditional advertising and marketing.
The overall value of the worldwide product placement market, including the barter/exposure value
of non-paid placements, will increase 18.4% compounded annually to $13.96 billion in 2010 (PQ
Media, August 2006).
Product placement in Europe where the rules about it are stricter, is not used much at all, but at the
same time it is allowed if it is already present on foreign productions. According to research done
by PQ Media (2006) in Europe, The European Commission is working on the legislation
addressing the use of product placements for movies or TV-programs and has set out its plans in
order to update 1989's Television Without Frontiers Directive, extending the rules to all TV-like
services and relaxing the rules of advertising to allow product placements40. Also Mikael Ekelöf,
Broadcast Director at the media agency Starcomm AB, confirmed this future evolving of the
European legislation, hoping that “there will be a simplification of the process regarding the brand
placement regulations after the new directive will be approved during the summer in the European
union, which will make the situation easier and more open all around European states, creating for
sure new opportunities”.
fig. 09 – frames from American movies and TV series were brands have been shows as product placement
38
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
39
K. Blonde, I. Roozen “An Explorative Study of Testing the Effectiveness of Product Placement Compared to 30-Second
Commercials”
40
K. Blonde, I. Roozen “An Explorative Study of Testing the Effectiveness of Product Placement Compared to 30-Second
Commercials”
19
On the other hand, some advertisers have gone forward into programming. For example BMW took
the first step back in 2001 developing a new form: a perfect hybrid of ad and movie where BMW
was not only the sponsor but also the creator. They produced 8 minute web movies shot by
directors like Guy Richie, starring people like James Brown and Madonna. BMWs had starring
roles, playing an integrated part in the plot line. This advertising, as a piece of entertainment, is
based on the assumption that not only will be tolerated by consumers but they will actually go in
search of the BMW ads. “BMW sales went dramatically through the roof in the years these films
were shown on the internet,” said Scott Donaton, Editor at “Advertising Age”41. Thus, the
boundaries between contents and advertising are definitely blurring in every popular media, such as
the music video clip, where rock stars like Sting teamed up with Jaguar or even Bob Dylan with
Victoria’s Secret.
3.2 The traditional business model in TV ads
The business model behind traditional television ads is quite well known: the advertiser, assisted by
the advertising agency or media agency, produces a 30 to 60 second film commercial that will be
aired on the TV channels’ commercial breaks. Once the commercial is ready to be on air the
advertiser or the advertising agency, through the media buyer, deals with the TV network in order
to buy the slots needed for the television advertising campaign (fig. 10).
The selection of the slots, as said before, would be related to a precise advertiser’s strategy in order
to intercept the most relevant target audience or the vastest audience as possible. Moreover,
communication strategies such as media frequency and seasonal selection are taken into account in
order to design the most effective campaign for optimum brand and product awareness. All
television ads need to be refreshed, which in itself gives rise to increased costs for the advertiser.
Thus the advertiser, with the collaboration of the advertising agency, has to decide whether to use a
“concentrated frequency” or a “distributed frequency”. According to Best (2008)42, the
concentrated frequency uses consecutive messages in a short period of time making this marketing
communication strategy appropriate for building awareness and comprehension for seasonal
products. To the contrary, the distributed strategy focuses on a long run exposure of the message.
The essence of TV as a medium is that the message is delivered to large audience usually in a short
time: the message is sent by the TV in an unequivocal way that flows from the TV channel to the
audience without any possibility of customization. This type of fixed roles between senders and
receivers makes the traditional TV commercial less effective these days when the essence of the
communication needs to be as close as possible to the customers’ particular needs. At the same
time, it is important to include the cost of producing TV advertising in order to have a clearer
picture of the entire business model. Usually the cost of producing TV commercials is relatively
high compared to other type of media. It is especially high if we compare the cost of production
with the length of the production itself demonstrating that production of standard length TV
commercials is quite expensive compared to the cost of producing a TV show or TV series.43
Finally, it is possible to say that the TV channels set the amount of programming investment and
41
42
43
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
R.J. Best, “Market-Based Management”, Eastern Economy Edition, 2005
“Alcatel-Lucent report”, 2008
20
the prices (or quantities) of advertising, while the producers determine their demand for advertising
and the product price. The two factors (programming investment and prices of advertising) are
quite correlated because at this time, for any TV channel to be able to produce TV content, it must
have enough financial resources which are only raised by selling advertising spots44. It is quite clear
how important it is for any TV network to be able to sell as many advertising slots as possible at as
high a price as possible in order to invest part of the advertising revenues into the production of TV
content, creating a circular and cyclical selling-investment situation.
fig. 10 – traditional TV advertising value chain and production process
44
T. Nilssen, L. Sorgard “TV Advertising, Program Quality, and Product-Market Oligopoly”, 2000
21
4. AFP - NEW TYPE OF TV AD,
NEW TYPE OF TV SHOW
The AFP can be considered a new way for advertisers to promote their products and brand
but, at the same time, it is essentially a new type of TV show. I will analyze the
characteristics and type of production of this new format of television content, from the
first Procter & Gamble soap operas to the newest interactive TV series. I will be also
discuss the Aurelian road of quality for the television contents production, which is the
main goal of entertainment in general.
4.1Brief history of advertiser-funded programming
Advertiser-funded programming is not a totally new marketing tool because branded entertainment has
been around the media field since the 1950s, especially in the USA, where much TV programming
was sponsored by different companies. The most famous examples are what are called “soap operas”,
dramatic fiction episodes broadcasted on television and radio and entirely produced by the consumer
goods manufacturer Procter & Gamble. “Guiding Light” has been the longest show on TV ever and
for Procter & Gamble has been an extraordinary marketing tool to speak directly with the target
audience of housewives without having to show their products but instead by entertaining them under
the wording of a Procter & Gamble product.
fig. 11 “Guidning Light” 1957
fig. 12 “Guiding Light” 2009 – last season
It has to be said that AFP is still a small business these days, as states David Brennan, research and
strategies manager for the TV marketing body Thinkbox in the UK: “Total sponsorship is
estimated at £200m, and AFP is a small subsection of that at the moment, but it will surely grow as
brands see the power of association.”45 In fact, AFP and branded content in general, has always
been quite marginal in total advertising spending in TV and in the past there's been a lot of talk
about it but not much of it happened. One of the main questions has been whether viewers will
reject ad-funded programming. This has long been debated but, as will be seen later on in the
report, this is no longer the main and most important concern surrounding use of AFP.
45
V. Frost “Could advertiser-funded programming solve TV financial problems?”, The Guardian, Monday 27 July 2009
22
In the view of the majority within the business, the future of AFP seems positive, with talk about an
“increased focus” around branded entertainment and branded contents. However, it is also well
known that we are still far away from a general understanding of and belief in the actual potential
impact of this new type of television advertising and entertainment content production.
4.2 AFP’s characteristics
As noted above, in the last few years the television industry has experienced a surge in the number
of TV channels, digital and satellite. “Family channels”, tailored to a specific target audience, and
niche channels, has had TV networks desperately searching for good content to fill their schedules
on tens of new channels. The audience fragmentation appears clear and the competition for those
audiences makes quality and success of the contents a crucial issue in order to maintain or gain the
competitive advantage in the TV market. At the same time, to be able to produce good television
content, broadcasters need to invest substantial resources to finance and support the production
efforts. The standard method of raising funds, that is by selling advertising slots is, as we have
already seen, no longer effective enough and that has caused a lack of confidence in the traditional
television advertising business model.
The AFP model falls perfectly into this situation where TV networks are looking for new TV
shows and TV contents and, on the other hand, advertisers are willing to find a new type of
advertising that is able to give them a closer and more entertaining relationship with consumers.
Thus, the AFP model represents a great opportunity for all the actors in the market to start a new
era of closer collaboration between players to create good and high quality content that can better
fit within the new media landscape and meet the demands of advertising awareness and
effectiveness. The main idea around AFP is that editorial content is influenced by an outside
interest, that is, the advertiser, in conveying a message to reach the underlying audience. The
intention may be to increase interest in an industry, product category or phenomenon, creating a
need or driving a trend. In sum, the AFP is another television production in the sense of any
television program wholly or largely funded by one or more advertisers, which in turn has a
different level of impact on program content and/or form.
4.3 The main actors involved in AFP
AFP productions are naturally an multifaceted, complex type of production that involves many
actors with specific capabilities and roles all of which can ensure the advertising campaign’s
desired goal of a high quality, efficient message and complete brand communication of the
advertising campaign matching at the same time the editorial strategy of the TV channel.
In its essence as a large project with many aspects, every AFP production requires a high degree of
involvement and engagement of each player starting at the beginning: the development and
production of the TV content. The TV show, which is the first stage of a broader 360 degree
advertising campaign, is the crucial starting point in the communication strategy for both the TV
network and the advertiser involved. AFP is also one of the more challenging products, requiring
attention and a clear statement of the goals. Being the touch point with the consumers, the TV
content has to be, first of all, well constructed in all of its parts in order to communicate effectively
the advertiser’s message and to maintain the editorial quality of TV channel. It is, on the TV show,
where each actor needs to put as much effort as possible in order to deliver the best product
possible, which in turn will help to launch a bigger campaign.
23
Thus, it is essential to analyze carefully and critically each actor involved in the AFP production,
identifying characteristics, tasks and roles but also the driving forces that affect the decision to start
an AFP project. This is a starting point for a deeper analysis of the entire business model and
strategies around this kind of project.
4.3.1 The Advertiser
The advertiser or commercial advertiser is a company, brand or any association that decides to
advertise its product or brand using the TV as a medium. The advertiser searches for the best way
to communicate with consumers and deliver to them the best message possible. The purpose of
every advertiser is to increase consumption of products or services through branding strategies that
in turn can increase revenues and brand awareness.
It seems that these days companies are looking more and more intensively to connect and engage
with the right audience rather than the biggest. As Russell Place, Chief Strategy Officer at the
American media agency Universal McCann, says “we are currently in a transitional
communications environment and many categories of advertiser - from food and travel to property
- are moving from a model of exposure to one of engagement with people.”46 Thus, advertisers
want more targeted ads. At the same time, they are reluctant to pay for big events or big audience
shows that contain different and imprecise target groups.
In its role as financer and funder of the AFP project, the advertiser is the player with the clearest
and most understandable goals. The driving forces that are moving companies and brands to invest
in the production of television content (fig.14) are quite straightforward in view of the current
market situation and the media landscape today.
fig. 14 – Advertiser’s driving forces
First of all, advertisers are working hard to achieve the goal of being perceived by customers as
entertainment producers; as Calder and Malthouse (2008)47 state, “the brand needs to convey fun
46
47
L. Rouse, “Will branded content work for your brand?” in Media Week June 2007
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley, 2008
24
and enjoyment, it has to entertain. Companies want to engage their customers as deeply as possible
in order to provide them with a brand experience rather than make them believe that they want just
to sell the product”. The need to create brand experience is one of the main driving forces for
advertisers working with AFP because it allows them to convey a broader brand value message
rather than just push the product. This is confirmed also by the experience economy theories from
Pine II and Gilmore (1998)48. If the investments in TV advertisement are still an important part of
every advertiser’s marketing efforts, companies also want to be able to cover different platforms
and get in touch with consumers in multiple moments of the day. It is clear that TV is no longer the
only mass-medium and there are different and multiple platforms where the product should be
present. So, advertisers are also looking desperately to own good quality content they can use on
different occasions and mediums. For example, these days almost every company has its own web
site, Facebook profile or YouTube channel that needs to be filled with good, appealing content in
order to engage and communicate qualitatively through every channel available.
