It's the Relationship, Stupid

Back in 1992, James Carville made famous the line "It's the economy, stupid", using it as a way of disciplining then-Governor Bill Clinton and his campaign staff to remain focused on the only issue Carville deemed important to voters, namely the so-called "jobless recovery". This catchphrase helped Clinton and his team stay on message, contributing greatly to his election victory.

A variation on these four simple words came to mind repeatedly for me this past month or so amid the blizzard of "TV-on-demand" deals that were announced. It is indeed tempting to get caught up in the deal orbit. The ultimate promise of these deals - anytime, anyplace viewing is exciting for all those who work at programming networks and distributors. Particularly for creative teams that are charged with developing the video programming itself (TV, broadband or otherwise), as well as marketers who are charged with attracting the eyeballs, the notion of unlimited access to the creative product is very enticing.

However, in the midst of this cornucopia of consumer convenience and content, I believe it is more important than ever to prioritize building and sustaining meaningful viewer relationships that extend far beyond inducing a viewer to use a particular technology or tune into a particular program.

Understanding the Challenge
To gauge the magnitude of this challenge, consider the evolution of how my wife and I have viewed our favorite program, "The West Wing", over the last six years. For the initial few seasons, we would mentally mark our calendars — Wednesdays at 9PM — to tune in. (Recording with a VCR was way too unreliable, as we couldn't guarantee that our nanny or children hadn't popped out the blank tape during the day.) I'm embarrassed to admit that, in fact, we might have even partially organized daily schedule around being home and in front of the TV at that appointed hour!

Three years ago, we bought TiVo. Since then, we have had the show on "Season Pass" recording and we watch it when we want to, often in multiple sittings. Importantly, we skip all of the ads and watch the show in a more time-efficient 40 minutes. Even more alarming for NBC is that, but for the constant NBC logo animating in the bottom corner of the screen, we might have long since forgotten this show was on NBC (or any particular network for that matter!) To take this one step further, when TiVo releases its new software to allow iPod synching, I'll simply take my TiVo-recorded programs with me wherever I go, and watch them on the go.

Our behavior pattern is already quite common, and will only accelerate in the future as broadband-delivered video becomes more common, and the recently announced deals are actually implemented in the marketplace. As consumers are continually empowered, the tasks of ensuring that they continue to watch the programs they love season after season and introducing them to new programs, becomes harder and harder. Staying relevant to their audiences is the biggest challenge networks will face in the future.

"It's the Relationship, Stupid"
Many people seem to believe that the big news in the recently announced deals is that consumers get access to the technologies that enable consumer experiences beyond "conventional TV". This sexy positioning of a real world "Jetsons" is one of the reasons these deals receive such widespread attention. I believe that this thinking misses the mark. Rather, I think these technologies should be viewed as a means to achieving a larger end goal. That end goal is creating, developing, and sustaining a meaningful relationship between the network or service provider and its viewers.

Realizing this goal will require a sea-change in the business philosophies of network executives. That's because these networks have traditionally thought of the people who watch their programs as "viewers", not customers. The networks' considered their customers to be the advertisers and their agencies. There is a certain logic to this, after all, since these are the companies that write the checks that make the programs possible at all. Building large, demographically attractive audiences is simply a tool for creating the right financial context for advertisers and agencies.

Thus, the relationship between network and viewer has been only skin-deep. In fact, networks made very little attempt to build this relationship, focusing instead on aggregating audience through "tune-in" promotional techniques. These focus on temporarily luring a viewer to his or her TV set at the appointed time to watch a particular program. The formulaic message — whether executed on air or on radio, in print or in outdoor — goes as follows: "Watch show A on network B at time C."

Staying Relevant
But think about how anachronistic this proposition is to a family like mine. The simple reality is that no matter how compelling the program itself may be, what is being asked of us — "sit down at this hour and watch this channel" — is irrelevant and outdated to us, and therefore does nothing to build our customer relationship with the network. Yet, this is exactly what the ongoing viewer-centric marketing approach is all about.

Network marketing executives need to move beyond this thinking, and fast. Though advertising is going to continue to be critical to networks' financial results, in our media-saturated society, attracting the (right) audiences is becoming far more complicated. And even trickier is figuring out how to effectively monetize that audience.

Increasingly, staying relevant means thinking of viewers as customers and embracing customer relationship management or "CRM" techniques. This would entail a whole new approach for programming networks. Marketers who use CRM software and initiatives know that understanding the general expectations of their customers is the starting point. These are then refined to a list of their target customers' specific wants and needs. One of the best ways of understanding these wants and needs is by using sophisticated tools that allow for measuring past and current customer behaviors. Once understood, offers for future products and services can be carefully tailored to the individual needs of finely segmented groups of customers.

When CRM is well practiced (and unfortunately this doesn't happen often), it is a powerful tool in building a longstanding, mutually beneficial relationship between the seller and the buyer. Examples of this abound. Companies in highly competitive industries like financial services, travel, hospitality and internet services regularly generate specific offers that map to their target customers' interests. In a sense, Google's model of matching ads with searchers' key words is a dynamic form of CRM.

Embracing the Viewer as the Customer
Programming networks need to drive this thinking across all relevant departments. A good start would be in honestly assessing how the general expectations of viewers are taking shape. I would include on my list of viewers' new video expectations: (1) access to popular programming, (2) strong picture quality (though relative to the circumstances, i.e. video quality on an iPod doesn't need to be as good as on a 42" plasma TV), (3) functionality improvements (e.g. on-demand, searchable, personalized and interactive), (4) access to specialty programming (deeper libraries on narrow topics like surfing, that don't have good distribution), and (5) remote and portable access (access to programming when traveling a la Slingbox, and easy synching to portable devices like iPods or PSPs).

The challenge of satisfying these expectations is not just for programmers to address themselves. Service providers, such as cable and satellite operators, who control key pieces of the infrastructure required for enabling these capabilities need to be involved. In fact, figuring out how to collaborate to jointly build the viewer's relationship with both the network and the service provider is a must.

That's because broadband's disruptive impact on the video distribution value chain is already underway. Internet-based aggregators such as Yahoo, AOL, MSN and Google are becoming more broadband-centric and are starting to play a role in delivering video content that goes beyond the status quo in meeting consumers' new expectations. This will fundamentally alter the roles that current market participants play, further underscoring the need to act now in prioritizing customer relationships.

In short, viewers are more empowered than ever, which makes the job of satisfying and exceeding their needs a steeper hill to climb. Cementing profitable customer relationships means conveying a relevant, valuable brand promise and then delivering on it repeatedly, often by using new technology platforms as the delivery mechanism.

Those who recognize technology's role this way — as part of a larger focus on customer relationships, rather than as fodder for deals to be promoted to the media — will be well on their way to victory in the marketplace.