Memorandum

To:       Charlie Collier, President & General Manager, AMC

From:   Becca McGovern, Strategic Planning Committee

Re:       Final Strategic Plan for AMC

At the heart of TV is the consumer. Strategists can preach revenue streams as much as they want, but the consumer is ultimately the only thing that draws revenue in. Despite all of the shakeups recently in the media industry, good content wins out — but only if it has the backing of the consumer.

Executive Summary

AMC is already at the forefront of successful original programming. Originally the American Movie Classics, airing movies from an extensive archive, the network was truly able to live up to its most recent slogan and become “Something More” (Crupi, 2013). One thing that we need to continue to keep in mind is our unique advantage over competitors. The big ratings from cable channels come predominately from unscripted content (I have mentioned A&E more than once) — except for AMC. At this moment, AMC occupies a favorable position in the minds of the consumers. AMC is the only cable network to win the Emmy for Outstanding Drama series four years running and boast 84.1 million subscribers, according to a profile from the Cabletelevision Advertising Bureau (“AMC network profile,” 2013).

Before History Channel turned heads with scripted content, we were beating broadcast numbers with the premiere of “The Walking Dead” was “the highest-rated non-sports telecast among adults 18-19” the week of its season three premiere (Andreeva, 2012).

Although AMC has garnered these critical and ratings successes, and despite the buzz about top shows like “The Walking Dead,” “Breaking Bad,” “Mad Men,” and “Hell on Wheels,” AMC remains relatively low on the food chain. As of the end of 2012, the network has yet to break the top 10 of the list of cable networks with the most average total viewers. And it is even further down the list in average viewers in the key 18-49 demographic (Patten, 2012)

 

Despite this apparent deficit, AMC can identify and utilize trends to strengthen their ties to their already loyal audience by enhancing the sense of community around their programming through strategic cultivation of social media, as well as exploring new modes of advertising based on brand strength and content collaboration.

I will identify two key trends that will affect AMC moving forward:

1. The proliferation of consumer use of social media, second screen interaction and social TV.
2. The changing nature of consumers’ online advertisement consumption, including the proven effectiveness of native advertisements versus current models of banner advertisements and pre-roll ads for online video content.

I will recommend that the network tackle the first trend by overhauling its social media strategy, creating opportunites to eventize airings of popular programs, increase viewership, and promote real-time interaction with consumers in order to gain a loyal, attentive consumer base.

I will recommend that AMC approach the changing nature of advertisement consumption by jumping on the trend of native ads, and working with advertisers in collaborative efforts to create branded, long-form online video advertisements. These ads will not only promote the brand that the network is collaborating with, but will also serve as extra content for our already loyal viewership. Even though we seek to gain viewership for certain programs in certain time slots due to the aforementioned eventizing, this alternative revenue source will provide a buffer during less profitable times in the day, because the content is something viewers will seek out by themselves. Collaboration in these advertisements will also provide an additional revenue stream to offset the growing trend of over-the-top viewing.

TV Goes Social — To the Extreme

The rise in social media usage during TV viewing is a continuation of what has been a trend since the dawn of TV. Once again, the consumer is at the focal point.

At the outset, social TV centered around literal watercooler discussion. Before the Internet age and instantaneous connection and commentary, major discussion of TV events took place when consumers had the time to gather and discuss major events in person — but they would only be able to discuss with people they knew.

With the dawn of social TV, the niche has now expanded — exploded, even. Consumers are no longer limited to conversations with the people around them, or the people whose phone numbers they know an can call and discuss. Instantaneously a viewer can interact with a viewer watching the same content at the same time all the way across the country. There is now an entirely new level to the eventizing of television content.

Super Bowl XLVII serves as an example of the expansion of social TV. Always one of the major television (and advertising) events of the year, viewership for 2013’s Super Bowl actually declined from the previous year. The game’s average of108.4 million total viewers marked the first time viewership dropped from the previous year since 2005 (Morabito, 2013). Despite the decline in viewership, the social media response to the big game was bigger than ever before. According to a report by Bluefin Labs, the big game set a new All-Time Record in social TV with 30.6M social media comments” (Thai, 2013).

The Super Bowl, of course, serves as an extreme example of how social media and second screens are infiltrating the world of TV. But the trend goes beyond broadcast. For the 2013 season premiere of its show “Duck Dynasty”, A&E Network’s marketing department launched a social media onslaught in an attempt to get people talking about the previously under-promoted cable series. A team of 25 people worked together, interacting with fans, answering the questions of curious Tweeters who had never heard of the show and generating Internet memes on the spot. The show garnered 8.6 million viewers, which in and of itself is an impressive number for a cable show to pull in. However, most importantly “‘Duck Dynasty’  was the No. 1 most-social TV show for the night, according to Trendrr,” beating out broadcast ratings giant “American Idol” in the process, in addition to gaining 30,000 new followers by the next morning (Poggi, 2013). A&E dominated social media that night, and in the process created a huge fan base for “Duck Dynasty.” The result? It’s April 24^th season finale not only broke A&E’s record for total viewers with 9.6 million tuning in, but also beat out all cable AND broadcast competitors in the key 19-9 demo — including Fox’s “American Idol” (O’Connell, 2013). This is a testament not only to the rise of cable, but also to the increasing importance of social media interaction and forging a connection with viewers — direct from the network and the show themselves.