4.3.2 The TV Channel
TV channels have experienced in the last few decades different technological and market
revolutions. However, big TV networks have always underestimated the impact of those
modifications in the media landscape. That’s why within the media industry, broadcasters have
been seen in the last few years as the “dinosaurs” – quoting Nick Ryle, President of
Rylewoolcombe Agency during his speech at the Screen Yorkshire conference in 2008. TV
networks used to succeed by taking advantage of their historical power in the media landscape and
they have never been willing to change business model and strategies. They have also been
skeptical of adopting new business models especially related to advertisement because they were
worried about losing their power as catalysts of advertisers and, in turn, losing their continuous
revenue streams. Some networks simply haven’t seen the opportunity to engage with brands as an
opportunity to drive new revenues and new ways to do business.
These days, the situation is changed and is changing so quickly that Nick Ryle thinks “some of
those broadcasters maybe have already lost the chance to change their strategies and future
prospects”49. However some TV networks have started heavily using AFP, employing experts who
work solely on this kind of television programming such as Discovery Channel, foretelling its
importance.
The driving forces that move the TV channel (fig. 15) towards AFP are especially related to the
changing media environment and the threat of digital media, especially the web, to its traditional
advertising revenues. As mentioned above, TV channels are experiencing a crunch in advertising
revenues and investments and thus the AFP is seen as the best way to deal with the problem of
decreasing financial resources to invest in productions. At the same time, another important driving
factor is the need to fill the daily schedule for those networks that have experienced the creation of
what are called “family channels”. Thus, the proliferation of channels and niche channels require
more content and TV shows and AFP products are seeing TV channels as a great opportunity to
have more content totally financed by advertisers. Moreover, the broadcasters are seeing as positive
the opportunity to avoid the risk in buying sometimes insecure and expensive TV formats by
utilizing AFP projects which can provide free, quality television content. Finally, in interviews of
people in the advertising and sponsorship department of television channels, revealed that TV
48
49
B.J. Pine II, J.H. Gilmore, “Welcome to the Experience Economy”, Harvard Business Review, 1998
Nick Ryle, President of Rylewoolcombe Agency, Screen Yorkshire conference, 2008
25
networks are also using AFP as a pure offering strategy. As Andreas Stenberg, at TV4 stated “We
want to give to our advertisers as many options as possible and AFP represents right now another
service we can offer to our highly demanding advertisers.”
fig. 15 – TV Channel’s driving forces
4.3.3 The Media Agency
The media agency is the actor that historically has been called an advertising agency, or in the case
of a singular person, a media buyer. These days the denomination of “media agency” seems to fit
better with the broader range of activities that these actors are playing in the media market. The
media agency used to be in charge of the planning of the entire TV advertising campaign for its
client. From the definition of the target and the tone of the TV ad to the negotiation with the TV
channels for the purchase of specific slots during the daily schedule, the media agency played the
role of coordinator and link between advertiser and the other actors.
These days the situation has not changed very much and media agencies might even become more
involved by designing more multifaceted campaigns because they now have more platforms to use
and more activities to set. Media agencies are often at the cutting edge as they are in the middle of
a fast-moving market. They must always have new suggestions and ideas for the clients, giving
them innovative solutions and a well-prepared bundle of offerings involving different activities and
platforms where advertisers can market their products and brands. From the creation of the slogan
to casting and the choice of locations, the media agency is still a crucial actor.
Within the AFP business, media agencies (fig.16) are looking to establish a more essential and
effective role between advertisers and TV channels, capitalizing on their knowledge of the market
and expertise in designing multiplatform and multifaceted campaigns.
26
fig. 18 – Media Agency’s driving forces
4.3.4 The Production Company
The production company has always been an essential actor for the production of TV advertising
and also TV content in general, even if it doesn’t hold a very critical position in the market in terms
of bargaining power. Essentially the production company is in charge of production of the film,
from the shooting to the editing of the “ready to play out” audiovisual product for the TV channels.
Production companies are also used more and more by the TV channels when they have to
outsource productions of any kind of content, from TV shows to live events, and this situation
makes the relationship between production companies and TV networks more established and
stable. Having interviewed Lars Bilk, Creative Director at the production company Bond Street, it
was quite clear that there is close collaboration with the TV channels, which helps to maintain their
working relationships. In the case of Bond Street Film many times their production work comes
directly from the TV channels who recommended Lars’s company to the advertiser or the media
agency.
According to Lars Bilk, one of the main goals for production companies is to match the quality
standards that TV channels require to be on air, particularly regarding format and quality of the
image, which are of course crucial and essential factors for any audiovisual product. At the same
time, the production company has to follow the direction of the media agency that, together with
the advertiser, designed the ad campaign, the tone and the visual appeal. It is clear that presently
production companies have more opportunities to produce more TV content based on the
proliferation of niche TV channels. Besides the gap between big production and niche production,
that will be more and more marked, AFP will provide opportunities (fig.19) for production
companies to produce more TV content, possibly a cheaper type of production, as well as establish
long term relationships with advertisers who will need entertaining content for their multimedia
platforms.
fig. 19 – Production company’s driving forces
27
Having explained for each actor the capabilities, driving forces and needs that are moving them
more towards AFP productions, it is now possible to have a clear overview of what the players are
looking for in these types of projects. The decrease of traditional advertising investments, the
evolution of the digital landscape and the need to entertain and engage more and more customers
are definitely the main driving forces and needs within the television market. That is why AFP is
suited to become one of the most effective tools for advertising, as well as for creating content, in
today’s market for both advertisers and TV channels.
Media planners say that, while the major commercial broadcasters are backing advertiser-funded
programming, the demand is even greater among multichannel stations where budgets are tighter50.
According to Thinkbox, the cooperative body in TV advertising for the largest commercial
channels in the UK, AFP is becoming an increasingly important part of television-related
marketing in the UK and the same scenario might apply to the rest of Europe, with certain cultural
and media habit differences and taking into consideration advertisement regulations. What seems
the bigger advantage for AFP is the ability of advertisers and brands to take advantage of the TV
medium, using the whole communication potential to redefine themselves also as entertainment
producer and to take advantage of, and exploit the potential gains that a successful television
program can generate, which also includes activities and synergies outside the television box. On
the other hand, TV channels have the opportunity to produce TV contents and TV formats financed
by the advertisers, cutting down the risk margin in directly financing the production or buying new
format. As a Viacom’s report states “AFPs contain contents that can target specific demographics
and that can create a bond between the topic, the brand and its audience. This is a fresh new way
of advertising as it reaches beyond the normal 30 second spot and combines entertainment,
content, media and branding”51.
Even if a clear list of benefits is quite easy to analyze and describe, what makes an AFP project a
successful TV program is quite hard to clearly define. There are some characteristics that can be
seen as central for the success of this kind of production. For example, branded content counts as
"experiential" marketing, allowing viewers to spend longer periods of time with advertisers' brand
values52, while the sole criterion for advertiser-funded programming is editorial quality53. This
direction in the production will secure the quality of the program that in turn means a better
response from viewers and consumers.
4.4 Type of productions
Based on my research, AFP productions seem to be quite flexible and multi platform types of
projects. Based on what has been already on the air on different TV channels and in different TV
markets around the world, AFP projects can vary widely in the range of type of formats and
audiovisual content.
It is important to say that AFP experience exists in television and cinema, game shows and drama,
reality shows and documentaries, showing a quite unique way to adapt to all these different formats
50
51
52
53
C. Fitzsimmons, “Advertiser-funded masterstroke proves hard to beat”, The Guardian, Monday 3 March 2008
“Advertiser Funded Programming Marketplace Summary”, Viacom Brand Solution, 2010
L. Rouse, “Will branded content work for your brand?” in Media Week June 2007
C. Fitzsimmons, “Advertiser-funded masterstroke proves hard to beat”, The Guardian, Monday 3 March 2008
28
and media. It is possible to try to formalize a quite standardized production process to create it,
besides the format and the platform where it is going to be shown. AFP can be created in different
ways and negotiations are present in different and multiple stages of the production process. Here,
based also on the interviews I conducted with actors within the market, it would be useful to
present visually how the production proceeds in its most important steps:
fig. 20 – version of AFP’s production process
1. Advertiser’s marketing department in collaboration with the media agency creates a brief, which
includes the brand's core values and the nature of programming the advertiser wishes to fund.
2. A commissioning editor then works with the client and tries to get a production partner.
3. A programming concept is offered to a production company and the format is then worked up
with the advertiser before it is submitted to a broadcaster.
4. Programming is made and funded and then given to a broadcaster who will then have to find a
suitable slot for it to air54.
Additionally the process can proceed in others ways. For example, with regard to the level of
involvement of the broadcaster, the TV networks can participate actively, and usually they prefer it,
in the development of the production at an earlier stage, especially if the programming aspires to
have important position in the TV channel daily schedules.
fig. 21 – version of AFP’s production process
1.Advertiser and TV network start to have preliminary meetings about the possibility of producing
a new TV show and its placement in the daily schedule.
2. Advertiser, in collaboration with its media agency prepares a first brief of the TV show that
needs to have approval and feedback from the TV channel.
3. Media agency or TV channel starts the scouting for the production company that can fit better
with the project.
4. Once the production company is found, the final brief of the TV show concept is submitted to all
the actors and they start the production of the final product for the play out.
54
“Advertiser Funded Programming Marketplace Summary”, Viacom Brand Solution, 2010
29
At the same time, especially for formats that require a high level of editorial independence such as
documentaries, the model used to finance an AFP project can be quite different in terms of the
relationship between producers, broadcaster or distributors and advertisers. It is possible to outline
three different processes for production and financing of these types of AFPs:
1. The advertiser follows the creation of the editorial content from the beginning, and so has more
control over the message but a lower degree of certainty of the success or successful realization of
the final product.
2. The advertiser finances the production when the product, the documentary for example, is ready
to play out and to be distributed. In this case the advertiser will have less control over the message
and the editorial content but more ability to evaluate whether the final product is good enough for
marketing purposes and whether it is an effective investment.
3. A third way could be a hybrid between those two processes, creating a mixed investment from
the advertiser in order to not risk too much on the production process, foregoing editorial
independence as well as a sort of control over the message it needs to convey.
4.4.1 Most popular TV format
We have experienced in recent years, and in different television markets, many different types of
AFP productions, from game show and reality to TV series and documentaries. No one of those
types of format seems not to fit with the idea of branded content but it is possible to underline
different integration approaches for each one. So, I will try to categorize the most well known
advertiser-funded programming based on the TV format and the genre of the content.
Game shows
Game shows seem to be one of the easier and common types of AFP for its rather easy integration
between advertisers and TV show’s contents. A game show, such as “Britain's Best Brain”
financed by Nintendo and broadcasted on Channel Five (UK), appears to have an easy integration
process between actors and there are no risks at all of having interference of the brand in the
creative development. At the same time, using game shows, it is possible to have a quite deep
integration between advertiser and TV content without affecting and overstepping into the TV
show.
Another game show like “The Kripton Factor”, broadcasted by ITV in UK and financed by The
Sage Group, is a great example. The game is a famous TV quiz about mental attributes and brain
games (such as “mental agility”, “observation”, “intelligence”, “general knowledge”). The theme
of the game perfectly fits with the core business of the advertiser; in fact Sage is a software
company that produces business management software to help managers, sales forces etc. to
perform difficult tasks more quickly and easily that, in the end gives to its clients high standard
services. Thus, at the same time, some of the contestants could be seen as possible Sage customers:
there is the investment banker, the customer service manager, the manager consultant etc, which
are indeed all possible users of Sage’s software. This means that there is a deep connection
between the TV show and the advertiser’s core business, which helps of course the brand stick in
the minds of the audience, creating product integration between the TV show and the advertiser’s
brand, even without having to show the company’s brand.
