COMMENTARY

TV Must Retool Now: Lessons Not Learned By U.S. Automakers In '70s

• by Dave Morgan , Featured Contributor, Yesterday

The ‘70s were a turbulent time in the U.S.: The war in Vietnam, Watergate, inflation, unemployment. 

Then there was the oil embargo that precipitated the “energy crisis” and a massive run-up in oil prices around the world in the early 1970s that would come back around again in 1979.

The U.S. car market at that time was dominated by American-made vehicles, a fact well known to me since my family’s tiny yellow 1972 Datsun station wagon very much stood out in Clearfield, the small, western Pennsylvania coal town where I grew up. It had replaced our big old Ford-manufactured, much more normal-looking, maroon station wagon, where half of the neighborhood kids could fit in back. Yes, this was pre-kids’ car seats.

Of course, our little Datsun got three times as many miles to the gallon of gas as our old big Ford did, which mattered an awful lot with gas prices where they were, Plus, the Datsun had all sorts of neat little innovations, like buzzers that sounded if you didn’t buckle your seatbelts.

By the end of the decade, the high gasoline prices and economic “stagflation” had devastated the U.S. auto industry. Domestic car sales were way down. Imports were up. 

Importantly, Americans had discovered that the imported cars didn’t just get more miles to the gallon, but that they rusted out a lot less, had a lot of innovative features, cost less — and, incredibly, were built better and with a nicer fit than their legacy competitors.

The rest you know well. Car brands like Volkswagen, Honda, Toyota, Mazda, Nissan (maker of Datsun) and Subaru took a massive share of the U.S. auto and small truck market, building better cars, getting better mileage at better prices. 

The hit on the U.S. automakers helped accelerate the collapse of the even-less-efficient U.S. steel industry that was making the fast-to-rust bodies for U.S. cars in open hearth steel furnaces, using labor-intensive technologies and methods that they had perfected in the early 1900s.

Towns like mine were devastated and have continued to decline from those pre-1970s levels of employment, opportunity and optimism. Clearfield County’s two industries were coal mining — mining sulfur-heavy coal that was converted into coke to fire the Pittsburgh steel furnaces — and brick-making. Our refractories made millions of fire bricks every year to line those open-hearth furnaces. Fortunately for the brickmakers, open-hearth furnaces burned through their brick liners twice a year, so the replacement business was very good. Ironically, not dissimilar from the business model for U.S.-made cars.

This is TV’s energy crisis moment. Too much of what drives the TV industry today happens because it has happened that way year in and year out since those same 1970s, the era of the color TV, three big broadcast networks and “Happy Days,” “M*A*S*H” and “ABC’s Wide World of Sports.” 

This terrible global health crisis is putting a pause on many of the industry’s key economic pillars: live sports, a fall prime-time schedule anchored in new, highly anticipated releases, upfront-sold advertising — and, most importantly, a near monopoly on high quality video programming that attracts the attention and engagement of massive home audiences all day, day in and day out.

This crisis is putting a punctuation mark on the fact that the TV industry’s premium video monopoly is over. In fact, it has been over for years now. Cable unbundling, streaming services and precision, audience-based video advertising over-the-top are a decade old. 

But, just as it took the energy crisis for U.S. consumers to wake up to the better value proposition offered by foreign-made cars at real scale, so too will this crisis cause consumers to  entirely reconsider and reconfigure the way they watch video programming, and who and how they pay for it.

U.S. automakers never returned to the kind of market share and customer loyalty that they had pre-1970. Why? Because they were so in love with their own products, they had long since stopped worrying about their customers’ problems: boring cars that were expensive to drive, rusted out, broke down and needed to be replaced every three to five years. 

It took bankruptcies, the losses of millions of jobs and enormous customer defection until automakers grudgingly retooled, created new products, adopted true quality-controlled production and global supply chains.

Of course, it wasn’t just their love of their own products and ancient ways of doing things that held U.S. automakers back. As auto industry legend Bob Lutz told all who would listen, U.S. car companies ultimately put short-term cost accounting in charge of their businesses, not product innovation, not customer satisfaction and certainly not long-term market development. Sound familiar?

The TV industry — its advertising business especially — must retool, and do it now, Here’s what I think it means to retool:

Reform core TV ad products. The TV industry needs to stop making the sale of gross rating points against sex/age by day and daypart as your core product. That does not solve marketers’ problems. That product is what commodity traders and intermediaries want, just as 1970s car dealers wanted to keep car buyers in the dark about vehicle economics to protect their margins, and cared way too little about selling and servicing better cars.

Marketers want TV advertising to help them grow their businesses. They want hearts and minds by the millions. They want sales. They want to reach specific audiences with specific message, and measurement that helps them understand how audiences received and reacted to those messages.

Reform core TV ad processes. Everything in the world of marketing and advertising is dynamic now. Recognize that fact and cater to it. Clients want to know how their ads are doing in real time. They want to get their campaigns up fast. They want to optimize them early and often. They want to get them down fast.

Media plans should be able to be converted instantaneously into TV media buys. This is the time to put software at the center of your business, not create tools to optimize with around the edges of the business. Real automation is needed to replace the daisy chains of dozens of folks that need to touch every plan, order, negotiation, spot and report to make it happen, or unhappen.

Fix TV ad measurement and reporting. This is the time for TV ad sellers to measure and report on what marketers and their bosses really care about most. They want to see campaign delivery in real time, updated regularly, across channels, de-duplicated by audiences and linked to actual performance like target reached. They want frequency de-averaged at the person and impression level. They want reporting on business outcomes, not just media outputs. They want to know attribution to their key performance indicators, like web visits, leads and conversions.

TV can win the fight on both media effectiveness and efficiency for many marketers against most other media, but only if it competes with digital head to head and apples to apples. 

Staying in its solitary measurement silo gave TV an extra decade or so of protection from other media, but it also prevented the industry from building the muscles it needs to emerge from this crisis in a state that it can not only survive, but truly thrive.

This is the TV ad industry’s energy crisis. Just as automakers were then, they are at risk of losing massive market positions from a failure to change legacy products, processes and business models that weren’t so badly broken that they had to be fixed. 

U.S. automakers didn’t fare well after the energy crises of the 1970s. Will TV advertising face down this crisis better?