IBM Unveils The Blockchain Of Everything

IBM has released a proof of concept for blockchain-powered Internet of Things devices called ADEPT, short for Autonomous Decentralized Peer-To-Peer Telemetry. The system design is fully distributed, secure, and open source. Primarily based on the blockchain, which is the protocol that underpins BitCoin and the other cryptocurrencies, ADEPT also incorporates Ethereum for smart contracts, TeleHash for fast, secure, peer-to-peer messaging, and BitTorrent for file sharing. The company is teaming up with Samsung, which will presumably help test and implement the system into their products.

“Imagine a world where a smart washer is able to detect a component failing, can check from the blockchain if the component is in warranty, place a service order with a contracted service provider, and the service provider can independently verify the warranty claim – again from the blockchain – and all this, autonomously.”

The distributed design allows IoT devices, which might have a useful life of ten years or more, to avoid using a cloud service with ongoing financial costs that would likely require selling user data to be sustainable. It also eliminates single points of failure—for example, a hacker would not be able to compromise a manufacturer’s update server to instruct every device to transfer cryptocurrency maliciously because there is no central server, and quarantining bad actors is built in.

MAGNA GLOBAL Flash POV: Supreme Court Dubs Aereo’s Service Illegal, Broadcasters Rejoice

Over-the-top video service Aereo was effectively shut down today after the U.S. Supreme Court declared their business model illegal.  While CEO Chet Kanojia vowed to continue the fight to develop consumer-centric video solutions, the company’s main investor, Barry Diller, said the fight was over.  Indeed, there is no way Aereo could continue in its current form without paying the same substantial retransmission fees that cable, satellite, and telco providers currently pay, eliminating its position as an inexpensive alternative.

To recap, in 2012, a temporary injunction filed by several broadcasters was denied by the Federal court in New York, citing a previous case involving Cablevision’s remote DVR service.  The consensus among the judges was that since Aereo is designed to send signals to individual consumers, it is not broadcasting publicly and therefore not violating any copyright laws.  That decision was upheld by a federal appeals court in April of last year.

While three of the Supreme Court Justices agreed with that assessment, the majority did not.  In their minds, Aereo operates in the same way as any other multichannel provider, because it “receives programs that have been released to the public and carr[ies] them by private channels to additional viewers.” (You can read the full decision here).  Because of that, said the Court, it too must comply with the Copyright Act of 1976, which is the law that enables broadcasters to collect retransmission fees from said providers.

Justice Scalia, one of the dissenters, expressed concern that the Court’s “improvised standard” will “sow confusion for years to come.”  The fear in the technology world is that this will strongly discourage any innovative new over-the-top solutions for fear of being squashed by the broadcasters.  For consumers, it whittles down the less expensive alternatives to having a traditional multichannel subscription—but the fact of the matter is, there is no evidence that current cable subscribers have any interest in abandoning their service.

Our latest estimates show that multichannel subscriptions are quite stable—while some consumers may switch providers, very few are abandoning their cable altogether.  Which means that OTT options like Roku, Apple TV, and video game consoles are largely supplemental, and that the viewers that rely strictly on broadband for their video never had a multichannel subscription in the first place.  But—as we’ve pointed out before—they must often relay on the same cable companies for their broadband connection.

Bottom Line: This decision is not surprising; the broadcasters have deep pockets and powerful lobbies in Washington.  The truth of the matter is that even if Aereo had won, it wouldn’t have presented much of a threat to the broadcasters—at least not in and of itself.  What could have been disruptive is the inevitable efforts by MVPDs to avoid retransmission fees by adopting a similar model.  Even then, though, those services are likely to have appealed to a small contingent of consumers that never had a multichannel subscription to begin with, as those who have it don’t seem to be in any hurry to part with it.





MAGNA GLOBAL Flash POV: Aereo Case Goes to the Supreme Court

The Aereo case squarely positions the rights of content owners against clever technologists, who believe that the way they transmit content may redefine the limits of owners’ rights in the content.  After different courts looking at Aereo and a similar model reached different conclusions on the legality of Aereo’s position, the Supreme Court has agreed to review one of the decisions ruling in favor of Aereo. 

