FANG (Facebook, Amazon, Netflix, Google/YouTube) is about to take a huge bite out of traditional network TV (ABC, NBC, CBS and Fox), and the media business will never be the same.
To understand the profound implications of the recently announced NFL on Amazon Prime or YouTube TV, it may help to understand the economic engine that drives traditional commercial television.
The goal of the commercial TV business is to package a specific, targeted audience and sell it to the highest bidder. The more precise the targeting, the higher the fee; the bigger the targeted audience, the bigger the fee.
TV is data-poor
Because the broadcast television industry is data poor (it only offers metrics about itself), this model has never been a complete solution for brand or lifestyle advertisers. In practice, an advertiser needs to translate ratings and demographic information from Nielsen into knowledge and insights it can link to its key performance indicators (KPIs). Because content is distributed across so many non-TV platforms, this process gets more difficult every day. How effective was your broadcast TV buy? Was there an increase in sales that could be attributed to it? Could we have spent this portion of our advertising budget differently?
See more at Ad Age.