30
fig. 22 – frame shots from The Kripton Factor’s opening titles
Sport shows
These days, sport content is quite common and easily formatted to integrate with this type of
project. Sports and related brands seem to have the ability to build TV content easily. Some recent
examples are: “Wayne Rooney’s Street Striker” financed by Coca Cola and broadcasted by Sky 1
in UK. It is a kind of talent show where the Manchester United and England National Team’s
striker searches for the best street soccer player. Another great example is how Red Bull used the
sponsorships of different types of sports and contests that, in the end, had been shown also on TV,
such as the “Red Bull Flug-tag” on ITV4. MTV, partnered with X Box, Samsung and Adidas,
produced during the 2006 Soccer World Cup a documentary-behind the scenes about some famous
soccer players called “MTV Goal – Germany 2006” that has been broadcasted in 11different
countries. Another successful sport show was the “Gillette World of Sport”, a show that the target
audience wants - but it is not about razors or shaving gel. This series offers a topical mix of the best
sporting highlights and specially shot features from around the world, and there are many more
examples out there.
An even better example of sport show is “The McCain Track & Field”. It is sponsored by the chips
manufacturer McCain and aired in UK on Channel 4. The 30-minute-shows are aimed at a young
audience, who are encouraged to take their enthusiasm for athletics beyond an interest in watching
GB’s professional athletes race and into active participation. The series highlights some of the most
promising young athletes in the country, but it is focused just as much on those with no previous
experience. The focus of the TV show, as well as for the TV sponsorship before and after each
episode, is around the grass roots philosophy that moves both the UK Athletics and the advertiser.
Here, the link between the content and the advertiser’s purpose is activated without in anyway
compromising the independence of the TV content and integrates well with it.
fig. 23 – frame shots from The McCain Track&Field’s opening titles
Music shows
As well as sport content, music is one of the most used genres in the AFP productions. It works
well in the integration between companies and TV channels in both types of formats: the one-shoot
concert and the long-run talent/music reality. Of course, MTV is one of the most well known TV
channels using this type of synergy with brands. In early 2005 fast food giant McDonald's linked
up with MTV in a global partnership based around new music talent, the “MTV Advance
Warning”, a 12-part series which was focused on emerging artists (it helped to launch artists such
31
as Joss Stone and Franz Ferdinand), on air before in US and then across Europe. Talking about
one-shoot concerts, the famous “MTV Music Awards” is always sponsored by big brands (LG
Electronics for example etc.). But MTV looks also to niche and creative content such as the
“Campari Red Passion Parties With the MTV Soundsystem” targeting clubbers around Europe
during the summer. MTV also created also a micro website to have a more integrated campaign.
Besides MTV other TV shows based on music content have had good success. One of those is the
“Orange RockCorps” concert in partnership with Orange, Sony Ericsson and Channel 4 in UK. The
volunteer association RockCorps produced the music show in association with those main
telecommunication companies as a final stage of a more articulated campaign to engage teens and
young people as volunteers for community works with the slogan “Give 4 Hours, Get 1 Ticket”.
For the broadcaster, the TV concert from The Royal Albert Hall is a great piece of show, having
artists such as Busta Rhymes, Ludacris, Feeder, Guillemots, Lethal Bizzle, John Legend, The
Automatic etc. who can attract many TV viewers and high ratings. At the same time, for the
advertisers it is a unique way to connect even more with their main customers and target groups.
Another example is the “F1 Rocks”, promoted by the Formula One brand, in order to promote the
F1 races. The concert took place after one of the season legs in Singapore in September 2009 and it
has seen many international stars in its line up with a wide distribution over 172 countries and a
global audience of 26 million people. The next concert will take place next September 2010 with a
very unique line up of artists as well.
The Sweden market, for example, experienced the TV show Summer Krysset, which was financed
by the amusement park Grona Lund and broadcasted on TV4 and earlier on SVT. The show
combined music performances with international artists with a crossword puzzle game. It took
place in the Stockholm amusement park during the entire summer season with a TV show per
week.
fig. 24 – frame shots from Orange RockCorps TV show
Factual and reality shows
Factual and reality is another extensively used format for advertiser-funded programming because,
as Andreas Erenius, Vice President at the production company OTW stated, it is possible to mix
easily different components like learning, reality and competition in order to help people to get
involved in the program. In fact, it is possible to see different examples from all over the world that
fall into this category, making this format one of the most successful example of branded
entertainment.
One good example is “The Gamekillers”, a one-hour television series/realty show/candid camera
that was aired on MTV in the United States in 2006. The series was developed by Axe, along with
the ad agency Bartle Bogle Hegarty. The consumer-products company approached MTV with the
concept, thinking it was the most relevant network for the show to air on. Axe’s ad campaigns
target young men aged 14-35, a target demo that fits neatly with MTV’s viewership. The
"Gamekillers" are a collection of stereotyped characters that represent certain annoying
personalities who teens and 20-somethings often encounter throughout the course of their social
life. In particular, each Gamekiller is said to be particularly skilled at inadvertently (or sometimes
32
purposely) ruining a date and breaking up a couple and they are all generally understood from a
male perspective. They used the slogan “keep your cool”, which works perfectly as a rule for the
show where guys have to maintain control when they are attacked by the different types of
gamekillers but, at the same time, “keep your cool” is what Axe promises to give to the customers
with its new roll-on. It is easy to understand the power of this message and how it was embedded in
the whole plot of the show without appearing forced or showing the product. The TV show has
been running on MTV US and it has had incredible success with big ratings (3 million viewers and
the 4th highest rated show on cable TV), so that MTV decided to rerun the show 11 more times
giving Axe 11 hours of free media for the brand! Moreover, the show has been sold and watched in
Canada leading to extra airtime for free and revenues from the rights of the show.
One more example is the reality show financed by the water producer Aqua d’Or in Denmark and
aired on Viasat 3 in May 2008. The show had the goal to find the right person, for the advertiser’s
next advertising campaign, among common women with natural beauty. So they launched a contest
and scouting session to find the right testimonial for the campaign “the natural beauty” that worked
as any other reality show, following the candidates during their ordinary daytime activities, with a
finale where a jury decided which one was the best. The idea of natural beauty and simply water
worked great for the advertiser who got a good in response in term of revenues almost
immediately, according with Allan Feldt, CEO at Aqua D’or, who said that the sales grew up by
40% that year, and the web site created for the project became one of the most visited websites in
Denmark. Also from Denmark another example of a factual format for AFP is the creation of the
TV show BOOST for the launch of the new model of Ford Fiesta. In collaboration with Mindshare
and Nordinska Film (DK), they created a weekly lifestyle show in which the three hosts presented
international fashion trends, haircuts and makeup and every show finished with the three girls
applying the tips and new styles to themselves during public events such as movie premieres,
concerts or fashion shows. The TV content, plus an internet magazine and a traditional ad
campaign, had the aim of reaching the selected target group of women between 25 and 35 years
old, a shift in the traditionally targeted group for Ford according to Catherine Krokos-Leroy, Head
of Branded Entertainment department at Banijay Entertainment, who worked on that project55.
In Sweden it is possible to find two examples quite similar to this kind of TV format: Room
Service and Off Set. The first was a painting and interior design program, first aired in 2001 on
Channel 5 and financed during the first season by the Painters’ Union, where specialists were
called by families to remodel their houses. The program succeeded in attracting such a large
audience that Channel 5 decided to produce it without asking for funding by the advertiser in the
following seasons, giving great exposure for free to the Painters’ Union. The latter case in Sweden,
Off Set, is also an interior design program funded by VSM Group and aired on TV456. It has only
had minor success.
TV series and documentaries
The integration of advertisers and contents might be different for other types of format and
products. For example, a documentary like “The End of the Line” about overfishing, for which the
distribution was financed by the British grocery store chain Waitrose, had a different financing
model. The advertiser, who didn’t have any input into the editorial content of the documentary,
nonetheless had the right to appear as a partner and to show the documentary on its internal TV
channel to raise awareness about the problem of overfishing and state that the fish in its stores were
55
56
MiP TV International Conference, Cannes, France, April 2010
A. Högman, A. Lindén, C. Nilsson, “Advertiser Funded Programming - En ny väg runt mediebruset!?”, 2007
33
approved by the fishing authorities. Also in this case, the advertiser experienced an increase in fish
sales of 14 percent over the previous year, according to Waitrose’s senior fish buyer, Quentin
Clark57.
Another example of a documentary is “Summit on the Summit”, funded by Procter&Gamble’s
company PUR, but also HP, Microsoft and the United Nations Foundation, and aired on MTV. In
the documentary, a talented team of musicians, actors, show business stars etc. attempted to make it
to the top of Mount Kilimanjaro, the highest peak in Africa, in order to call attention to the clean
water crisis. As Robert Friedman, President of @radical Media, the media agency behind this
project, stated during the last MiPTV conference, “the three weeks initiative has had a lot of
interest with about a million unique viewers on the dedicated website, 5 thousands viewers of the
daily content on MTV; it has created twitter and Facebook accounts, two you tube channels and
actually by the time the show premiered, before the show premiere, and they got 8 hundred million
impressions, and 2 billion impressions by the time the documentary ran on MTV. It was a
significant initiative for all the partners, and was very unique. It wasn’t the traditional kind of
integration: it was really to take the DNA of the brands and integrate them into the show, which we
think is the future.”58
Finally, about TV series. A recent product is the TV program called “Pedro & Maria” financed
again by Procter & Gamble to be aired on MTV. This project might be seen as a kind of updated
soap opera by the company which started the phenomenon. The series will be a bilingual, modernday Romeo & Juliet in which audience members can suggest plot twists and story direction using
websites like Facebook or Twitter59 in order to increase even more the interaction between the
viewers and the TV series.
57
58
59
L. Partos “U.K. retailer Waitrose bans swordfish sales”, SeafoodSource, 19 June, 2009
MiP TV International Conference, Cannes, France, April 2010
B. Tourtellotte, “Ben Silverman's Electus unveils shows, one for MTV”, Reuters, 12 April 12, 2010
34
5. BEYOND THE AFP – STRATEGIES
In this chapter the focus will be on the dynamics between the actors involved in the
production of advertiser-funded programming. The analysis of the network of actors is
critical to understanding how much an efficient creation of value within the network
should be considered one of the main assets of an AFP project.
5.1 The value constellation in AFP
It is quite clear that in AFP projects there is no a single model for the production. The issue is
creating the right partnership between a numbers of different actors involved in the project. Thus,
the partnership becomes a crucial and basic characteristic in any AFP production. The important
point is that no single actor can deal and deliver the whole project alone and so the different
companies should be willing to work integrated together with the other actors without feeling their
contributions are being compromised. According to Normann and Ramirez (1993)60 one of the key
challenges of the new economy is to integrate knowledge and relationships in order to have a
greater impact in a highly competitive market. Kothandaraman and Wilson (2001)61 stated that
today, the focus has moved beyond individual firms to examining the value-creating network
formed by the key firms in the chain that delivers value to the end customer. This, then, is where
every advertiser funded programming producer should tune in.
Because the AFP production is always a gamble from in the moment it starts, a well-formed
network of partners is more and more important to secure the hoped for result of the entire project.
In order to have an effective collaboration within the network, it is important that the network
should be able to produce value to the end customers and to create superior value for the offering.
