Explaining Southern California's economy

Super Bowl ads: Great for Los Angeles, but it's still all about TV

The L.A. Times' Meg James has a great piece today about how a kind of advertising-tech axis is developing in Los Angeles, combining our resurgent ad agencies and all the new tech firms that have sprung up on the Westside and that are being called "Silicon Beach." (There was a Silicon Beach of sorts back during the 1990s dotcom boom, so this isn't so much a completely new thing as a reboot.)

Nowhere can this be seen more clearly than in the much-anticipated ads for the Super Bowl. Here's some salient language:

More than 110 million people are expected to watch the Super Bowl on TV, making it the biggest advertising event of the year. The pressure to perform is intense. Broadcaster NBC has charged a record $3.5 million for each 30-second spot. The commercials, which can cost an additional $2 million to make, will be analyzed and replayed as much as the action on the field. More than 20 of the high-profile commercials, including those promoting Hollywood films, were created locally.

This is obviously great for LA, and it's intensified by all of the spots now being previewed or teased online, then replayed...well, forever. So you can certainly see a clear competitive advantage for LA here, given that so many ads are shot here — especially car ads, where the budgets for advertising as typically enormous.

However, the story highlights a critical issue: online continues to play a supporting role for TV. 

Upwards of $6 million to create the ad that really matters — the TV spot — clearly shows that television is, as it has long been, the master medium. OK, it's true that the Super Bowl exaggerates this situation. There aren't that many televised events around anymore than keep an audience of millions glued to a single, central screen (they might be using multiple, ancillary screens, of course) for hours on end. 

This is exceptionally distracting from what's actually going on with TV, which is that the audience is fragmented and their viewing habits are much harder to predict even though digital media has provided better data than has even been available before. However, the real story here is that because of TV and the still significant need to produce advertising — very expensive advertising — for TV, Silicon Beach has a chance to establish business models that can counter what's happening in Silicon Valley. 

Because even though it might sound cool to say that TV as we have known it for decades is on the way out, it actually isn't. Mark Cuban — the Dallas Mavericks owners who has often blogged about this issue — thinks TV continues to be just as important as ever:

It will seem very cool that when you hit a button on your remote a list of distributors like Amazon, Hulu, Netflix and others will pop up for you to watch. Some folks will make good money with it. But it still won’t be the competitor to TV that everyone predicts. Why ? Because just like no one took the time to change the blinking 12:00 on their VCRs back in the day, having to hit the internet button on the remote, or even worse, the input  button on the remote will not be the path of least resistance for watching tv. Believe it or not, it will be far too much hassle for most people when compared to just turning on and watching  TV the old fashioned way. And on top of that, distributors like Dish, Directv, Charter, Comcast, etc are working hard to improve their guide experiences which will be faster and easier than their online counterparts.

Old-school TV may even have a competitive advantage over online that can never be overcome, because TV is so different. 

The analysis I like to use is one that I came across years ago. TV is extremely narrow, while the Web (or any Internet experience) is very broad. You can easily see this when you compare, say, the Super Bowl broadcast with Facebook. The Super Bowl remains a focused, linear viewing experience, broken up with commentary, graphics, commercials and, this year, Madonna.

Facebook, by contrast, is a nonlinear, unfocused dynamic clustering of social interactions. TV is tight. Facebook is loose. Nowhere near as loose as MySpace. But still loose.

All this means is that TV will continue to lead. Big-time when the Super Bowl rolls around. But also at large and lucrative scale for lesser televised events and programming. That might sound like it runs counter to way the tech industry wants to see things go, and that's because it does. And for the tech business in L.A., it's a very good thing.

Follow Matthew DeBord and the DeBord Report on Twitter.

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