ADVERTISEMENTS, PRODUCT endorsements and commercials have been the bread and butter of the TV business for decades. Mobile television-albeit a new distribution channel-is no different, though broadcasters of the new medium are still developing the technology and business plans that advertisers have dreamed of for years. Until they do, it’s hard to see when profits will be realized.
Qualcomm Inc.’s MediaFLO USA Inc. subsidiary has been commercially available through Verizon Wireless’ Vcast Mobile TV offering for almost two weeks now and already many in
the industry are curious about the company’s future plans. At this point one thing is clear, under the current offering it will take some time for Qualcomm to see a return on its $800 million investment in the Forward Link Only technology and the nationwide network it built to broadcast the service.
Advertising has the potential to render all of that moot.
“I think at launch the approach to advertising looked very much like traditional TV,” Dan Novak, VP of programming and advertising at MediaFLO, said in an interview with RCR Wireless News. “It’s pretty typical in terms of an advertising model for a cable or broadcast network,” he added. “In some cases, some of the programmers are filling the traditional available breaks with different kinds of content or promotions vs. straight advertising, and in other breaks it’s a flow through of the advertising that would exist during that break as the show is carried on broadcast or cable.”
Blended strategy
Novak called the strategy a blending of commercial “inventory” from both the programmers and MediaFLO. Carriers do not share in the ad revenue and currently don’t have any business interest in the commercials their mobile TV subscribers will view on MediaFLO. Carriers simply pay a wholesale rate to provide their customers with mobile TV via the MediaFLO network.
“We have a wholesale rate to the carriers. I don’t think I can share any of the specifics on how that’s structured, but we’re a wholesaler of the technology, the network and the service, the programming,” Novak explained.
But since MediaFLO is a new platform being delivered over a new distribution system, the company expects the amount of revenue it sees from advertising and carriers to evolve over time.
“We have business relationships that reflect the current opportunity. It will evolve depending on where the product goes technology wise,” he said. “Advertising is very important to the business model, but I can’t frame up what percentage or what projected percentage of the opportunity that represents for MediaFLO or the carriers or the content providers.”
Fast-forward to new opportunities
While there are no immediate plans to add channels to the current offering, Novak and his staff aren’t idling.
“We’re in the early days whereas when we’re just beginning to offer the product, as you can imagine there’s not that unique a selling proposition for either the programmers or MediaFLO to go out and say ‘hey isn’t this great,'” Novak said. He doesn’t expect things to stay that way for long, however.
“There are some things that are really unique to providing TV on a cellphone that we think will create some different, unique opportunities going forward for advertisers,” Novak said. “We anticipate down the road that we’ll be able to do some really unique advertising opportunities, some really unique selling propositions for advertising on the mobile phone, based on being able to geographically deliver a spot in a specific market or at some point based on where you are specifically.”
The potential to give mobile TV viewers the ability to purchase something during an ad or receive ads or coupons that are of immediate use based on their location is exactly what MediaFLO and its partners hope to deliver on soon.
“Over time MediaFLO will work to innovate and bring different kinds of technologies and unique selling propositions to the advertisers. And again it looks and sounds a lot like traditional national advertising out of the gate, but we think it’ll get a lot more interesting and a lot more relevant both for the consumers and for the advertising community over time as we get further down the plan in terms of what we can deliver on the handset,” Novak said. “We look for partners that want to innovate with us.”
MediaFLO is anxious to receive feedback about the service as it looks to deliver programming that meets customers’ needs. “We’ll know a lot more about what the real experience is like later this year and we’ll adjust as we go. I think the one point is that prime time is likely not to be the traditional prime time. All day parts are going to be important to the consumer with MediaFLO,” Novak said.