However, Kothandaraman and Wilson (2001) point out that the creation of value depends also on
the ability of each company to perform at the highest standard to produce the benefits generated by
that company’s competence. These are called “core competences”. Being quite rare that they exist
within any one company, the network constellation works as a catalyst to bundle the companies’
skills together and create the desired superior value of the attributes that are important for
customers. Moreover, the partners within the network have to be judged also for the level of the
risk they present for each other and for the whole network as well. In fact, again Kothandaraman
and Wilson (2001), formalized a matrix with the level of risk in a range from high to low, as well
as the value contributed, in order to distinguish four broad categories of relationships: integrative,
facilitative, developmental and losers. Integrative relationships are defined as those “based upon
the contribution of the partner to current products and future products design and development”.
Facilitative are the ones that “involve important, but not usually core, parts of the market offering
or technologies”. Developmental relationships are represented by firms “able to add value to its
market offering and then help others to improve their ability to be a low-risk operating partner”.
Finally, what are called losers are firms that “do not add value and are difficult partners”. In order
to have a clearer understanding of how the network can condense together the actors in each
60
R. Normann, R. Ramirez, “From Value Chain to Value Constellation: Designing Interactive Strategy” Harvard Business Review,
1996
61
P. Kothandaraman, D.T. Wilson, “The Future of Competition: Value-Creating Networks”, Industrial Marketing, 2001
35
advertiser funded programming, it is useful to represent visually for each actor, which core
competences usually are brought to the final product and the level of risk for the network.
fig. 27 – Actors’ capabilities and Kothandaraman and Wilson (2001) risks’ evaluation
The actors themselves have to find the way to integrate their core competencies and core
capabilities. According to Kothandaraman and Wilson (2001)62, the value creating networks will
take the business into a competitive domain where competition will shift to the network level from
the firm level, where a network of firms will compete against another network of firms. The idea of
working together as a team in order to beat the competitors within the TV and advertising market
seems to be well accepted by the professionals I’ve interviewed. In fact everyone believes that the
value-creating network is going to become the necessary competitive advantage for a successful
AFP project.
fig. 28 – Kothandaraman and Wilson (2001) value creating networks
The above scheme shows the nature of the interrelationships between the core elements of the
network. The superior customer value, which is the goal of the value-creating network, appears as
the result of the core capabilities of the actors, which are influenced as well by the nature of the
relationships between them. Also, the quality of the relationship facilitates the creation of value.
We can apply this model to almost every example of AFP in order to understand how to manage
the network of actors involved in the project and how to improve the entire process.
62
P. Kothandaraman, D.T. Wilson, “The Future of Competition: Value-Creating Networks”, Industrial Marketing, 2001
36
5.1.1 Partnership’s characteristics
If the partnership and the network seem to be one of the most important characteristics of any AFP
production, it will be more and more important to see the entire phenomenon not just as a flow of
revenues from the advertisers to the broadcaster but as a constellation of actors that create value.
The traditional TV ad value chain and the new AFP value constellation differ in many ways. As I
discussed above, in the traditional television business, the value chain can be modeled as a flow
from the creator - the advertiser and the advertising agency - to the end consumer. In contrast, the
value in AFP productions is created by each actor involved in the project and, at the same time, it is
also created by the users and viewers which are involved in and mobilized to take part in the show.
Using the new communications tools offered by the digital environment, the users are engaged in
the network, producing value themselves. In some of the examples I presented before, the role of
the viewers as creators of content quite clearly adds value to the development of the TV show. This
is what Kothandaraman and Wilson (2001)63 called the “cooperative paradigm” based upon
cooperative relationships between the buyer and the seller. The case of the TV series “Pedro &
Maria”, where viewers can shape the development of the plot using social networks, is quite
illustrative. As can be seen in the scheme below, the flow of the content creation in AFP is more
dense and wide, involving consumers, who are mobilized to take part in the value-creating network
and be creators of content themselves, opening up new processes of value creation.
fig. 29 – AFP’s network value chain
The more complex a network is and the more the creation of value is spread around the
constellation of actors, the better AFP is able to generate more opportunities for the creation of
value and to pack those into new and particular offerings. At the same time, the creation of more
opportunities of value requires the actors within the network to be more adaptable. Another
characteristic in the network of AFP projects is that the roles seem to be constantly redefined as do
the relationships between actors. Thus the network of actors must be much more flexible in order to
be able to adjust the advertising campaign strategy more effectively during the evolution of the
advertising campaign.
63
P. Kothandaraman, D.T. Wilson, “The Future of Competition: Value-Creating Networks”, Industrial Marketing, 2001
37
fig. 30 – Current content television
However, what emerged during the interviews I’ve conducted with professionals in the industry, is
that in practice, the actors in the market are still working on a daily basis process –they still do not
have systems in place for working within a network. TV channels, media agencies and production
companies still deal with these complex and articulated projects differently each time. According to
Hakan Gustafsson, Managing Director and Head of TV Department at the media agency, Carat
Nordic, each project is managed differently, with multiple negotiation stages and different
dynamics. It seems that even on a single project, actors need to meet and deal with partners
multiple times during the production process, making the development of the entire project longer
and more difficult. Of course this situation of daily deal-making and having different points of
negotiation during the production, doesn’t help the efficiency of the network, especially when these
activities are so complex, dense and multifaceted.
fig. 31 – production process in AFP
38
5.1.2 Partnership and network’s goals
If the informal production process is one of the problems within the network, based on the
interviews with production companies, media agencies and TV channels, it seems also that another
important factor in establishing an effective partnership within the network involves the role of the
advertiser. What each actor is looking for in an advertiser besides the ability to invest financial
resources in the project, is its maturity. Production companies and TV channels in particular
believe it would be easier to work with big advertisers that have the marketing knowledge to
interpret the advertiser-funded programming, not only as a way to push more successfully the
product or brand, but also as a new way to engage with consumers. This approach will lead to an
easier collaboration and to a more qualitative production of content. In contrast, the professionals I
interviewed also had experiences with small companies who started an AFP but unfortunately were
unprofitable in terms of dealing with the content. Those small advertisers usually lacked an
understanding of the necessity for long-term investment, instead were looking for an immediate
return on investment. As Andreas Stenberg at TV4 stated “the advertiser should immediately
realize how much it costs to produce a TV show and how complicated it is to realize a welldesigned AFP project. We experienced advertisers who were thinking they could use the last money
in their marketing budgets for AFP, without realizing that is a much more complicated and multilayered project”. Production companies, as well as TV channels, prefer to work with big clients
who have the knowledge to understand thoroughly the functions of the AFP. Andreas Erenius, vice
president at OTW, was in agreement, stating: “OTW, generally, doesn’t want to produce TV
content with small and cheap clients because the result would be not enough and would not match
the broadcaster’s requirements. Moreover, it would also reflect poorly on the image of the
production company itself.”
The goal in bringing the “best-in-class” players together should be, of course, the willingness to do
everything for the advertiser funded programming to secure the success of the project. Douglas
Scott, during his speech at the MipTV conference in Cannes in April 2010, describes his idea of
partnership as “the right production house, the right show runner, the right talent, and the right
distributor. All those things need to come together helping to drive success in term of what exactly
our terms of objectives are”64.
Finally, it is possible to say that the collaboration is the primary characteristic in the network for
delivering more value using the constellation of actors as a resource. As Kothandaraman and
Wilson (2001)65 state companies that can deliver superior value in the market place will win the
battle for the consumer. The commitment to work together as much as possible becomes one of the
most important resources in AFP productions and the network and is crucial in both on-air and offair activities. Nicky Buss, ITV customer relations director, said in this way: “If the idea of
advertiser-funded programming is to find new ways to create productions that can be of value for
each actor involved in them and especially for the high demand customers, it is important to talk
about content collaboration in a multiplatform sense”.66
64
65
66
MiP TV International Conference, Cannes, France, April 2010
P. Kothandaraman, D.T. Wilson, “The Future of Competition: Value-Creating Networks”, Industrial Marketing, 2001
L. Rouse, “Will branded content work for your brand?” in Media Week June 2007
39
5.2 The TV show as a spin-off
One of the most important characteristics of the AFP project is the idea that the actual TV
production is just the starting point of wider and broader campaign involving different activities
and communication tools to communicate in a better and more articulate way, the information
about the product or brand while at the same time, being entertaining. In other words, the AFP
itself is used as a spin-off for a broad range of external activities for the whole project, which
connects together traditional advertising campaigns with new types of consumer/viewer
communication strategies. For this reason, AFP production can be seen as an on-going process
where the TV content is the beginning of a more vast and “liquid” communication campaign. Thus,
the advertising campaign will be more intense, occupying more stages of the consumers’ life from
the traditional outdoor posters to viral videos on the web.
The “on-going process” can be seen as one of the core strategies behind every AFP production. The
content in the TV show is the base for an integrated communication with customers, making the
brand and the story integrated in a deeper and more effective way. The strategy is designed in order
to create a 360 degree advertising campaign that involves different communication tools but, at the
same time, it is flexible enough to be modified during the process. Having these characteristics of a
flexible campaign, the AFP projects, starting from the TV show, can be shaped later on during
development in different ways, based both on the success of the TV show as well as on the appeal
of the external activities or the response of the customer.
fig. 33 – structure of activities generated from the TV content in AFP projects
As it is possible to see in the picture above, in the actual AFP productions, the pure video content
for television or web is the central part of a more extensive and multifaceted integrated marketing
mix. For example Roger Troup, managing director of AFP specialist Flawless, talks about
"integrated media" in using a TV channel to push awareness of an AFP project and then using the
40
internet via an aggregator such as Joost, a video sharing website, to build a direct relationship with
a brand's audience67. But it is not just that, because the activities around the advertiser-funded
programming are many and different from the TV box and we can call those, “off-air activities”.
5.2.1 The off-air activities
“One of the biggest advantages of AFP is that branded content can exist on many different
platforms, from traditional TV channels to the web and beyond. The development and production of
entertainment opens up a wealth of rich content opportunities for the brand to exploit off-air”68
stated Douglas Scott, CEO at Ogilvy, one of the most important media companies in USA.
The ability to build around the TV content, a wide range of entertainment activities on different
platforms seems to be one of the most interesting and important advantages of this kind of project.
Basing my research on different television markets and watching different TV content, I had the
chance to notice that in almost every AFP project the off-air activities have a critical role in the
overall campaign. Those are all the activities that the advertiser and media agency design around
the story and the idea of the TV show. The editorial content, broadcasted on TV, becomes the base
for a wide range of activities with the goal to engage the customers more deeply and to find new
approaches to advertise the brand and the product besides simply the television commercial.
Internet: websites and social networks
The web is the platform where the off-air activities have the greatest impact and importance for
every AFP project. It is essential to integrate the TV show with the web in order to better engage
the consumer in what is called the “media meshing”. Douglas Scott, at Ogivly, describes it in this
way: “Today’s teens are consuming four forms of media in a given moment of time! If before, the
consumption of television was a solely moment of communication between the broadcaster and the
viewer who was exchanging his/her time for the entertainment, now the young viewer is watching
TV while chatting with a friend and googling something and listen to music all at the same time.
This makes it harder for a brand to break through, thus a new form of entertainment, that is brand
entertainment, is needed69.”