The trend of social engagement is not going anywhere — the proof exists in the very actions of the human brain. On a scientific level, a recent neuroscience study conducted by WPP’s MEC in conjunction with Australia’s Seven (a TV network) and Neuro-Insight (a market research firm) has shown that viewers who interact with social media during a TV program are actually more engaged. The study, which used neuroscience because recall and diaries cannot be completely relied upon, showed that viewers who watch a program then engage in social media return to the program with a 9% increase in engagement. See the video below for more detailed descriptions:

This not only signals good news for shows because of the increased engagement,  but also for advertisers, who can “capitalize on viewers’ heightened receptivity to details” to “optimize the type and timing of advertising messages with a TV program” (McClellan, 2013).

Prescription:

AMC needs to continue to capitalize on this second screen engagement (as it already has with its second screen applications like Story Sync. But in addition they need to find more ways to interact with those social media consumers who have not yet sought out AMC second screen applications. There is a very vocal and loyal community of fans of AMC content all over social media, and the most loyal flock to the second screen apps and are exposed to the content there. However A&E showed how possible it is to gain the support of new viewers through an aggressive social media campaign — it was more than a second screen app that timed pre-fabricated posts to specific moments within the show. It was a campaign based off of real time interaction with fans reacting to the show.

Furthermore, our current second screen app doesn’t innately encourage the eventatization of content: it doesn’t necessarily mean eyes will flock to the TV. Although a consumer risks seeing spoilers when interacting with the app, if they wanted to delay viewing the latest episode of “The Walking Dead,” for example, in favor of an OTT option, all they would have to do is scroll through. They would still be able to participate in the polls and see the responses of other viewers.  AMC could to well to take a leaf from A&E’s book to find methods to eventize programming, by using a team of real people to interact with consumers in real time.

Not only does the real time interaction with audiences guarantee higher engagement, as per the neurological study, but it also provides opportunities to gain revenue through partnerships with advertisers. Advertisers have already shown a propensity (and even an overzealousness) to engage in real-time marketing during significant cultural moments, as evidenced by the circulation of the #oscarsrtm hashtag utilized to direct the conversation of advertisers during the 2013 Academy Awards. AMC already has partnerships with brands such as Hyundai which are promoted via second screen apps, but AMC has the opportunity to promote both its shows and the advertisers it chooses to partner with on several different forms of social media if we were to forge a relationship with advertisers based on real time marketing.

Rise in Popularity of Native Video Ads

Recent comScore reports have shown a rise in viewership of online video ads. In March alone, online video ads received 13.2 billion ads, which is a record-high figure.

According to the comScore report, this “means that video ads accounted for one-quarter of all videos viewed”. This seems only vaguely related to cable TV viewership, given the statistics are based only online views of advertisements and we are a cable network, but looking deeper, a somewhat troubling trend is revealed. A Neilsen case study shows that the most effective online video advertisements are not the pre-roll ad units which consumers see before the content they actually want to watch, but in fact are native ads — or branded video content. With native ads, marketers are the content creators who can create advertisements within “a budding content-based, user-initiated ad format with no length limit” (Nielsen, 2013)

The case study shows that consumers exposed to native ads experience an 82% lift in favorability toward the brand. Those exposed to pre-roll ads only experienced a 2% lift.

A recent and very popular example of these native, long-form advertisements is Dove’s recent viral video, in which a sketch artist shows women they are more beautiful than they think they are. The video gained more than 36 million views in three weeks.

As advertisers catch on to this trend, and as the number of consumers viewing online videos and online video ads, specifically, continues to increase, purchasing the pre-roll ad unit option w ill become less and less attractive to advertisers. We will lose the revenue from the Cadillac pre-roll ads before our “Breaking Bad” minisodes when Cadillac decides to turn to longer-form, native ads to lift their brand and the purchase intent of the consumers.

Prescription:

If we operate two steps ahead of the catching-on of this trend, we can, once again, work to form strategic partnerships with advertisers (like we currently to), but with an eye toward this trend of online video viewing. We can work to combine the power of our content and our brand with the brand of the advertiser. This is a partnership that is less product placement and less content creation: long-form advertisements double as extras for our programs. An example would be a 5 minute video of a character from AMC’s “Walking Dead” happening upon a Gillette razor and having the best shave he’s had in months. Or a minor character from “Mad Men” attempting to pitch to a certain brand. Ideas like these are only the beginning for what can become limitless content creation and collaboration ideas, centered around and controlled by us, the content producer. The more we build up the AMC brand through community-building via social media around our programming, the more we can attract collaborators in these creative endeavors.

Not only does this idea provide a revenue-gaining alternative to selling on-air spots, but it provides us a protection and cushion for OTT consumers. The long-form advertisements can be made available exclusively online, drawing viewers in from various social media outlets (where our overhauled social media team will be promoting content and interacting with the fan base). The additional content would draw in the viewers, and the native advertising (via partnership with brands) would make advertiser investment pay off — a win-win situation for both advertiser and content producer.