Having the Supreme Court rule on who is right in this battle should create more clarity in the market for content distribution.  That will help drive long-term investment decisions for technology innovators, and for media providers including television and cable networks.  If the Supreme Court rules against Aereo, and effectively shuts it down, we can expect largely the status quo to remain, with companies coming up with new methods of content distribution required to pay retransmission fees to content owners.  It may also force owners of cloud-based technologies to obtain licenses to send copyrighted material via the Internet.  A decision in favor of Aereo, however, will create major market disruption.  Among other things:

+       Many companies can be expected to copy Aereo’s model to avoid retransmission fees, including major cable networks.

+       Television networks cannot be expected to continue investing in content at current levels if retransmission fees are eliminated.  Absent a technological solution to block retransmission, this may threaten the entire public broadcast system concept.

+       Third parties currently generating billions of dollars in revenues from TV networks—like sports leagues—may shift to paid cable or other private network broadcast.  This is already happening to some degree as more major sporting events have shifted to cable networks like ESPN, where rights fees can be recouped by increasing subscriber charges.

While these are some possible impacts of any Supreme Court decision in Aereo, the impact of the ruling will depend on how narrow or broad a decision is issued by the Court.  For example, if the focus of a Supreme Court ruling is Aereo’s antennae system, that is not particularly new or innovative technology.  The Court could say, for example, that this particular system constitutes a public performance and violates copyright, but leave the door open for new broadcast models or technologies to skirt the current copyright rules.  Alternatively, Aereo’s use of cloud technology and the fact that individual consumers are the ones pulling content from the Aereo system could be the focus.  If the Court were to find that cloud-based systems are a way for companies to make content available without such companies being classified as engaging in a public performance of content, that kind of ruling could have more far-reaching implications.  And, of course, Congress could seek to enact legislation in response to any Supreme Court decision, that might further shift the landscape in the media and technology industries.

Bottom Line: From an agency/advertiser point of view, spending will ultimately move to whatever channels can deliver a client’s desired audience.  If content and audience shift from publicly-available television to premium cable channels, for example, we can expect media dollars to follow.  For now, there are a lot of unknowns, and any major industry shifts would take time and buy-in from a lot of different parties before it could be realized.

MAGNA GLOBAL Flash POV: TiVo Study Ignores Realities of TV Buying

A study released by TiVo/TRA yesterday and picked up by MediaPost and Adweek attempts to quantify the money lost by the major networks because we use only three days of playback in the ratings currency instead of seven.  They did so by examining the ten primetime series with the most “season pass” requests among their subscribers, and calculating the increase in viewing between days four and seven.  Then, they applied average unit costs from SQAD and multiplied it out to calculate the amount of lost income over the course of a season (in this case, the 2012-13 season).

While it certainly makes for some eye-catching headlines, there are a number of issues with their approach:

1.       The TiVo sample is not representative of the U.S.

2.      TiVo owners are more aggressive time-shifters than the average DVR user.

3.      Activating a season pass implies that the show will be viewed exclusively in playback—ignoring a sizeable portion of the audience that actually views live.

4.      In most cases, a season pass means that only first-run episodes will be viewed, which does not reflect the reality of how TV buys are structured.

5.      TiVo ratings are not the currency.

The chart below illustrates the difference between the C3 (average commercial minute ratings with three days of playback) and C7 (seven days of playback) published by TiVo, and compares it to current season numbers from Nielsen for the same series.  Even excluding repeats, the Nielsen increases are significantly lower.

Bottom Line: The networks will very likely cite this study as justification for a move to C7 during the upfront, but it ignores both the actual trading currency and the work done at the negotiating table.  In the end, it’s little more than interesting headlines.

C4-C7 Percent Increases

Network Program TiVo % Increase    Nielsen % Increase, No Repeats Nielsen % Increase, All Airings
CBS BIG BANG THEORY, THE 8.1% 2.7% 2.0%
ABC MODERN FAMILY 10.9% 4.7% 3.5%
ABC GREY’S ANATOMY 8.0% 3.1% 3.1%
CBS NCIS 8.8% 2.6% 1.9%
CBS MENTALIST, THE 9.6% 3.2% 3.5%
ABC CASTLE 10.0% 4.2% 3.0%
CBS ELEMENTARY 8.8% 3.0% 3.3%
FOX AMERICAN IDOL 4.1% 1.6% 1.6%
CBS GOOD WIFE, THE 6.2% 1.6% 3.3%
AVERAGE 8.2% 3.2% 2.9%