This trend is also called “the two screen” and it seems to be one of the fastest growing phenomena
in the business. The audience/consumers, especially in the segment of population between 15 and
35 years old (one of the most interesting and profitable segments), are usually watching the TV
with the laptop open connected to the web and, if they are engaged in the show, they usually go on
the TV show’s website to discover more about characters, backstage etc. Surveys show that they do
so especially during the show. In fact, according to the 2008 Nielsen report70 for the USA
television market, 31 percent of internet activity occurs when consumers are also watching
television. The opportunity to use the web in a more integrated way seems to be the best way to
build a one-to-one relationship with customers and create a 360 degree multi-platform and
67
68
69
70
L. Rouse, “Will branded content work for your brand?” in Media Week June 2007
MiP TV International Conference, Cannes, France, April 2010
MiP TV International Conference, Cannes, France, April 2010
“A2/M2 Three Screen Report”, Nielsen, 4th Quarter 2008
41
integrated communication campaign. But the web has also another great impact on the economy of
the AFP project. On the internet, the space that can be used to show the brand of the advertiser is
far bigger compared with that of the TV because the regulations about sponsorship and brand
placement are less strict and not yet regulated. This means that the advertiser’s brand can be shown
without any restriction on the TV channel’s website dedicated to the TV show. At the same time
the brand is usually an active link to the brand website. This utilization makes the web a great place
for advertisers to show off the brand and to re-direct the audience of the TV show to its own
website.
The off-air activities on the internet can be attractive to viewers in various ways and be theme
related. For example the TV game show “The Kripton Factor” provides viewers an opportunity to
play with the TV show’s games and with many other games on their own. On the website dedicated
to the realty series, “The GameKillers”, the fans of the TV show can read more about the characters
and get more tips on how to fight against every type of the “gamekillers”. For the documentary
“Summit of the Summit” the viewers had the chance to see more videos about the ascent to the Mt.
Kilimanjaro and on the web site dedicated to the reality show “Nature beauty”, women had the
chance to share beauty tips and participate in a contest uploading their video profiles. Thus, it is
clear that the advertisers can create a communication strategy on the web using spin offs from the
TV shows. This web strategy seems to be very important for advertisers and for TV channels as
well, providing them with an immediate response based on the number of web visitors. Andreas
Stenberg at TV4 agrees when he said that the opportunities created on the web are unique for actors
and that, at TV4, they are currently working harder on that integration. TV content can also be
spread around the web using social networking, video sharing websites and communities, providing
a greater awareness of the programming and feeding all the possible platforms. Aris and Bughin
(2009)71 describe the off-air activities stating: “There is increasingly a need for advertisers to use
digital-marketing techniques across multiple platforms that will require from media companies the
ability to come up with cross-media offerings.”
fig. 34 – itv’s web site dedicated to the game show “The Kripton Factor”
71
A. Aris, J. Bughin, “Managing Media Companies”, Wiley, 2009
42
fig. 35 – Sage’s web site linked to the TV show’s web site
Road-shows and live shows
Another type of off-air activity is called road shows, where the advertisers and the media agency
set up a promotional tour, usually strongly related to the tone and subject of the TV show, to
advertise the product and the brand in public spaces, like train and metro stations, public events and
neighborhood fairs. In doing so, the advertiser can use the brand awareness created by the TV show
in order to reinforce the message with the customers, engaging them in fun and informational
games and live shows. This type of branded activity seems to be particularly important if the
company wants to better communicate the idea of an entertainment brand. The road shows are great
chance for any company to reinforce the advertising campaign message started on the TV show,
and to engage the consumers in activities related to the core message of the campaign. In this way,
the message will be reinforced and it will stick more easily in the consumer’s mind.
One example that demonstrates well the importance of this kind of activity in order to build interest
and brand awareness and to create a more effective campaign is the TV show “McCain Track and
Field”. In addition to TV shows and the TV sponsorships, McCain (the advertiser), Beattie
McGuinness Bungay (the media agency) and the UK Athletics Organization (the additional
partner) created a road show around England involving more people around athletics, giving them
the chance to try different athletic disciplines. During the road shows, where famous British
athletes are present to give advice to people, the McCain brand is always present in different forms.
Some games are designed around the McCain core business, chips, such as the sack-running and
the potato-on-the-spoon competition. The dedicated website completes the 360 degree McCain
campaign around athletic and healthy lifestyles.
Road shows are not just great marketing opportunities for the advertisers but also for the TV
channels and TV networks that can also use live shows to engage consumers and the audience even
more, thereby reinforcing their brand awareness and the link with the TV show. Nielsen’s 2007
report72 showed that usually viewers are more loyal to the TV show as a brand than to the particular
TV channel. Thus the road shows can be seen by the TV network as a great way to reinforce the
channel’s brand recognition by using the brand awareness of the TV show’s brand. The road show
can create a new experience between the TV show and the viewers, designing new, unique
72
“2007 report on US Television market”, Nielsen, 3rd Quarter 2007
43
participation opportunities in live events. In general, as Aris and Bughin (2009)73 state, off-air
activities are great opportunity for media companies because they can also monetize branded
content across different media product/channels and through merchandising, resulting in much
closer cooperation between the different types of media than has traditionally been the case,
potentially transforming the organization from a product-specific to a consumer segment oriented
organization.
Off-air activities can also take place before the transmission of the TV show, as Andreas Erenius, at
OTW, experienced with a project they worked on. They used off-air activities as a starting point,
where common people were engaged in a contest that ended with a TV show, a kind of gala, aired
on TV in prime time.
In short, the integration between off-air marketing and activities, using the TV show as a spin-off,
is another important strategy to obtain the maximum return and to create the most effective
message that, in turn, can affect consumers’ behaviors. It is one of the most important tools to
increase engagement with consumers, which is the main goal in today’s TV and advertising
strategies as Douglas Scott, President of Ogilvy, stated at MipTV 2010 in Cannes: “This idea of
distributive content is really becoming the connective tissue from a cultural standpoint to the
audience, it is where we see this market is created. In fact, it is very important for us to be able to
activate the content across all our media channels with our partners so as to spread the message
more effectively reach the audience74”.
5.3 Implications and suggestion for a better
network strategy
Based on the analysis of the actors involved in the advertiser-funded programming project and
based the description of how the network of players and the partnerships between them can
increase the value of the overall project, it would be useful to formalize some suggestion for
strategies, with their implications for how better partnerships and the value network constellations
can ensure better results for AFP.
As has been analyzed, the main goal for every AFP project is to create a strong relationship
between the actors involved. The long-term relationship should be the focus for every firm working
with advertiser-funded programming because, as Kothandaraman and Wilson (2001)75 state, “the
main way that firms assemble the network of firms is through developing strong relationships with
key partners who can add value to the market offering”. The point, as many professionals in the
field have already realized, is to find the right partners who can ensure an increase in the valuecreating process within the network. The network being the central pillar of the whole project, it
must be strong enough to support all the activities needed in a branded content. Thus, it is
important that the actors be chosen based on what Kothandaraman and Wilson (2001) called their
“core competences”. Only by having the best players with the best knowledge about the project and
73
74
75
A. Aris, J. Bughin, “Managing Media Companies”, Wiley, 2009
MiP TV International Conference, Cannes, France, April 2010
P. Kothandaraman, D.T. Wilson, “The Future of Competition: Value-Creating Networks”, Industrial Marketing, 2001
44
with a long range perspective toward achieving goals, can advertiser funded programming succeed.
Thus, integration of different disciplines and expertise within the constellation helps to leverage the
level of value-creating activities. To accomplish this, AFP projects have to combine different
activities into branded offerings, producing new opportunities for creating value.
In successful AFP projects, every actor involved has been willing to contribute from the beginning
of the project. Players within the market have started to realize how important it is to engage with
the network’s partners in a cooperative effort instead of just pitching ideas through media agencies
or production companies, as happened in the traditional television commercial market. This
proactive approach in developing the project from the first stages of development is an important
asset for the overall project that will increase the value of the final product. This early involvement
does represent a more expensive and time consuming effort than if they wait until a later stage of
the production, according to the actors interviewed. Thus, if the network of actors wants to
maintain a high level of quality, assured by the cooperation of every player at the starting point of
the development, companies should try to create the necessary conditions for better project
organization. This is why, as also suggested by an IBM Report, actors involved in the TV value
chain should create standards-based network operations in order to optimize content development
and distribution, as well as to enable continuous improvements in business flexibility and network
cost-efficiency. If the network can be moved to an optimized delivery platform, actors should be
able to improve their agility to meet different production needs, producing product faster for launch
in the television market, which, in turn should reduce production cost as well as time consumed in
dealing within the network. A standardized network structure would also benefit by the
responsiveness to market needs, shaping and developing content and off-air activities, tuning with
the consumers’ needs and acceptance, utilizing each actor’s resources in a better and more effective
way, thereby increasing the overall value-added activities of the network. Use of the elasticity of
partnerships in the value-creating constellation is where a TV show has also the opportunity to
build proprieties over time. If it starts small, it can grow by introducing new elements and
additional contents and also the format can evolve during the different seasons.
This could be the real advantage in AFP production and the characteristic any partnership should
try to achieve, because better internal organization of the actors within the network will lead to a
more qualitative and efficient production of any kind of advertiser funded programming.
Moreover, this way of creating value can redefine the traditional value flow and can redesign the
ways of value creation. According to Norman and Ramirez (1993)76, the goal of the value
constellation is not just to create value for customers but also to mobilize customers to create their
own value from the company’s various offerings. From this perspective, the network of actors
involved in every AFP should be looking at all the possible off-air activities as a way to involve
consumers in the creation of value for the overall project. This can turn out to be a real asset for
this kind of production making it different from all other types of TV and advertising contents. As,
will be shown in the next chapter, mobilizing the audience and the consumers will not just help
increase the value creation of the offering itself but also it will help to retain and engage viewers
more deeply so that they become loyal advocates of the AFP, of the brand and the TV channel.
76
R. Normann, R. Ramirez, “From Value Chain to Value Constellation: Designing Interactive Strategy” Harvard Business Review,
1996
45
6. EFFECTIVENESS IN AFP
This chapter will analyze which characteristics are important to increase the effectiveness
of advertiser-funded programming in term of consumer engagement and consumer loyalty.
Those are two critical characteristics that any AFP should try to activate among the
viewers in order to secure the success of the whole project.
6.1 Content and engagement
Every advertising campaign determines its efficiency and effectiveness based on the return-oninvestment. However what makes the effectiveness of any campaign greater is its engagement with
consumers, especially now, when media cannot be treated as simply as a vehicle and consumers
cannot be consider simply passive viewers. As Calder and Malthouse (2008)77 state “the
effectiveness of advertising depends on the brand being advertised, the quality of the ad itself, and
the characteristics of the execution such as the size of the ad and placement in the medium”. If that
is true for the traditional television commercial, the same would be even more relevant when we
talk about AFP.
In the current situation, the clutter of advertising which has been actually created by the advertisers
themselves, is almost saturating the market and the advertising industry is in a desperate struggle to
break through this clutter even as they create more clutter! Brands and companies don’t just come
forward with what they want to sell, they want to engage the consumers with things they want. And
that is why advertisers have blurred the line between programming and products78. The idea is to
give people advertisements that they do not just tolerate, but even go in search of it. What the
advertisers always wanted to do is not simply to suffuse the atmosphere but to become the
atmosphere. They want to become the cult and so they study cults and how they can affect the
consumer’s into the right frame of mind79. This is what an AFP should be designed for: to create an
atmosphere where the brand surrounds the content without having to be shown, increasing the
power of the message. As Alberstat (2001)80 states “the main interest of an advertiser lies mainly
in adding marketing support and building a culture around the programme to benefit both the
programme and its brand.”
The need for a better-planned and conscious development of brand entertainment and AFP projects
is related also to the new consumer’s changes in habits and cultures. If, on one side, the market
today is made up of sophisticated consumers who are well informed and do not easily buy into
catchy slogans and unsubstantiated claims, on the other side, the consumers are indeed changed.
