As the new TV season breaks out, CEO of mobile marketing agency LEAD9 Nazar Grynyk reveals why TV channels fail to use mobile applications for enhancing viewer engagement.
The integration of the mobile with TV began in the early 2000s when the reality shows became popular. Then there were SMS-votings and quizzes. The business model is very simple and transparent: television provides air time for promo, mobile operator or the intermediary technical partner provides a short number and collects money from viewers who pay by sending SMS. Usually the revenue split is 50/50 or 50/45/5, if there is a content provider getting about 5-10%. This model works in Ukraine. While in Europe TV channels are commercially stronger and their share often hits 90%, while mobile operator getting only 10% for delivery services. TV channel can earn several hundred thousand or even millions of dollars using SMS and IVR-voting per live show season (8-10 shows). At the same time, the more popular among younger audience mobile apps fail to monetize the airing with comparable profit. So far.
The dramatic increase in the number of smartphone users, the popularization of instant messengers and social networks put pressure on classical communication via SMS, which is mainly used by older subscribers or young people only in cases of confirmation of payments and various registrations. In addition, sending SMS is getting too costly for the audience, there is a limit on the number of characters (160), it is impossible to send images, and video. All this makes SMS a less attractive channel. Especially among youth, whose attention is rarely attached to TV screens. When the younger generation watches TV shows, they usually use gadgets and computers, where apps and services are second nature, free and easy to use. However, there is one «but». Applications and messengers are much more difficult to monetize, because neither the mobile operator nor the TV channel can directly charge the user. Of course, they can ask payment for the application download, include sending SMS to a paid (premium) number, implement a credit card payment, or DCB -direct carrier billing (direct payment from a mobile account), as it works, for example, in Australia. But, first of all, it is too complicated for both parties and secondly, there is not such culture in Ukraine yet – to pay for something by card from a smartphone. The users are simply not ready to tie their card to the application and calmly part with 3-5 UAH, paying for something from thin air, – for a vote which «does not decide the destiny of the Universe.»
Therefore, today the development of mobile applications for TV channels is still a marketing challenge, with the desire to win loyalty of a forward-looking and young audience. This is an investment that would not necessarily pay off. When using SMS, TV channel invests only in air time, with everything else left to the business partners. Whereas when considering a mobile application, the broadcaster is left alone, since it cannot be directly monetized and partners are not interested. The cost of mobile application development alone can reach 30-40K USD or slightly less in case of some third-party solution is used, for example, Teleportal. But ready-made solutions have more or less fixed functionality and despite the claimed several hundred thousand downloads, can really activate the audience of 50-80K people, which is a drop in the ocean compared to 40 million audience of TV viewers in Ukraine. In case a mobile app is really needed, the one developed from scratch is more reliable, long-playing and flexible solution, many say. So SMS or mobile app? Today different Ukrainian TV channels choose both ways. STB, Espreso TV and Hromadske TV have their own apps. Nonetheless, how can these things be made feasible and profitable if the audience is not eager to pay online?
First, it is a must to take the mobile component into account at the early stage of TV show production. Whether it’s a separate mobile application, social networks or instant messaging bots – they have to influence events in the scenarios, rather than just pop up in the background at the final stage of the broadcast. It is done well in the Netherlands and other Western countries and it makes real impact on viewer’s engagement. Immersive integration into shows via mobile helps sponsor brands to reach active online audience, use new promo opportunities and cover the costs invested by the channel in the apps development.
Secondly, apps have to create unique value for users, not only special projects and prizes, but also interactive formats that allow audience to dramatically influence / change the show by pressing a single button. Viewers should have a feeling that the fate of the show depends on them. In this case, smartphone owners are ready to pay real money.
At the same time, all functions of SMS and applications should be separated. As Mykola Kononuchenko, 1+1 TV Channel specialist, puts it, SMS should work for monetization, while mobile application should provide for wider audience reach and entertainment. Yes, they can coexist, but must perform completely different tasks. Simple mix of the voting on SMS and mobile app won’t gain much profit. In this case you have to choose what is more important for you right now, monetization or marketing, or maybe both.