Steve Lanzano, President & CEO of TVB, joins Michael Beach to discuss the impact of streaming services on traditional television networks, the trend towards original content, and the importance of innovation to stay competitive. Watch our latest Screen Wars Thought Leader Interview here and read the full transcript below!
MB: Hey Steve, welcome to Screen Wars.
SL: Thanks, Michael. Good to be here.
MB: Do you mind giving our audience a little background on TVB (The Television Bureau of Advertising) and the problem you solve?
SL: Sure. Before I came here, I worked for over 30 years on the agency side of the business, on media planning groups. I worked my way up to running MediaEdge, and then MediaEdge CIA, which became Wavemaker. I spent most of my time at GroupM agencies, including Mindshare. I was at FCB when it was around. Prior to coming to TVB, I was at Havas Media, as their COO of North America. Most of the time I was doing the media planning and buying side of the business. When I started working with the TVB, they were looking to change the ways and work done by the association. They were looking to be more outwards with advertisement agencies, and to do more as a business development association, while also doing advocacy and PR. And, of course, continue all the research work we do, which is of vital importance to the industry.
That’s how I got here. The TVB is the association that represents all the local broadcast stations across the United States. We don’t do the legislative slide, that’s done by the National Association of Broadcasters (NAB). Once in a while, we get involved, especially if there are issues about taxing advertising, but it’s rare. We handle the marketing side. We advertise our agencies to other agencies and to advertisers.
MB: Earning season just ended for Q4 and a lot of the broadcast groups had a great close to the year, with a lot of that being related to the political landscape of October and November. We worked with AdImpact to create a projection that shows that there was an 80% growth for broadcast over the last midterm. That means broadcast went from 2.5 to 4.5 billion dollars, which is a huge change. What do you think local broadcast TV continues to deliver to political campaigns that drives it up?
SL: That’s a great question. After every political cycle, we do what we call a “voter funnel” to see what really drives them. We go into the 10 most competitive states, and we canvas voters on what influenced them: From knowing a candidate or a ballot measure, to actually going out and voting. And broadcast TV overwhelmingly influences everyone, going from just awareness, to actually going out and voting and deciding on a candidate. I always say that it’s not “TV or,” it’s “TV and.” You should be doing connected TV, or digital, or radio, but they’re always additive to TV.
I look at this as our base case study. In any campaign, you either win or lose. In other advertising categories, you could be the number two share in a market, but here, that doesn’t matter, you lost. The political consultants have all the research in the world, they know what moves the poll numbers, what gets people out to vote, what gets them motivated (Which is the main thing in the political category), and it’s, overwhelmingly, broadcast TV.
Now, as I said, it’s not broadcast TV only. You should be doing CTV, you should be doing digital, and you should be doing radio. What matters the most is how you use them in the roles of those mediums for those races. How do you make sure that you’re reaching your constituents?
MB: And despite the 50% market share, what do you think other advertisers could learn from political campaigns at the local level?
SL: We get the reverse question a lot. When we go to the ANA, or the 4A, they want to know what they can learn from political campaigns. They really find them fascinating, because it is a win or lose situation. But answering your question, I think they could learn about measurement. How do we expand our measurement so that we can deduplicate audiences? If we ran a spot across different platforms, how many unique people did we reach? What kind of frequency did we reach them with? Was it effective in terms of reaching them?
The political side needs to get more involved with the measurement, specifically measuring across all the different platforms out there. Then, they should put that together and see how many unique, different people they reached.
MB: A lot of the solutions right now focus at the national level, trying to impact the upfronts and the larger brand advertisers. And with political, most cycles will buy in almost all 210 markets, so we have to be much wider than the big markets.
SL: That’s correct. And when you look at us, our business is 75% local direct advertisers, and 25% national advertisers. In the words of Tip O’Neill, “All politics is local.” We shine at providing what we provide on a local level. TVB is the only platform that provides local news and information now. Radio walked away from it because they’re doing more national syndication, and Newspapers, unfortunately, don’t really exist anymore. And in fact, over 55% of our advertising revenue is in local news. And something that fascinates me is that there is an insatiable appetite for news. We can always put more news on the air, and it will find an audience.
Everybody wants news. And we saw it especially during the pandemic, when our news numbers exploded. Anytime there’s any sort of event, our local news numbers double. But during the pandemic, we saw that our 18–34 years old audience (where we didn’t have a lot of viewership) really grew. We knew it was not going to stay that way when things opened up, and it didn’t, but our numbers with that group increased around 15% now, versus where they were pre-pandemic. And that’s good, because as people grow older, and get to 25–54, 25–64, and especially when you look at the voter demographic, which you can make the case is 35+, they watch more and more news. That’s our real point of differentiation. We always say that it’s something everybody wants but can’t replicate. It’s very capital intensive in terms of financing.
