John Martin, Chairman and CEO of Turner on Top Trends in Telecommunications and Media
John Martin has been with Turner for a quarter century, first as the company’s Chief Financial Officer, and since 2014 as the Chairman & Chief Executive Officer. Throughout this time, Turner preserved its position as one of the leading, largest, and most impactful companies in the media.
Martin, the industry veteran, says, “There’s never been a more challenging time to be in the media business, but there’s also never been a more intellectually interesting time to be in the media business.” He explained why at Bloomberg’s Headquarters in Midtown in a conversation with ABC anchor Scarlet Fu where Martin highlighted some of the key trends that are disrupting television and advertising industries today.
1. Turner is experiencing a shift from viewers to fans.
“We cannot think of ourselves as a TV network company anymore. We are a fan engagement company,” says Martin about Turner. “Wherever our fans are…we need to be able to reach them in a seamless way.” Martin says that over the past three and a half years Turner has been undergoing a complete reinvention from inside out, and that the company now views fan engagement as an important metric of success measurement. “We need fans, not just viewers,” concludes Martin.
- Takeaways: This trend signifies that the traditional TV industry is embracing a shift towards a two-way communication between the medium and the user. The viewer on the other side of the screen is no longer a passive absorber of the content, but is an active participant, ready and willing to react, like, comment, and share.
2. TV content will soon be personalized through multiple linear content streams.
“Imagine, we will shortly have an ability to serve different cartoon experiences to your children depending on their preferences,” says Martin. He asks to think of Turner as Spotify for video content, where viewers will be able to create content lists, archive them, save them in libraries, and access them whenever and wherever they want to. “If they want to get it on demand, we can serve live linear streams to them at the same time,” says Martin.
Martin points out that Turner’s acquisition of iStreamPlanet, the company which he names “arguably the country’s leading contributor of live IP-streaming,” was among key catalysts towards Turner’s move towards the personalized content space. The idea of personalized content will transform the way people enjoy media, concludes Martin.
- Takeaways: Customization and personalization of linear TV content is the next era of content evolution. While TV has always lead with a massive reach of consumer audiences, Digital has won the “contest” towards personalization thanks to massive social networks and robust measurement and tracking. Now linear TV will need to tackle this strategy as well to stay attractive to and interesting to the viewer who’s become accustomed to Digital’s custom content.
3. Consumer experience is king.
“It is no longer about an argument about whether content is king or distribution is king,” says Martin. He says consumer experience is the third leg that is just as important as content and distribution.
Martin notes that Netflix was the most successful in proving consumer experience was the king. He says, “I would argue that Netflix doesn’t have the best content in the world, but because it’s easy to use, it’s available, it works, it’s intuitive, it’s got great parental controls, and it’s offered at a really good value, it is a fantastic product.”
- Takeaways: Content, distribution, and user experience should be at the core of every big brand’s (and broadcaster’s) advertising strategy. They effectively interplay with one another. To deliver a great a great consumer experience brands must deliver entertaining or useful content that’s aligned to their audience’s interests through a distribution strategy that matches current behavior.
4. Cable operators and media companies need to get aligned.
Martin says that Turner has recently launched two over-the-top services that distribute content directly to users:
- FilmStruck, a film library for movie enthusiasts, that is a complement to Turner Classic Movies
- Boomerang, a service that will eventually make iconic content from cartoons to Warner Brothers’ films available
Martin would like for Turner’s traditional telco and satellite partners to serve as the distributors of these and similar products. A partnership between the distributors and media companies would be mutually beneficial. But, media companies are able to also reach out to consumers directly.
Martin admits, “The whole distribution landscape is transforming. Virtual MVPD’s are emerging, and it’s in the interest of the traditional distributors to stay afloat. The distributors are not going to have a choice than to lean into this… and …carve out their space… to remain relevant in the future.”
- Takeaways: While today cable providers remain a large part of the traditional TV ecosystem, there is a threat for them in the future if media giants aggressively pursue a path of direct consumer engagement. The best experience for consumers will be one where media companies and distributors are developing aligned products and solutions together.
5. Skinny bundles will continue gaining popularity thanks to their affordable pricing structure.
Martin mentions that skinny TV bundles will continue gaining popularity. Turner has experienced a financial uptick from these products. He mentions that there has been a slow decline in multi-channel TV subscribers in the US due to price and channel irrelevancy.
A large number of people who subscribe to skinny bundles from MVPD’s are chord-cutters. Many of these people do not want to pay $80 for 500 channels when they do not want to watch 480 of them.
“There are too many networks in the US and a bunch of them need to disappear,” remarks Martin. 85-90% of nearly $5B in distribution that Turner gets are from four networks, TBS, TNT, CNN, and Cartoon Network. “Our goal is to get those networks into as many packages as possible,” says Martin.
- Takeaways: The customization and personalization in TV industry is taking place on multiple levels – with the content, as described earlier in #2 and within the distribution network. This is mimicking the trends that were pioneered and widely accepted online, such as pay-as-you-go for content and subscribing to a menu of content (Netflix, Hulu, etc.) vs buying a subscription to a multitude of channels.