Sources: TiVo published figures, 2012-13 season, Nielsen 9/23/13-4/06/14

MAGNA GLOBAL Flash POV: Stephen Colbert Will Take Over The Late Show in 2015

One week ago, David Letterman announced he would be retiring as host of CBS’s Late Show.  Yesterday CBS put the speculation on his replacement to rest with the news that Stephen Colbert (current host of The Colbert Report on Comedy Central) will be the new host of the Late Show when Letterman departs in 2015.  While the exact departure date for Letterman has not been set, Comedy Central has already decided The Colbert Report will end its run at the end of 2014.  The burning question everyone has been asking since the news broke has been answered by CBS: Colbert will drop his “conservative” character when he moves to the Late Show.

This move reflects an overall shift in the late night daypart, which seems to be both a cyclical changing of the guard and an effort to keep younger viewers tuned in.  Just one month after taking over The Tonight Show, Jimmy Fallon has lowered the show’s median age by six years (52 versus 58).Prior to Fallon taking over, Jimmy Kimmel had been the youngest of the 11:30pm Broadcast programs with a median age of 54.  The shift to a personality like Stephen Colbert should help keep CBS competitive with the younger set.

In the age of digital extensions and the importance of social media, CBS needs someone like Stephen Colbert who can be directly competitive with both Fallon and Kimmel.  In terms of full episodes, Colbert Report generates more total streams and time spent than Fallon and Kimmel combined.  However, the broadcast hosts have the advantage when it comes to short clips, with The Tonight Show’s YouTube channel generating about three million subscribers and Kimmel’s just over four million.  Comedy Central’s entire channel has just under three million in total.

There has no announcement yet on whether Craig Ferguson will continue as host of the Late Late Show following Colbert, or what will replace The Colbert Report on Comedy Central.  Former Daily Show correspondent John Oliver had been considered the heir apparent in C0medy Central late night, but he has since moved over to HBO.  As the press noted during the week of speculation leading up to CBS’s announcement, two late night staples—Conan O’Brien and Chelsea Handler—will become available in the near future, as their contracts expire in 2014 and 2015, respectively.  For now, we can expect more rumors to fly.

Impact on TV Viewing

We expect this transition to be very similar to the shift that just occurred at NBC.  While the first week will show growth due to increased interest, once the initial sampling stops the show will settle back to its normal levels.  We expect to see a slight shift in the median age, again similar to what occurred at NBC.

Can TV Be The Mobile Cookie?

Most industry folks would agree that the Holy Grail of marketing is to create a) highly targeted advertising b) at scale. This is, however, no easy feat…

As we point out in the recently released Second Screen Fallacy report, the simultaneous usage of a mobile device while watching TV (a behavior true of most mobile users at this point) is the best means we have of personalizing the TV experience. But while mobile offers the best means of personalizing, TV continues to be the most effective medium for reaching audiences at scale.

Recognizing that “second screen” is a nebulous and often misleading term, in this case we are using it to represent a two-screen advertising strategy, regardless of which you would consider the “first” and “second” screens.

A recent Forbes article does a great job of describing what we might call a “marriage of convenience” between Twitter and TV networks and their hybrid offspring: Twitter Amplify, which enables complementary content to be served up to users on the second screen.  But we have started to observe a different dynamic occurring between the two screens; TV content is now starting to be used to contextually target a user on mobile platforms.

Not only do marketers want to know who the users are, but also what mood they are in, and what interests they’ve recently indulged in (cooking, sports or X Factor?) so we can target them with right message at the right time, according to their specific mindset.  Ultimately, TV provides rich behavioral insight for mobile targeting, and this dual screen dynamic is opening the doors to richer and more personalized mobile targeting, powered by hefty TV audience data.

In my previous life as a digital media planner, the daily banter with ad ops would include: “how many cookies do we have in the cookie jar,” because some of our campaigns were so targeted it would sometimes take weeks to gather enough cookies for a fully-fledged retargeting campaign.  But TV  is a ready-and-waiting, data-rich cookie pool which can now be activated, thanks to the “second screen” industry.