MB: It’s a very tough model to replicate, with all the news crews, and satellite trucks, and everything else.
SL: Exactly. That’s our niche. And, of course, having NFL football is also very important. The sports angle is also very important for us.
MB: What do you think has changed the most in the local TV market in recent years?
SL: We’ve seen a movement away from prime entertainment. Now it is only about 12% of our advertising revenue, going down from 20-25% some years ago. News have grown, as well as our streaming product, and our on demand product. Now we need to be on all social platforms, and most of the major broadcasters are.
We’ve also seen growth in terms of virtual MVPDs. We want to be where everybody is. We need to be where the viewers are. So we have to make sure that we’re on those platforms. And now, the questions we try to answer is: what’s the content for those platforms, and how does that change versus the linear content? Because some of these platforms skew towards younger people. How do you deliver the content that we provide (the local news and information content) in a different way on those social platforms or virtual MVPD platforms versus what we provide on linear? A lot of the stations are working those angles, seeing what works and what does not work.
MB: There’s an interesting side note that has not gotten as much coverage. With a company like The E.W. Scripps launching a sports division, do you see sports coming back to local broadcast TV?
SL: I think what’s going on now with the RSN model is very interesting. It’s such an expensive model for the rights fees, and they are trying to make that work. There have been some issues, especially with Diamond Sports, so I think there’s an opportunity to go back to local.
Out in LA, Nexstar has some Lakers and LA Clippers games now. So you can see a move back to local broadcast, and a lot of that has to do with the wide audience of it. Broadcast TV reaches everybody, whether you’re an MVPD, virtual MVPD, or over the air, you get access to that.
One of the things in the work that we do is look at NFL football. Across the broadcast networks, the NFL was up about 4% this year, after being up double digits last year. But, overall, the numbers were down 2%, because of the Thursday Night Football on Amazon. They can’t promote the games like we do. We can promote football, and the network can do that across all of our affiliates. And it is important to do that to drive people to the program and get more viewers. So, Scripps and others are realizing, “There might be an opportunity here to start bringing some of those local sports teams back to broadcast TV. We can show the breadth of audience that we can bring and provide some financial stability to it.”
MB: Absolutely. When I talk to analysts in the sports area, one of the interesting things they mention is the immediate revenue versus brand building. Being on broadcast, the NFL is constantly building its top of funnel with the brand, as opposed to the Major League Soccer, that moved to Apple TV. They’re going to reach all the hardcore fans, but they will have a hard time getting more popular because of the reduced access to the service. That’s an interesting trade-off in the short term.
SL: I think it comes down to this question: What do we provide? Well, local broadcast is the only way to scale up right now. If you try to scale up on other platforms, it’s very difficult to do. We saw that when P&G went overly towards digital, and they weren’t bringing new people into their products, and they weren’t getting new consumers. They went back the other way and said, “We have to bring more money back to media, like linear TV, so that we can continue to grow the audience and bring in new users.” And that’s exactly what we can do.
MB: With your background in the agency world, how do you see that today? And then regarding the ratio of local or national, do local agencies buy local TV more often, or do national agencies do it?
SL: We still get a lot of national dollars. 25%, which is still a big number. And if you’re in the top 20 markets, the ratio is closer to 55% local and 45% national, because all the big national advertisers want to spend in big markets where they have a lot of business. And that’s where the Owned & Operated stations (O&O) business is. But, mostly, we’re getting it directly from a local advertiser, or from a regional media agency. Still, a large portion of our revenue comes from national agencies. And one of the things we know, is that it is difficult on the national agency side, since their margins are so small.
They’ve done a terrific job re-changing their compensation model to, essentially, be a manpower plus model with incentives, so it’s not based on commissions anymore. And where they really make their money is on data and analysis. A lot of companies, even some of the bigger ones, that took some of that in-house, understand they need the agencies, because they have all the software and the backend built to be able to manage and provide insights off of that data, as well as buying off of that data.
And when you look at the agencies earnings report for the fourth quarter, their organic growth of 7-8% surprised everyone. But a lot of that has to do with the change in their compensation model, and advertisers now focusing on data and analytics, especially first party data. With cookies going away, they became more and more important.
Something that we need to do, and that we’re already working closely with the agencies on, is making the buying process simpler. We have to automate all of those mundane manual labor things, and make them more electronic. That helps with the manpower on the agency side, and allows them to build deeper relationships with the stations in terms of sponsorships, and greater, more premium advertising opportunities that they can do now. Right now, sometimes they’re inundated with the paperwork and all the backend work, and they don’t have time to do that. So we’re working very closely with agencies to simplify all the backend stuff and automate it as much as possible, so that we can provide bigger and better opportunities.