6. “Fake news” is actually good for CNN.
“What’s your biggest challenge in sustaining success of the network, despite President of the United States calling CNN fake news and denouncing your talent?” asks Fu.
“The journalistic mission has never been more important,” responds Martin. “Due to the rise of the fake news concept, people are searching for the news sources they can actually trust.”
Martin shares that human curiosity and search for objective news has been peaking sparked by the political changes in the U.S. He says that CNN is in an environment where news is communicated to the world 24/7, to the extent that he has never seen before.
“CNN has never been stronger financially and editorially,” shares Martin.
- Takeaways: The “fake news” controversy reveals an important lesson. Rather than giving into “fake news,” people are seeking out a variety of sources to find an accurate depiction of the news. This means that media outlets that report on the news more objectively have a higher credibility rating from the viewers and garnered more attention. Similarly, brands focus on transparency, especially as the value has become more important to consumers.
7. CNN’s multi-channel approach helps reach audiences of all ages.
CNN is no longer a medium only for adults aged 50 years old and up. “We are reaching people on all of the various platforms!” says Martin. Through a multi-channel approach that expands CNN’s content outside the TV set, a multitude of audiences are engaging with CNN:
- In the U.S. the average age of viewers on a live television network is 58;
- An average age on CNN.com is 48;
- An average age on CNN app is 38;
- An average age on CNN’s Snapchat follower is 27.
“My daughter is 19 years old,” says Martin. “She would never watch CNN, the channel, but the two things that she goes to in the morning are her Instagram and Snapchat, to watch her CNN News.”
- Takeaways: Turner’s multi-channel distribution demonstrates how a media veteran can appeal to younger consumers. People of various ages and preferences consume content on different platforms, and it’s necessary to create products on each platform to tap into those audiences. To reach broad audiences, content requires a large degree of distribution across TV, digital, social, and mobile.Pew Research Center’s graph shows the broad distribution of news consumption habits:
8. TV and Online Advertising are racing “to the middle.”
There is indisputably a fight between TV and Digital for advertising budgets, says Martin. He describes it as “a race to the middle,” where companies whose business is TV-centric are looking for innovative ways to provide audience targeting and delivery-specific reporting to advertisers, and where companies who have already succeeded in digital landscape are working towards developing premium content.
“If you are a premium content company, we are trying to develop the digital capabilities, so that we can go to advertisers and guarantee them audiences and ROI, and really be able to report out in a specific way on the messaging delivery against specific consumers,” states Martin. “On the flip side, the big digital companies are doing the exact opposite, when they are trying to get into premium content, whether it’s YouTube or whether it’s Facebook.”
While leading the company’s transition into the digital age, Martin still bets on TV to win the afore-mentioned race. “I like the chances of TV with the reach that we have, the brand-friendly environment, and the immersive incredible emotional connection that we have to storytelling,” says Martin.
- Takeaways: In the next several years, advertising budgets are likely to shift back and forth between TV and digital. It’s unlikely that Digital or TV will be an outright winner. Brands will each need to find the mix of channels that are most effective and impactful for them.
9. Longer programming with fewer commercials.
“We will reduce the number of commercials per hour. This is a challenge and an opportunity,” states Martin. Turner is working on striking the right balance between commercial and programming loads.
On TrueTV the commercial load was reduced in half in the last quarter of 2016. Martin explained, “We have been revenue-neutral to up so far.” As a result, Turner has been experimenting with this with other channels as well.
To make up for the reduced commercial loads, Turner is focused on increasing the impact of the reduced spots. “We’ve got to make advertising better, more contextually relevant,” states Martin. So far Turner is seeing a 10% or more increase in ad recall from the new plan.
- Takeaways Turner realizes how important it is to pay attention to the consumer experience and how improving the experience can improve results. Brands must also take this approach. By paying close attention to how the consumer is responding to a brand’s media and messaging, marketers can focus on improving the experience to achieve better results. Being more effective doesn’t need to mean being more invasive.
10. Audience-based data purchasing will be further standardized.
“A rising tide can lift all boats.” Martin uses the metaphor when discussing data standardization that’s been an ongoing effort of the telecommunications industry. Turner has announced OpenAP, a joint data consortium among Turner, Viacom, and Fox. “It’s meant to begin to standardize the way marketers and agencies can buy audiences based on data that they can trust,” says Martin. Brands must trust the data they are using to buy TV audiences. Without that trust, audience-based buying will never get off the ground.
- Takeaways: Data is becoming standard in TV buying. Digital advertising has driven brands to expect more for what they’re able to get out of their advertising, across TV as well. Brands must take their data and leverage it to buy the programming and dayparts that are going to reach valuable audience segments. Being effective at audience-based buying starts with the data. If the data is dirty, poorly aligned with TV, or doesn’t focus on the right signal, then buying effective TV audiences won’t be possible.
Fu’s interview with John Martin was an exciting discussion about the trends in digital and TV driving toward congruent advertising across channels. From measurement to distribution, TV is shifting towards the two-way dialogue with the viewer while content on all channels is becoming more relevant and personalized. Brands must pay close attention to these trends to continue creating marketing content that will connect with consumers and drive results.