And so far, it is showing promise.  AdTonik, a “second screen” startup, found that using TV as a “cookie” off which to retarget mobile ads has resulted in a reported 3-10x increase in mobile engagement (compared to straight-up mobile buying).

Meanwhile, at the Lab, we are starting to establish best practices in this nascent space. In partnership with Collective, we have conducted research (to be released soon) focusing on Collective’s cross-screen targeting capability, TVA.  Our research demonstrates that re-messaging people sequentially (meaning within 10 to 40 minutes of TV exposure) across screens yields the highest ad breakthrough.  We also found that using the same creative across the two screens is more effective than switching (at least until breakthrough has been achieved).

Another potential twist on this theme, from our resident broadcast visionary, Brian Hughes, is to reverse engineer the flow of data, using mobile as the “cookie” to make TV advertising more targeted and effective.

Simulmedia, for example, already allows you to buy targeted local TV ads based on content people are watching,” he noted; “why can’t we use the richer data available via mobile to create more targeted TV ads?”

Flash POV: Do Mobile Devices Have A Blurred Lines Problem?

Earlier this year, Blackberry CEO Thorsten Heins questioned the future of tablets in a Bloomberg interview, saying that “in five years, I don’t think there’ll be a reason to have a tablet anymore.”  Indeed, the release of smartphones with larger screens, such as the Galaxy Note, have given rise to the term “phablet” to indicate a device that is somewhere between a phone and a tablet, ostensibly eliminating the need to have both devices.

So are the lines between mobile devices blurring?

Maybe a little, but we don’t see it having any kind of substantial impact on tablet sales in the near future.  For now, the lines are more distinct than ever—even if the terminology is not.  Here are some key points to consider:

+        Phablet is a misleading term, because it’s really just a smartphone with a bigger screen.  A phablet (defined as having touchscreen between 5 and 6.9 inches) is a replacement for a smartphone.

+        In the early days of smartphones, smaller devices were desirable, but now that touch has become more sophisticated and responsive, screen sizes have got larger.

+        MAGNA currently estimates that there are about 169 million smartphones and 87 million tablets in the hands of Americans—but the latest ComScore data shows that “phablets” only account for about four percent of smartphones (just under seven million).

+        Recent research from Flurry confirms our own findings that tablets are largely an at-home, media-playing device (content, design, gaming), while smartphones are task-driven (navigation, shopping, mobile banking).  We think “phablets” fall into the latter category as well.

+        We agree with Time reporter Jared Newman that “phablets” are a niche, not a fad, and their emergence is simply an indication that consumers are enjoying bigger screens.

+        A recent downward trend in iPad sales has led to speculation that tablets could end up becoming more niche themselves, but it’s not that surprising given the influx of cheaper Android devices like the Kindle Fire.  Tablets remain the fastest growing media machines in history, and we project continued (albeit slower) growth over the next five years.

As the debate continues, what’s important for marketers is to be aware of is how consumers engage with brands on the various devices:

+        Phones = more ownership and more situations

+        Phones = shopping as an activity (product reviews/research, driving in-store, show-rooming, driver of purchase intent)

+        Tablets are used mostly at home, for personal content consumption

+        Tablets generate better video ad recall than other devices (see June 2013 Media Economy Report), and generate more spending per user compared to smartphones

+        eMarketer: In 2013, 63% of tablet users will make purchases vs. 39% of smartphone users


For more information, contact [email protected] or [email protected].

Flash POV: Viacom’s Deal with Sony: Are They Hedging Their Bets?

Although neither company has made any official statements, news reached the press late last week that Viacom and Sony had come to a tentative agreement for streaming the former’s networks on a yet-to-be-released Sony video platform. Details are sparse, as the two companies are presumably still working out the finer points of the deal, but here is what we know thus far:

+ The service would feature live feeds of the Viacom networks, the same as any MVPD would get
+ It will be initially available on connected Playstations and potentially Sony Smart TVs

The new streaming service would be competitive with similar products in the works from Google and Intel, but if the deal holds, it will be the first of the three to have secured live TV feeds. With content owners up in arms about Aereo’s live TV service and MVPDs facing increased competition from over-the-top solutions, this type of agreement seems counter to the industry’s interest in protecting the existing TV model. So why do it? We can only speculate at this point, but here are two potential reasons:

+ Viacom doesn’t have corporate ties to any particular multichannel provider, and has been notoriously aggressive in its negotiations them. We seriously doubt NBC Universal (Comcast) or the Turner Networks (Time Warner Cable) would be part of this kind of deal unless it was somehow synergistic. With multichannel subscriptions set to peak this year (see the latest Media Economy Report), perhaps Viacom is laying the groundwork to make sure its channels are viewable in a broadband-delivered video world.

