The Internet has been around for decades, but the digital advertising that supports it still resembles the Wild West. Joe Marchese might be the new sheriff in town who can tame the territory.
Marchese is fast becoming a force in the media industry by preaching the value of using new forms of video advertising to support the long-form content that is the bedrock of the TV business. In doing so, he could help his employer, 21st Century Fox, and rivals like NBCUniversal, Time Warner, CBS Corp., Disney, and Viacom find new sustenance in a difficult area. As CEO of True[X], which Fox acquired for a reported $200 million in late 2014, Marchese has worked to develop video ads that digital consumers can choose to watch in exchange for access to a favorite program.
As more consumers watch TV programming in new ways — streaming video, mobile phones and tablets — Marchese’s ideas could gain favor. The digital medium has been dominated by banner advertising, pop-ups and pre-rolls. Now the executive wants to replace that stuff with something that has worked in the past, with a twist: TV commercials that viewers get to pick on their own.
“Human attention is the most valuable resource on the planet, but the market for trading human attention is broken,” Marchese said in a recent interview. “We need to respect people’s time.” In a conversation with Brian Steinberg, Marchese sketches out his plans for upending advertising’s traditional business models and improving the consumer experience. He also reveals the types of commercials that make him stop and take notice.
How do you think the rising generation of time-shifting, cord-cutting, video-streamers will eventually end up watching TV — and will that behavior accommodate watching ads?
In the streaming cord-cutting sort of world, advertising will persist, but not in its current state. I do think interruptive advertising is seeing its decline. I think that if TV is going to become interactive and on-demand, then advertising is going to become interactive and on-demand. People will be able to control ad loads, but they won’t have to interrupt the story arcs.
But there’s no arguing about it: Consumers say they hate commercials — or at the very least, they hate being forced to watch them at times that aren’t of their own choosing. What makes you think your idea will triumph over decades of brewing resentment?
They say necessity is the mother of all invention. It’s no longer Coke and Pepsi and Fox getting into a room and figuring out who gets what ad spot and what to put in front of the consumer. It is Coke and Pepsi and Fox getting into a room and figuring out what they are going to put in front of the consumer that the consumer is going to tolerate and not ad-block or ad-skip. Advertising that a consumer opts to immerse in is already seeing success, to the tune of tens of millions of dollars, and I think it will cross in this upfront into the hundreds of millions of dollars.
The technology you’re putting to use for Fox and others is aimed primarily at the consumer who uses broadband to watch a favorite TV show. Do you ever see a time when some of your methods make it over to linear TV?
I think we will start seeing more of it if consumer behavior shifts faster. You will have two kinds of content: live-viewing content and VOD content. We see it in all of our programs. The number of people who watch time-shifted content — we want to give them options. I think what you will see is that VOD will continue to grow, and that’s where we can do lot of innovations with ads. And then you can use data to optimize what you place in the linear environment. You are going to continue to see reduced ad loads on linear TV, or consumers will shift to a VOD environment, and you will see live sports spur even higher demand.
You’re a digital-advertising guy, but you have in past remarks advised people to make full use of ad-blocking software. Aren’t you biting the hand that feeds you?
It’s like getting a treatment for an illness that’s going to taste terrible and may make you a little sick. As long as the cure doesn’t kill the patient, maybe we will be in a better place. There is a fictional unlimited digital inventory for ads that doesn’t exist. Most of what will be killed are two- or three-second ads, four-second ads or below-the-fold ads or pixels that fire in the background. I don’t consider myself a digital-advertising guy as much as I consider myself a what-is-the-next-media-model-that-is-consumer-friendly kind of guy. The thing that we never talk about and that we all know about ad blockers is we know if you are using them. If someone comes to Fox and wants to watch “Empire” and has an ad blocker, I can say, “Sorry, you can’t watch this program.” We could do that and someone who has an ad blocker would turn it off to watch more, in which case we would get them some ads or get them to do something else or ask them to pay. The people who hate ad blockers are the ones who could not ask people to turn it off. Long-form quality content providers should hope for a reduction in supply to get back to relative pricing.
What’s the last video commercial you saw that made you stop and watch?
You know what I saw that was amazing? I don’t know if I saw it on television. Apple did an ad about a young man with autism who used the iPad to speak. It was a great story with very light Apple branding and made me watch the entirety of it.