Backchannelmedia

Jack Myers Media Business Report, February 7, 2007

TV Commercial Inventory Will Inevitably Contract But Value Will Increase, says DR Industry Leader

by Jerry Weinstein with Jack Myers

"In 1965 twenty percent of viewers were able to recall at least one commercial among those they viewed in the previous commercial break," points out Backchannelmedia president Michael Kokernak "That figure has now bottomed out at six percent and the first prescription is to reduce ad breaks to four to five minutes per hour from what is now averaging fifteen minutes. There's only so much you can jam down a consumer's throat. A contraction has to occur."

Backchannelmedia is a small Boston-based direct response agency that expects to shake up the advertising and media world with a revolutionary combination of patented systems and processes that Kokernak believes have the potential to significantly erode industry dependence on Nielsen ratings and Donovan back-room administration systems. Backchannelmedia's goal is to be installed in 10 million homes by February, 2009 and to be widely adopted during the following 24 to 36 months.

Kokernak describes Backchannelmedia's "continuous loop" advertising model as a great opportunity for advertisers and broadcasters. The feedback loop in the prevailing ad model is approximately four weeks from the time a campaign airs to the time results are available. If the data is unfavorable it impacts future media buys but is too late to influence decision-making for the immediate campaign. Backchannel's model provides real-time continuous feedback and Kokernak argues as audiences grow increasingly fragmented and marketers seek to apply digital technologies to measure ad effectiveness, traditional research models will become less and less effective.

Backchannelmedia's advertiser portal, called a Digital Gateway, automatically generates advertising schedules and inserts addressable and interactive commercials directly into broadcast streams based on multiple targeting goals. The platform serves television, radio, mobile, email, direct mail, telephone and print advertisements.

Commenting on video distribution and syndication models such as Brightcove and Joost (The Venice Project), Kokernak believes "if they are going outside of broadcast distribution; they'll never get the content." He also maintains that "most of the technology that is prevalent in interactive TV today was invented in the 1990s before those companies actually understood where the consumer was going. There is a huge holdover in technologies that are antiquated but that executives believe are actually contenders."

Since last fall Backchannelmedia has made extensive DRTV research available to the industry as a free tool available at www.backchannelmedia.com. The data integrates program guide information licensed from partner Tribune Media Services with 800,000 searchable pages on direct response advertising results and relevant campaign details.

"One of the design requirements for the Backchannel system," says Kokernak, "was that we needed to adhere to the buying practices of the industry so the disruption could be as muted as possible. Today's media buyers are using Nielsen numbers and not actual sales data, which means media planning is actually based on buying theories. Our database includes actual sales numbers, so media buying can go from theory to practical sales results."

To date Backchannel has received $4 million in capital and is expecting to announce a round of $50 to 100 million later this summer. The next stage would require capitalization of one to two billion dollars. Kokernak suggests the incentive for broadcasters and brands to support Backchannel is the opportunity to have accountable advertising based on dollar yield for each individual brand. "TV shows will no longer be dependent on Nielsen ratings and this will lead to a Renaissance on the content side."

A Backchannelmedia benefit that Kokernak believes might help convince advertisers to stay with television advertising rather than shift to the Internet is a lack of click fraud that is so pervasive online. The Backchannel system builds in a limitation. One has to be a subscriber to cable, making click farms irrelevant since one can only trigger one click per remote control for a specific offer.

In addition to the adoption of switched digital video, Kokernak believes that several major advances support his business model and patents. For example, he asks that we imagine what can happen when AppleTV or iPhone deliver a thirty-second promotional ID for Grey's Anatomy. "You will simply click 'Select' and move the program choice into iTunes for a scheduled download or schedule your DVR to record it from wherever you are in the world."

Kokernak is confident that as television regains its stature as central platform, it will provide a currency metric that will help advertisers find a bridge to the future. Kokernak is exploring relationships with a variety of research providers and intends to integrate research platforms into the Backchannelmedia database. (Disclosure: Myers Publishing has been in discussions regarding the integration of its Emotional Connections® research into the Backchannelmedia system.)

Kokernak reports that his firm has sent out 1,400 presentations to industry leaders. "We want to make sure that as the invention is announced all parties have a chance to review various aspects and comment accordingly. We are hoping for open dialogue and feedback from the industry."

Note: This article has been modified from its originally published form.