+ Theoretically, the live feeds streamed via Sony’s service would include only the national ads. Since multichannel providers typically have some local ad time to sell every hour, Sony could possibly generate some ad revenue by filling in those gaps.

We estimate that there are currently about 22 million connected Playstations in the US today, which will give Sony’s new video service a relatively small footprint to start with. There will have to be subscription fees to finance the carriage of Viacom’s networks, which will further limit uptake. All in all, we don’t expect it to have any meaningful impact on the marketplace, especially since the user experience won’t be a la carte or on demand; it will be the same as receiving the networks via cable.

However, it does bring a familiar issue to the forefront, one we have been citing for some time now. The MVPDs control most of the broadband connections in the country. As consumers eschew traditional cable subscriptions for broadband video delivery, those companies will naturally charge more and more for internet access to make up for those losses. This was confirmed by former Time Warner Cable CEO Glenn Britt, who was quoted in a New York Times article as saying: ”The reality is, if everybody watched TV over the Internet, and we were out of the TV business, then we would have to recover more money from the Internet service.”

At that point, the question becomes: is it really “cord-cutting?” Or just “cord switching?”


For more information, contact [email protected] or [email protected].

Flash POV: The Next Level of Targeting: Anticipatory Computing

In March, we predicted that 26 percent of online display ads would be bought programmatically this year, and that it would climb to 50 percent by 2017. And that’s just a single medium.

In addition to being data-driven and efficient, one of the benefits of a programmatic approach to buying ad space is the ability to get your message in front of more receptive audiences. A research study conducted by our colleagues at the IPG Media Lab and AOL demonstrated that real-time ads consistently generated more interaction. The idea of targeting in real- time is to create a mutually beneficial scenario for the brand and consumer—you’re offering something they need. But what if you could anticipate those needs before they even arose?

That is the promise of anticipatory computing, which, rather than waiting for the user to make a query, uses passively collected data streams like sound and location to proactively provide information. The Lab staff have cited this as a trend to watch this year, and were recently approached by research firm Forrester to provide input to for a study on the topic. One example of software that uses this technology is Google Now, which serves up virtual “cards” throughout the day to keep you updated on topics of interest, travel information, and calendar events without prompting.

While this is still a new space for advertisers, it has been used successfully. Earlier this year, Kleenex used a combination of Google search and public health data in the UK to anticipate which regions and cities would experience flu outbreaks, and adjusted their media plan accordingly. The result was a 40 percent increase in tissue sales year-to-year (read more about it here).

If the goal of real-time marketing is to be relevant and helpful, anticipatory computing represents a way to go one step further. Personal data will increasingly be used by brands to target consumers with information that they will find valuable precisely when they need it, and it won’t be long before they expect nothing less.


For more information, contact [email protected] or [email protected].

Flash POV: Super Bowl Viewing Unaffected By Blackout

Aside from being a very close game in the end, Super Bowl XLVII will likely also be remembered for the power outage that occurred early in the 3rd Quarter and delayed play for about 35 minutes.  Even without the blackout included (Nielsen separated into its own telecast, undoubtedly at CBS’s behest) the game was down slightly compared to last year with an average of 108.7 million viewers.  But the blackout coverage itself came in at 106.6 million, just two percent below the game – a swing that regularly happens from one 15 minute segment to the next.

Additionally, we noted that CBS aired the same ad pod twice – once immediately after the blackout cut the audio from the telecast, and then again once play resumed.  We assume the reason for this was two-fold: one, to make up for any audience lost because of the power outage, and two, to keep their promises to advertisers regarding scheduling of their spots.  The only ad break that aired in the middle of the down time featured a CBS promo.

Bluefin Labs is calling Super Bowl XLVII the most social TV event of all time, and the blackout is likely a contributing factor.  Their trend line shows it as one of the more social moments of the telecast – the most social being Beyonce’s halftime performance, which more than quadrupled the social commentary generated by Madonna last year.