Bayesian Theory and Network TV

A number of MR readers have contacted me and asked me to comment on the demise of network TV as a powerful advertising medium. With what I hope is perceived as good humor, I refuse to do so as forecasting the end of something that is happening gradually is always a crapshoot. Also, two wrote back and said, essentially, okay, could you at least give a forecast on when the network television upfront market will cease to be? The answer that I gave to both was that I was as surprised as they are that it persists but I have no clear timetable for its demise.

No one accepted my answer to either question. I have thought about both questions for 17-18 years and think about them from a variety of angles. For years, I have told people that TV, particularly national network TV, continues to do fairly well is because marketers and advertisers are risk averse and do not no where else to put the bulk of their money. All who are remotely honest admit that the medium does not work nearly as well as it did years ago in terms of either awareness or moving the sales needle, but have yet to find the mix of platforms that can successfully replace it.

One way that I have looked at it and never shared with anyone until now is that concept of Bayesian Theory which I will oversimplify tremendously. Thomas Bayes (1702-1761) was a British mathematician and theologian (a unique combination!) who was an early expert on probability. Bayes’ interpretation of probability looked at the strengths of beliefs and hypotheses rather than simply looking at frequency of occurrences in the past. Today, most statisticians considered to be Bayesian often predict how people update their beliefs. So, forecasts about future events are often linked to the strength of prior beliefs coupled with the extent to which new information is different from those beliefs. Even a shock to the system such as declining audience levels and attentiveness to the TV medium has not automatically triggered a revaluation of the nearly 70 year old belief that TV is the way to go for many advertisers. Importantly, it is not simply enough for the existing idea to be discredited (i.e., TV does not deliver viewers or sales as it once did). To cause a strong shift in behavior there has to be an alternative that is viable to a cautious group of marketers who are spending billions and afraid to submarine their careers due to a misstep.

So, therein lies the key problem to me. There are many platforms emerging but whither does one flee from TV? Social media has certainly surprised many of us but can it carry a big delivery burden for advertisers other than young adults? Mobile has fabulous potential but is not there yet. Big data use by Amazon and other online marketers has to cut the need for advertising in general and their forecasting models are relentlessly getting better each year.

How long does TV have? I just do not know but I do know that advertisers of all sizes need to continue to experiment and hedge their media bets going forward. TV also may reinvent itself as a direct response medium in ways that seem like science fiction today.

I wish all of you a happy, healthy, prosperous and peaceful 2018.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail..com or leave a message on the blog.