Dawson and Hall (2005)81 highlighted two particular factors: the first one is that western cultures
are increasingly driven by entertainment, news and celebrities and thus brands have to deliver
entertainment to compete for attention. The second factor is that consumers usually edit out brands
77
78
79
80
81
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley, 2008
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
P. Alberstat “Law and the Media”, Focal Press, 2001
N. Dawson, M. Hall, “That’s brand entertainment” for “World Advertising Research Center” February 2007
46
that fail to entertain them, affecting so the entire brand communication. That is why advertisers, as
well as TV channels, should not lose the opportunity to entertain consumers and in turn to become
closer and more essential for them. The figures tell us that in 2004, for the first time, American
consumers spent more on entertainment (movies, music, cable TV, websites, video games, and so
on) than business spent on advertising ($178.4 billion vs $175.8 billion). These statistics are quite
illustrative about the role that content and entertainment represents for advertisers and television
markets in general.
6.1.1 Content to increase customer satisfaction and retention
Best (2009)82, analyzing marketing dynamics, points out that in a competitive market with many
choices and low customer switching costs, such as in the television market, even relatively high
levels of customer satisfaction may not ensure against customer defection. That is why, in these
types of markets, a customer’s retention is much more difficult to achieve. It takes higher levels of
customer satisfaction to retain customers and, in turn, it is why it is extremely important to
investigate what makes viewers satisfied and how to drive them to become loyal consumers, a
crucial objective for both TV channels and advertisers involved in advertiser-funded programming
and in any branded content.
According to many professionals within the market, and based on what has been explained in the
previous chapters, the content itself represents the first element of attaining a higher level of
engagement. So, it would be useful to start analyzing the power of the content as the touchstone of
the customer’s engagement and to move later to investigate which techniques and strategies allow
advertiser funded programming and brand entertainment might help to create loyal customers.
The editorial content has as its main goal the creation of contact with the audience. The objective of
reaching the desired customers, however, is not easy to accomplish, especially today as the
television market is facing increasing audience fragmentation and increased clutter. The
fragmentation of the market, as Aris and Burghin (2009)83 analyzed, has made it increasingly
important to identify and understand its different segments in order to tailor products effectively,
especially as most segments tend to like multiple types of content rather than just one genre. Also,
according to Aris and Burghin (2009), media companies have to develop a deep understanding of
how and when people would like to access content, as there are many more channels to access the
same type of content and consumers have much more freedom to determine the timing. This is
because, as Singh (2008)84 states, the media market in general has moved from a time based
paradigm to a content based paradigm, and thus it seems increasingly important to focus on quality
and relevance of the content, as the way to engage with costumers.
6.1.2 The value of qualitative content
Aris and Bughin (2009)85 describe the content produced for entertainment as a perishable
commodity, at the heart of every media business, something intangible and depends on fashion,
82
83
84
85
R.J. Best, “Market-Based Management”, Eastern Economy Edition, 2005
A. Aris, J. Bughin, “Managing Media Companies”, Wiley, 2009
S. Singh, “Marketing Strategies for Protection of International TV Formats”, 2008
A. Aris, J. Bughin, “Managing Media Companies”, Wiley, 2009
47
trend and inspiration. That’s why the content, especially in AFP, has a central and crucial role and
it has to be well designed and planned in order to be successful. In fact, according to Aris and
Bughin (2009), the focus of most media companies’ top management is still very much on the
content generation process. This is because this process has the largest potential impact on net
income, and especially within branded content, affecting both advertisers and TV channels,
especially in AFP projects, that has as main idea that the editorial content is in any sense influenced
by an outside interest to convey a message or reach an underlying order. The intention may be to
increase interest in an industry, product category or phenomenon, creating a need to drive a trend.
The overall message of the content needs to fit within the corporate philosophy, however, it is
important that advertiser doesn’t compromise the genuineness of the editorial content in its
entertainment characteristics or in its quality as television programming. In fact, quality is also by
far expected and, even though it could be perceived as a commodity and standard, it is still
fundamentally important.
The value of the content in television programming, and especially in branded entertainment, is
incredibly important for consumers and its value is well explained by Douglas Scott, President at
Ogivly, who defines and suggests the term “content as a currency”. Thus, it is possible to talk
about “content as social currency”, whether water cooler talk, Twitter talk or blog conversation
about the content of the TV show, it helps engage people about the content and makes them want to
share with others their thoughts. The content will represent for viewers “fuel for conversation” in
their social community activities whether on the web or in real life, making them more engaged
with the TV show. At the same time, the content can be also seen as “promotional currency”, in
terms of reward that the advertiser and the TV channel give to consumers without selling anything.
The viewers give to the TV channel their time and they get back pure entertainment/ educative/
informative content and this can activate engagement. Lastly, the content can have also an
“economic currency” for the advertiser because either through licensing or in a format value,
content created can be re-used and subsequently played back in the economic model of investment
that’s happening today between producers of content and distributors of content86.
fig. 35 “Content as a currency” - how to activate engagement through qualitative contents
6.2 Engagement and Brand Experience
The challenge for advertiser funded programming and brand entertainment in general, compared to
the traditional advertising models, is to create a higher level of engagement for consumers, filling
the gap between entertainment, content and the brand’s philosophy. Today’s viewers are more
86
MiP TV International Conference, Cannes, France, April 2010
48
skeptical about everything and they are not easily persuaded. Besides the traditional 30 second
television commercials, which, as previously discussed, seem to be ineffective, advertisers now
have to spend more in engaging the audience rather than simply telling them to buy a product.
Broadcasters and TV networks as well are facing an urgent need to capture a higher level of
consumer engagement and to respond to changing consumption habits to secure their positions as
content providers. That’s why brand entertainment in the form of advertiser funded programming,
plays a crucial role. Thus, a new relationship between consumers and companies should be the
objective that media companies involved in AFP projects, such as media agencies seek, and
production companies and especially TV channels, should educate advertisers about this new way
of increasing sales and revenues.
6.2.1 Emotional connection
In order to engage with customers in a deeper way using advertiser funded programming, it should
be kept in mind that branded entertainment requires that the content be relevant to the consumers in
terms of the context of the story. Relevance, also according to Hakan Gustafsson at media agency
Carat Nordic, is the only way to create engaging contents. Though content can play many roles - it
can educate, can inform and entertain- it is important to first have a clear understanding of what
matters most to the consumers. Content needs emotional resonance, in terms of its relating to
viewers’ personal lives and interests. If an AFP project can build those two characteristics, it can
aspire to realize what Curry (2004)87 calls “emotional connection” with viewers, because according
to him, television is about delivering experience. As Kevin Roberts, CEO of Saatchi and Saatchi
Advertising, says “What consumers want now is an emotional connection—they want to be able to
connect with what's behind the brand, what's behind the promise. The brands that can move to that
emotional level, that can create loyalty beyond reason, are going to be the brands where premium
profits lie88”. This is the new frontier and the goal of any advertiser-funded programming that will
enable the advertisers and TV channels to create relationships with their consumers. For example
right now, Uniliver is shifting its marketing efforts towards something called its “relationship
campaign”, a term quite self-explanatory of the firm’s goals89.
To be able to activate an emotional connection with consumers advertiser funded programming
should make a shift from the traditional advertising strategies. Based on a recent research study90,
the old models in advertising don’t work anymore: those that focus on creating awareness,
repeating information over and over or focus on persuasion, trying to influence and sometimes
forcing consumers to buy the product. What now seems to influence consumers is an engagement
model based on creating experiences, activating personal and emotional connections with the
consumers who in turn feel more like a part of a community making them feel more relevant. Thus
engagement enables interaction, creates distinct experiences that connect brands and people, and
provides something that stands out as valuable and believable91.
87
88
89
90
91
A. Curry, “The Branding Bubble” in “The New Medium Television”, Interactive Digital Sales, 2004
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
“2010: The Year of Experience Brands”, Jack Morton Agency, 2010
“2010: The Year of Experience Brands”, Jack Morton Agency, 2010
49
6.2.2 Experience economy in AFP
Experience has always been an important characteristic for AFP and for the traditional television
commercials as well because, as Calder and Malthouse (2008)92 write, “media engagement and
experiences can make ads more effective”. However there may be drawbacks because of the
intrusion of the traditional 30 second ads within the television experience. Calder and Malthouse
(2008) confirm that what can make the difference is “a better understanding of how the experience
of the media product and the experience of the ad fit together and how intrusion can interfere with
this process.” It seems that AFP productions are on the right path, having a more integrated and
non-intrusive way to advertise and promote brands.
According to Pine II and Gilmore (1999)93 today’s consumers desire experiences and experiences
have emerged as the next step in what is called “the progression of economic value”. From the TV
show to a wide range of other activities, the offering value is continuously reinforced and
maintained at high level of consumer engagement. Engagement is one of the most important
characteristics that delivers a high level of value experience for consumers: thus it is important to
understand the lessons from the Internet and aim to increase viewer engagement in the most
powerful medium, broadcast TV. Engagement in advertiser-funded programming is activated
directly from each set of activities created around the TV show. Consumers, when they feel
involved in the development of the plot of a TV series or when they have the chance to offer advice
to the show’s characters or especially if they themselves can participate in the show’s
programming, are able to connect directly with the content, making them a part of what they are
seeing. This deep involvement in the content experience results in viewers’ being particularly
engaged with the TV show.
Consumers need memorable events, experiences that are inherently personal and that engage them
at an emotional, physical and intellectual level. Pine II and Gilmore (1998) say that experience
occurs when a company intentionally uses service as the stage to engage individual customers in a
way that creates memorable events. That is why road shows and activities, set up in the everyday
lives of consumers (at train stations, grocery stores, neighborhood fairs etc) are extremely
important in AFP projects, creating face to face relationships with the audience and giving them the
feeling of being in the TV show and furthering their feeling of relevance to the show. Road shows
thus are perfect examples for understanding which demonstrate how much the consumers need to
be involved in a brand and story experience. It is increasingly important to connect the brand with a
story and to try to blur the borders in order to “get the viewer lost in the wonderful world of the
brand”.
6.2.3 From the experience to loyalty
The ability to build experience around and within TV content is likely one of the reasons that
branded entertainment is effective and why it has an important position within the marketing mix.
But it is also extremely important to understand how the experience economy can be translated to
engagement and loyalty which are, in the end, the goals for both advertisers and TV networks.
Engagement is maximized by the enjoyment that the TV show gives to consumers, without asking
for anything in return. Consumers perceive that enjoyment as a gift that the TV show gives them as
a reward for the time they spend with the programming. For example American Express in the
92
93
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley, 2008
B.J. Pine II, J.H. Gilmore, “Welcome to the Experience Economy”, Harvard Business Review, 1998
50
period between 1996 and 2006 cut the investments in traditional television commercials more than
a half and instead started to pour in millions of dollars into producing web episodes starring Jerry
Seinfeld. As John Hayes, Chief Marketing Officer at American Express, said “we did this
operation because we knew that consumers want to be entertained and the American Express
message, built in a fairly seamless way that it doesn’t interfere with the enjoyment of the
entertainment, assures that the consumers get something and that they start to see the value of the
relationship with American Express94”. American Express didn’t want to come directly forward
with what they wanted to sell but they instead engaged the consumers with things they want in the
way of entertainment.
If TV shows can activate involvement and a perception of personal importance and interest in the
show, and consumers feel that the content of the TV show has some kind of value for them,
advertiser funded programming may also activate an attitude that makes viewers loyal to the
programming. Hopefully this will in turn commit consumers to the TV show and make them show
advocates, suggesting it to others. This would result in word-of-mouth spread which is of great
importance in building what Dawson and Hall (2005)95 call the “media multiplier” that gives brand
entertainment the chance to increase its effect. Word of mouth effect also has social implications,
as consumer recommendations are of great importance in increasing awareness about a TV show,
promoting a loyal and engaged audience which will endorse brand philosophy.