Big data is also something that factors into how AMC should tackle these new modes of advertising. Because so much information is available via websites like MRI Plus, which provides indexes showing matches between the different brands the respondent consumes, AMC can pinpoint the brands with which a partnership would bring the most profit. This way brands can target the consumers they want to reach, and AMC can provide native, compelling advertisements to viewers with AMC content they want more of in collaboration with the brands they want to consume.

Also rising in popularity are the Digitas Newfront presentations, where the Internet presents and teases its content to advertisers (Learmonth, 2013). Coming out of just their second year, the Newfronts are somewhat lacking in direction, but actually provide the ideal opportunity for AMC to pitch these new models of advertising, emphasizing the idea of a results-based partnership with a foundation in the interest of the consumer. If network and advertiser use data, analysis gleaned from social media interaction, and regular customer feedback, we can give our AMC consumer exactly what they’re looking for: an excited community ready to obsess about their favorite content right along with them; interaction with the shows and network they love; and advertisements from brands they love that don’t feel like advertisements because the content is interesting, meaningful, and seamlessly intertwined with the programs they came to our network to watch.

Summary

To summarize, the name of the game is engagement. While content may be king, the consumer is the only one who can determine which content actually gets to rule. The rise in popularity of cable channels and shows (the rise of the niche) is something we at AMC can capitalize on, as we continue to provide the high-quality, edgy, and innovative content that broadcast nets cannot afford to. However we need to do more if we are to stay relevant and combat the rise in over the top viewing and all of the consequences as a result of the drop in viewership.

 

AMC needs to work to grow the community that has already clustered around the premium content the channel offers, but it must also strive to create a feverish loyalty, which will allow the network to eventize its best content. This community-building can occur through the creation of highly interactive second screen experiences based in social media that hype the content, engage the consumer, and allow them to communicate with a viewing community across the country.

 

Bibliography

Andreeva, N. (2012, October 23). October surprise: NBC tops broadcast nets in 19-49, ‘Walking Dead’ No. 1 Show on TV. Deadline. Retrieved from  http://www.deadline.com/2012/10/october-surprise-nbc-tops-broadcast-nets-in-18-49-walking-dead-no-1-show-on-tv/

Cabletelevision Advertising Bureau, (2013). AMC network profile. Retrieved from website: http://thecab.tv/php/networkprofiles/13profileData/2013pdf/13AMC.pdf

Crupi, A. (2013, March 31). AMC rolls out ‘something more’: Cable net takes the wraps off new tagline, logo. Adweek, Retrieved from  http://www.adweek.com/news/advertising-branding/amc-rolls-out-something-more-148268

Learmonth, M. (2013, April 08). Digital newfronts poised to rake in $1 billion in ad deals. AdAge, Retrieved from http://adage.com/article/digital/digital-newfronts-rake-1-billion-ad-deals/240751/

MarketingCharts Staff. (2013, April 26). Online video ad views reach record high of 13.2 billion in March. MarketingCharts. Retrieved from http://www.marketingcharts.com/wp/interactive/online-video-ad-views-reach-record-high-of-13-2-billion-in-march-29009/.

McClellan, S. (2013, April 05). Tv engagement heightened by social media interaction. MediaPost, Retrieved from http://www.mediapost.com/publications/article/197464/tv-engagement-heightened-by-social-media-interacti.html

Morabito, A. (2013, February 04). Super Bowl viewership down for first time since 2005. Broadcasting & Cable, Retrieved from http://www.broadcastingcable.com/article/491680-Super_Bowl_Viewership_Down_for_First_Time_Since_2005.php

Nielsen. (2013, March 21). Ads that pop: How native video as boosted online fizz for Jarritos. Retrieved from http://www.nielsen.com/us/en/newswire/2013/ads-that-pop–how-native-video-ads-boosted-online-fizz-for-jarri.html

O’Connell, M. (2013, April 25). TV ratings: ‘Duck Dynasty tops ‘American Idol’ with record-breaking finale. The Hollywood Reporter, Retrieved from http://www.hollywoodreporter.com/live-feed/tv-ratings-duck-dynasty-tops-446567

Patten, D. (2012, December 17). 2012 basic cable ratings: USA tops again, History, TBS & Lifetime up, MTV & Nick At Nite fall. Deadline. Retrieved from http://www.deadline.com/2012/12/2012-basic-cable-ratings-usa-tops-again-history-tbs-lifetime-up-mtv-nick-at-nite-fall/

Poggi, J. (2013, February 28). Inside the social-response lab of A&E’s ‘Duck Dynast’y. AdAge, Retrieved from http://adage.com/article/media/inside-social-response-lab-a-e-s-duck-dynasty/240073/

Thai, T. (2013, February 04). Super Bowl up 150% in Social TV, sets new all-time record. Bluefin Labs. Retrieved from https://bluefinlabs.com/blog/2013/02/04/super-bowl-up-150-in-social-tv-sets-new-all-time-record/