Fig. 36 – Word-of-mouth effect and media multiplier
This process of involvement and loyalty is confirmed by Andreas Erenius, vice president at OTW,
who talks about the “factual entertainment” format as one of the most effective types of advertiser
funded programming for its ability to combine learning, reality and competition that help people
get involved. “The learning rewards the consumers with good tips that they can use in real life, the
reality moves the consumers closer to the character of the show, feeling an identification with him
or her, and the competition spices it up. Thus, those three components can activate engagement
and in turn loyalty to the program, moving them to talk about.”
94
95
Frontline – PBS, episode: “The Persuaders” Nov, 9th, 2004
N. Dawson, M. Hall, “That’s brand entertainment” for “World Advertising Research Center” February 2007
51
At the same time, in both Duncan and Moriaty (1997)96 and Calder & Malthouse (2008)97, it is clear
that both talented and famous people, promoting a brand or a product, have an important impact on
decision making and in increasing the effectiveness of the message.
6.3 Implications and suggestions to increase
engagement and loyalty in AFP
As has been analyzed, many elements help the TV show create an engaged and loyal audience
base, which is the main and most important goal for both advertiser and TV network involved in
advertiser-funded programming. Additionally, it is important to point out that some characteristics
that emerged during the investigation can have important implications in designing an effective
AFP.
It is useful to point out the role of the advertiser, in terms of involvement in the project and in the
development of the editorial content of the TV programming. From what appeared in the
interviews I’ve conducted and based on the statements of international professionals in the field, it
is clear that AFP is not for every business: it is a really powerful tool only when a brand has
authenticity in a particular area. Moreover, if the advertiser wants to contribute to creating the
content, it must have something of interest to say. Otherwise if it simply wants to push the product
or the brand the risk of corrupting the editorial relevance is really high.
It is clear that when the advertiser invests its financial resources in a branded entertainment
production, but remains at arm’s length from the editorial content, it may seem more risky from a
marketer’s point of view. However, this is where the really interesting territory lies. If the
advertiser wants to communicate authentic messages, it has to let the production companies, the TV
channels and even the media companies, which have competencies within the market, do the job
independently because that’s when the brand gets the most potent results. In fact, it is possible to
highlight two broad approaches on how to interpret the role of the brand or product within the
editorial content: the advertiser can put the brand in the editorial content or let the brand surround
it. The latter may be more efficient for both the content and brand, especially in the way the
audience approaches it. Advertisers, and especially TV channels, should maintain the integrity of
the core content as a vital prerogative, without forgetting that is a TV show, and that the actors
want to build an audience, not irritate people. Content and entertainment that really speak to the
audience are incredibly powerful and can give a distinctive voice and point of view, aligning the
advertiser and TV channel with the audience. This is where the true focus should be.
96
T. Duncan, S. Moriarity, “Driving Brand Value: Using integrated marketing to manage profitable stakeholder relatioships”, McGrawHill, 1997
97
B.J. Calder, E. Malthouse, “Media Engagement and Advertising Effectiveness” in “Kellogg on Advertising and Media”, Wiley, 2008
52
fig. 37 – how the editorial freedom can increase value for the brand
Second, because the media market, as well as the television market, is more and more fragmented
and consumption habits have changed, the segmentation of the consumer and the market represents
a crucial point on which to build a successful AFP. The first step for any advertiser-funded
programming would be to pinpoint the individuals or segments the advertiser and the TV channel
want to reach, in order to engage them with the right message, at the right time, around the frame of
mind and provide them with as much utility and information as they actually can. As Hakan
Gustafsson, at media agency Carat Nordic, said “consumers’ insights nowadays give enough data
to be able to reach those individuals when they are in the market or when their behavior is set to
actually engage them with the brand message.” Thus, the content, as the first touch point with
consumers, has to be relevant for them without wasting their time and must give them something
important which is tailored to their needs and wishes.
Another important characteristic in designing effective advertiser-funded programming is the
maintenance of a high level of engagement with the TV content. The overall AFP project needs to
put pull-through tactics in place to maintain interest and build the relationships and emotional
affinity needed to drive some measurable value back to the sponsor’s brand, in order to finally turn
the brand fan or the TV show fan into a fanatic with an “addictive appeal”. This can be done if the
TV show is able to create moments of dialogue with its audience, as happened in some TV formats
I previously described, using the web and social networks to obtain feedback that can be positive or
negative but which, in either case, help to build confidence with the audience. TV programming
should use social networks in order to engage people with similar tastes and passions so they can
meet and share mutual feelings. This is turn will give the TV programming, the brand and the TV
channel the opportunity to be viewed as a common place for meeting like-minded people, people
who have an emotional connection with the TV show.
53
7. FUTURE PROSPECTS AND
POSSIBLE DRAWBACKS OF AFP
This chapter will be briefly discuss what the possible future applications of advertiserfunded programming model might be for social and educational projects. It will also trace
briefly the impact that a change in the product placement regulations could have for AFP
projects and finally it will touch on some problems of measurement when we talk about
branded content and advertiser-funded programming.
7.1 Social and educational prospective of AFP
As has been explained during this report, advertiser funded programming should aim to establish
itself, first of all, as a high quality television production. In addition to high quality standards we
can also add the high level of engagement it creates. These two characteristics, then, are the most
powerful tools of an AFP project. For this reason advertiser-funded programming can also be seen
as a great way to help social entrepreneurs amplify their message and reach more viewers. The
ability to engage the audience and involve the consumers in the TV show can be useful for a broad
range of social and educational activities. Another benefit of AFP is that companies with social and
educational goals can use the TV content to move people towards their activities and involve them
through social networks and off-air activities.
AFP and branded entertainment in general thus can be an effective tool to build awareness around
themes and arguments with social relevance, using the entertainment value of TV content to help
increase the appeal among viewers. There are already examples of television contents with specific
social and educational subjects, created to build awareness of relevant social and humanitarian
problems. I previously mentioned the documentary “Summit on the Summit” that had the goal of
making people think about and be aware of the problem of clean water in Africa, using famous
artists testifying about the campaign and using extensively digital technologies and social networks
to increase the involvement of viewers in the African problem. Another advertiser-funded
documentary called “The End of the Line”, talks about the problem of overfishing. It had the goal
of creating awareness of an environmental issue. Likewise, TV concert and TV series “Orange
Rock Corps” created by the association RockCorps, used AFP projects to engage more young
adults in community works, giving them a concert ticket in return.
The high level of engagement and loyalty that these kinds of content can provoke is extremely
appealing, not only for companies because of its impact on revenues and sales, but also for
associations and educational projects in order to nurture closer relationships with the audience and
engage them in a fun and enjoyable way.
54
7.2 Product placement; will it help AFP to grow?
Many in the media industry see the growth of the AFP market directly correlated with a new
atmosphere of regulatory flexibility related to product placement. This will make companies and
brands more willing to invest and in turn it will help the creative industry play at the same level as
other international content providers and creative industries. The increasing flexibility within the
industry should tempt advertisers to invest more in AFP. The increased investment could also help
the market move AFP up on the agenda, to start to produce more prime time content and more
articulate and sophisticated TV shows. However, product placement doesn’t seem to be the
panacea for everybody in the media industry. For example Daniel Knapp, an analyst at Screen
Digest, seems skeptical about product placement: “In Austria, where product placement is allowed,
it generates 2% to 3% of commercial broadcasters’ revenue,” he said. “It’s not enough to buffer the
revenue downturn98.”
Product placement has additionally been criticized excessively, especially in Europe, but today the
old fear that that type of programming could become “hour-long” television commercials has been
dispelled. European viewers and consumers are already used to seeing product placement in foreign
television productions, mainly from USA. Shows like Desperate Housewives, Friends and 24 have
largely used product placement but nevertheless have proved to be massively popular after many
seasons. Of course some kind of deregulation of product placement would definitely help the entire
business of AFP, at least in attracting advertisers. The media agency MPG believes strongly that
help for AFP is needed stating: “Whereas before these deals could make no reference in the
editorial to the brand, and as such were over dependent on the sponsorship boards making the link
between the brand and the message, it would be possible to more closely link the two throughout
the content. So the result would be a win-win situation for all. Producers and broadcasters would
be able to open up valuable new revenues streams and offer a more integrated marketing solution
to brands and agencies. This is turn would help to protect TV spending and prevent it slipping
away at a faster rate onto the internet99.”
7.3 Problem of measurement
One of the main problems standing in the way of exponential growth of advertiser funded
programming is the need to create a relatively acceptable way to measure the effect of the TV
show. The content-led marketing essence of any branded entertainment, of course, doesn’t help in
search for a way to measure the experience that AFP creates, so there is still the challenge of
proving it with numbers.
One interesting way to measure and analyze the effectiveness of AFP programming in general
might be to compare the traditional television ratings with the impact of the show in the social
environment, such as on the web and social network. The comparison of the two could provide
interesting insights into TV contents’ viewers and their social interactions. In fact, as the American
consultant agency “Networked Insights” discovered, the most widely viewed TV shows are not
always the ones that create the most discussion on the web, in blogs and communities, a conclusion
that provides the creators, channels and even the advertisers a new way to look at ratings. What
Dawson and Hall (2005)100 call the “media multiplier” has to be taken into account in addition to
the traditional television ratings because if a TV show can create discussions and conversation
98
99
E. Hall, “Still No Product Placement Allowed on U.K. TV”, in Advertising Age, March 2009
E. Thwaite, “Product Placement - A more integrated future beckons”, MPG Thinks, October, 2009
100
N. Dawson, M. Hall, “That’s brand entertainment” for “World Advertising Research Center” February 2007
55
about itself, it increases its level of entertainment and engagement. Below, are two charts that
present the comparison made by the agency “Networked Insights”.
fig. 38 – comparison between TV rating and “social index”
fig. 39 – comparison between TV rating and “social index” for TV networks for TV programming
This approach, I think, is going to be the next step for a more comprehensive understanding of the
phenomenon of the “two screens” that can definitely help the overall comprehension of advertiserfunded programming as a great way to redefine advertising messages.
However, an increase in studies to evaluate the effects of AFP as well as a total commitment of
each actor to find a common ground for measurement are the two goals that should benefit the
whole industry. Evidence of brand effects and commercial results will encourage more brands to
invest in brand entertainment as it becomes justified and its strategic role fully understood. This in
turn will also positively affect and position media companies for future growth101.
101
N. Dawson, M. Hall, “That’s brand entertainment” for “World Advertising Research Center” February 2007
56
8. CONCLUSIONS
Finally, based on what emerged during this research and based on the analysis that was
done and the suggestions given, I will summarize the main points touched on in order to
bundle them together in synthesis to provide the response to the initial question.
8.1 Partners’ network and value constellation is at
the core of AFP
As emerged in the analysis of different types of advertiser-funded programming formats and
having collected information and insights from the different actors involved in these types of
productions, one of the most important characteristics that can affect the result of an AFP
production lies in the structure of the network and in the roles of the different partners.
First of all, according to Kothandaraman and Wilson (2001)102 the value creating networks will take
the business into a competitive domain where competition will shift to the network level from the
firm level, where a network of firms will compete against another network of firms. Thus, different
actors have to work together to be more competitive in a fast-evolving market, using the different
knowledge of each actor to create the best network as possible.
The network works as a catalyst of value across the actors and partners. According to Normann and
Ramirez (1993)103 one of the key challenges of the new economy is to integrate knowledge and
relationships in order to have a greater impact in a highly competitive market. Knowledge comes
from the partners within the network and, using the relationships between partners, can be
transfered to the entire value-creating process. Kothandaraman and Wilson (2001) called the
knowledge of each actor “core competencies”. Thus, the network has the ability to increase the
value of the entire production and to ensure an higher value at the final product, using the
constellation of actors as a fundamental resource of specific, but usually scarce, assets which
brought together can create an essential competitive advantage in the competition within the
market. The integration of different disciplines and expertise within the constellation helps to
leverage the level of value-creating activities. Using the partnership of firms, the network can
create the sum of particular assets in order to bundle them together, combining different activities
into branded offerings, producing new opportunities for creating value and finally creating the
desired superior value on the attributes that are important for customers.
The superior customer value, which is the goal of the value-creating network, appears as the sum of
the core capabilities of the actors, which are influenced as well by the nature of the relationships
between them. At the same time, the quality of the relationship facilitiates the creation of value.
102
P. Kothandaraman, D.T. Wilson, “The Future of Competition: Value-Creating Networks”, Industrial Marketing, 2001
103
R. Normann, R. Ramirez, “From Value Chain to Value Constellation: Designing Interactive Strategy” Harvard Business Review,
1996
57
The multifaceted network and the creation of value spread around the constellation of actors, make
the AFP able to generate more opportunities for the creation of value and to pack those into new
and particular offerings. These greater opportunities for value creation require that the actors within
the network be more adaptable. That is why the network has to remain as the internal goal for all
the actors involved because if everyone will be committed to the network process, it will have a
positive effect positively on every actor involved.
8.2 Consumers’ involvement as a way to increase
engagement and loyalty
Based on the research I’ve conducted and based on the analysis of advertiser-funded programming,
it is possible to say that an AFP, in order to be successful in creating an engaged and loyal
audience, needs to follow some strategies that can ensure that the project can be designed in an
effective way.
The creation of engagement and loyalty in AFP is vital in order to secure for the TV show a stable
base of loyal viewers for both the TV channel and the advertiser as well. AFP, using different tools
and strategies, can increase dramatically the effectiveness of the advertising message and therefore
it can be a powerful production and business model for TV advertising.
Again, it is important to keep in mind that the goal is to give people advertisements that they do not
just tolerate, but even go in search of. AFP offers a perfect example because what consumers
mostly are looking for these days is entertainment. In whatever form and platform, they want to
find content that will entertain them, speaking to them in a fun and exciting way, creating an
enjoyment in watching that will move them into a new stage of experience. The power of the
content is the touch point for customer’s engagement. The editorial content, in fact, has the main
goal to create contact with the audience, using relevance, designing contents that can be relevant
for the consumers, in term of context of the story.
The content relevance will activate what Curry (2004)104 calls “emotional connection”, creating
experiences, activating personal and emotional connection with the consumers who, it turn, will
feel part of a whole community, something relevant for themselves. Thus, engagement enables
interaction, creates distinct experiences that connect brands and people, and provides something
that stands out as valuable and believable. This emotional connection and engagement is created
with a multiple set of activities created around the pure TV content, increasing the power of the
entertainment value of the TV show. The utilization of web activities, social networks and live
shows will create 360 degrees of entertainment experience, giving to consumers memorable
emotions. These emotions will have definitive value for consumers, who in turn will become loyal
to the TV show and to the brand that gave it to them.
104
A. Curry, “The Branding Bubble” in “The New Medium Television”, Interactive Digital Sales, 2004
58
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PINE II B.J., GILMORE J.H., 1998. Welcome to the Experience Economy. Harvard Business
Review.
BRIERLEY S., 2002. The Advertising Handbook. Routledge. ISBN 0415243920
VARIOUS AUTHORS. 2009. When viewers control the schedule: measuring the impact of digital
recording on TV viewership. Google, Inc. and DISH Network L.L.C
BLONDE K., ROOZEN I. An Explorative Study of Testing the Effectiveness of Product
Placement Compared to 30-Second Commercials. Vlekho-Business School, Belgium
NILSSEN T., SORGARD L., 2000. TV Advertising, Program Quality, and Product-Market
Oligopoly. Competition Policy Center, Institute of Business and Economic Research, UC
Berkeley
HÖGMAN A., LINDÉN A., NILSSON C., 2007. Advertiser Funded Programming - En ny väg runt
mediebruset!? Lund Universitet, Sweden
ALBERSTAT P., 2001. Law and the Media. Focal Press. ISBN 024051629X
SINGH S., 2008. Marketing Strategies for Protection of International TV Formats. Bournemouth
University, UK
Articles and Web Sources
DAWSON N., HALL M., 2005. That’s brand entertainment. World Advertising Research Center,
February 2005
www.bulldozermedia.com/adm/imagens/.../BrandEntertainment.pdf
ROUSE L., 2007. Will branded content work for your brand? Media Week, June 2007
http://www.mediaweek.co.uk/news/rss/663853/Will-branded-content-work-brand/
COOPERSTEIN D., 2010. TV Advertising Budgets Are Under Siege. Forster Research, February
2010
http://www.forrester.com/rb/Research/tv_advertising_budgets_are_under_siege/q/id/56384/t/2
HALL E., 2009. Still No Product Placement Allowed on U.K. TV. Advertising Age, March 2009
http://www.commercialalert.org/news/archive/2009/03/still-no-product-placement-allowed-onuk-tv
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FROST V., 2009. Could advertiser-funded programming solve TV financial problems? The
Guardian, 27 July 2009
http://www.guardian.co.uk/media/2009/jul/27/television-advertiser-funded-programming
FITZSIMMONS C., 2008. Advertiser-funded masterstroke proves hard to beat. The Guardian, 3
March 2008
http://www.guardian.co.uk/media/2008/mar/03/insidemedia.insidemedia11
PARTOS L., 2009. U.K. retailer Waitrose bans swordfish sales. SeafoodSource, 19 June 2009
http://www.seafoodsource.com/newsarticledetail.aspx?id=4294967452
TOURTELLOTTE B., 2010. Ben Silverman’s Electus unveils shows, one for MTV. Reuters, 12
April 2010
http://www.reuters.com/article/idUSTRE63B63120100412
THWAITE E., 2009. Product Placement - A more integrated future beckons. MPG Thinks,
October 2009
http://www.mpg-uk.com/flash/#/news/what_we_think/mpg_thinks_oct_09_product_placement_a
CURRY A., 2004. The Branding Bubble. The New Medium Television, Interactive Digital Sales,
2004
www.re-thinkingtv.com/pdf/Curry.pdf
VARIUOS AUTHORS. The Thinkbox Guide to Advertiser Funded Programming (AFP). Thinkbox
www.thinkbox.tv/upload/pdf/Thinkbox_Guide_to_AFP.pdf
VARIUOS AUTHORS. Broadcast Sponsorship – UK – October 2009. Mintel International Group
Ltd, 2009
http://oxygenacademic.mintel.com/sinatra/oxygen/display/id=395161
VARIUOS AUTHORS. 2007 US Television Report. Nielsen Media, 3rd Quarter 2007
VARIUOS AUTHORS. A2/M2 Three Screen Report. Nielsen Media 4th Quarter 2009
http://en-us.nielsen.com/
VARIUOS AUTHORS. Emerging IPTV Advertising Opportunities. Alcatel-Lucent report 2008
http://next-generation-communications.tmcnet.com/topics/service-provider/articles/42283emerging-iptv-advertising-opportunities.htm
VARIUOS AUTHORS . 2010: The Year of Experience Brands. Jack Morton Agency, 2010
www.jackmorton.com/takeaway/.../files/Jack%20Mortan_Ezine_v1.14.pdf
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VARIUOS AUTHORS. Advertiser Funded Programming Marketplace Summary. Viacom Brand
Solution, 2010
http://www.getmemedia.com/DB/market-insight/advertiser-funded-programming.html
Video Contributions
FRONTLINE – PBS, episode: “The Persuaders” Nov, 9th, 2004
http://www.pbs.org/wgbh/pages/frontline/shows/persuaders/etc/synopsis.html
MipTV, April 12-16 April 2010, Cannes
http://www.mipworld.com/en/miptv/
Festival of Media, April 18-20 April 2010, Valencia
http://www.festivalofmedia.com/
SYnc: The Brand Wagon – Screen Yorkshire
http://www.youtube.com/watch?v=_H3UnuOTZSc
Aqua D’or Case
http://www.youtube.com/watch?v=eo_sEcjsWgo
Some examples of AFP
http://www.youtube.com/watch?v=9gbf7jhQOJo
http://www.youtube.com/watch?v=Go3e35rRl6A
http://www.youtube.com/watch?v=kA5PnCQmJaw
http://www.youtube.com/watch?v=OGPAkAWeB0A
http://www.youtube.com/watch?v=xgbN39wcUXU
http://www.youtube.com/watch?v=3H-ep4CUv1Q
http://www.youtube.com/watch?v=J4iX2cXSlMc
http://www.youtube.com/watch?v=u9nt-iDjDOc
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References
Questionnaire sample
Preliminary – background questions
‐ What is the main goal that you want to achieve using AFP?
‐ Why do you think AFP can be suitable for you?
‐ Which are the main driving forces in AFP for your company?
Network and partnership in AFP
It appears quite clear that in AFP projects there is not a single business and production
model, however it is about creating the right partnership between actors.
‐ How your company usually manages the partnership with other actors?
‐ How can you be sure if it is the right partnership for the advertiser and its brand
strategy?
‐ How works the negotiation between actors? Is it daily basis, working differently for every
project, or has it some fixed procedures and pre‐determinate requests from your side?
‐ How you and your company handle the relationships with most important advertisers and how
you try to satisfy their requests?
‐ Have you experienced substantial problems in dealing with your partners and, if yes, how can
you minimize the risks?
‐ From your experience, is it most common that AFP projects are financed by just one advertiser
or by a group of advertisers, sharing the investment efforts?
‐What are the most important assets that your company can deliver to an AFP project?
Content and quality in AFP
Content is a crucial characteristic for any advertising product, especially for branded contents.
‐How your company can ensure a high and qualitative copy content that can be effective for the
advertiser’s purpose?
‐ What is the level of involvement of your company in the development of the editorial content?
AFP still seams not yet a kind of prime time content.
‐ What do you think should be done in order to create prime time AFP contents?
‐ Do you think that niche channels, with more targeted audience, could be work better for AFP?
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References
‐ In terms of quality and contents, do you think is better to pitch a already prepared idea or to be
involved from the beginning of the production?
AFP projects can involve many different stages and it is a 360degree project.
‐ Beside the TV content, how much important are the off‐air activities that can be generated
using the TV show as a spin‐off?
‐ Have you ever experienced any of those activities (such as road shows, fairs and promotional
shows) using the awareness created by the show?
Engagement and loyalty in AFP
Content and entertainment really speaks to the audience and it is incredibly powerful.
‐ Which characteristics AFP needs to have in order to achieve the goal of creating engaging
contents for your audience?
Viewers seam to be more loyal to their favorite TV show rather to the TV channel (source
Nielsen report).
‐ How can you increase loyalty for the TV show in order to create advocacy towards the
advertiser’s brand or product?
‐ What kind of TV format do you think can work better in order to increase loyalty but also in
AFP in general?
‐ How much do you think web and social networks can increase loyalty and engagement for the
TV show and as well as for the advertiser? Are you using significantly any of those tools?
‐ How do you define the success of a AFP production?
Future implementations of AFP
Scandinavia’s best practice in creating new format and content can be a crucial asset for the
development of AFP in Sweden.
‐ What do you think about it and what are your forecasts for the future of this market?
‐ What is the most crucial aspect to secure a successful AFP?
‐ What do you think should be the focus for the future development of AFP?
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TRITA-CSC-E 2010:080
ISRN-KTH/CSC/E--10/080--SE
ISSN-1653-5715
www.kth.se