MB: In our marketplace, we have predominantly linear buyers, and one thing we see is that it is a lot easier for our linear buyers to start buying a streaming, than it is for digital buyers to buy into TV, because it is very different to what they’re used to doing. And we’re always trying to focus on: How can we bring more people into the marketplace? There’s an opportunity for increased demand and yield, if you get both parties interested in the inventories. I think that that would definitely be a huge improvement.
SL: You’re absolutely right. It’s much easier for a linear buyer to buy streaming than the other way around, for someone on the digital side. And the agencies now know that. And they’re trying to provide a greater knowledge base, because they want buyers to be able to buy all of it in a market, and look at the market as a whole, and then put it together so that they get the greatest reach at the most efficient cost.
MB: That’s the vision. We had Brian Weiser recently on the podcast, and he told a really interesting story about when he first got into the agency business at the national level. He did the math for a national brand, and figured out that they had a regional footprint. X percent of their customers fell into Y percent of markets, and that they should buy 25% or 30% local TV. He walked through the friction there, because the math made total sense. But he talked about how, even from the national level of making that happen, it was really complicated. Is that an area you see for growth at the local level?
SL: I won’t name the company, but there was a Quick-Service Restaurant (QSR), and we went to show them that they were buying all national media, but the impact of national media doesn’t spread equally across the country. You don’t get just 7% of the impressions in New York, it could be 20%, depending on what you’re buying. But also, it doesn’t fall in line with what your sales distribution is. And we were showing them that, in one really large market, they had one restaurant that was getting 20% of their impressions. And, unless that restaurant was worth doing 24 hours a day, and was selling all their high-end products, it didn’t make a lot of sense to do it that way.
So we put together a plan for them, using basic econometric models, to show them that if they were to divert, they could even out their delivery and make their delivery better and equate to what their sales were. And they didn’t have to spend a lot of money, it was around 15% of their dollars back to spot, as opposed to running a national campaign, hoping that everything falls where it may, which may not be as effective. So, we got them to move money.
We do that a lot with big national advertisers, especially those that are moving to national. We’ve had these conversations with sports betting advertisers, which is a new category that came out of nowhere in the past two years. This is very much a local category, because it’s regulated by each state, and there are 33 states now that have some form of legal sports betting.
And not all the FanDuels, and the DraftKings, and the BetMGMs, are in all those markets. And they were thinking, “Maybe we should start going national. We’re getting bigger.” But we showed them how they waste a lot of money in states where they didn’t even have a footprint, nor could they do mobile advertising. And we showed many of them that, without California, Texas, Florida, and even New York, (where it’s legal, but the state taxes 51% of your revenue), all of a sudden, it doesn’t make sense to run national.
We’ve brought that, and we’ve had them say, “You’re right. Help us with putting together a plan. We want to do some national because we want to start getting some markets that we think are going to open up shortly, to start creating awareness of who we are. But we want to make sure we’re hitting those markets where people are betting and where we make our money.”
MB: I love that. That’s a huge growth area. And like you said, some of their customers can’t consume the product.
I’ll get you out of here on a couple questions. One, if you could wave a magic wand and change one thing about the local video marketplace, what would it be?
SL: I’ll say, if I could wave two wands, one would be that we provide an end-to-end solution in total automating our transaction process. That would greatly increase our opportunity in terms of national advertisers. About the second one, I’m seeing Nielsen tomorrow to talk about bringing Nielsen ONE to the local market, and we’re doing our own survey with SIM and with the 4A to ask, “If you had the perfect research, what would you need on local?” So that we could start going out and saying, “Here’s what we need.”
So, if I had a magic wand I’d like to be able to say we have the perfect research service to measure our audience, and I could go across platforms and show what we are getting in terms of deduplicated reach across those platforms. That would be a home run for us.
MB: Both of those would be amazing, for sure. Where’s the best place for our audience to find you?
SL: I have a very simple email. It’s [email protected]. If you have any questions, thoughts, or any type of research that you would like, that maybe your audience doesn’t get, please contact me, because we either have it, or we could help you get it.
MB: That may be the shortest email we’ve had on. Excellent. I’ve really enjoyed the conversation, and I know our audience is going to love it. So thank you.
SL: Thank you, Michael. My pleasure.
See the rest of the Screen Wars Thought Leader Interviews here!
Steven J. Lanzano joined TVB, the national trade association representing America’s local broadcast television industry as President & CEO in January 2010.
Steve is a 30-year+ veteran of media agencies, rising to CEO, North America of MEC (now Wavemaker) as well as COO of Havas Media. His accomplishments include both operational and advertising honors including a Cannes Gold Lion for AT&T/Who Wants To Be A Millionaire, 7-Time Adweek/MediaWeek Media Plan of the Year Award honoree, as well as being named an Adweek/MediaWeek Media All-Star the inaugural year of the award in 1986. He was also awarded the 1994 FCB Chairman’s Award. In 1999, MEC was also named Advertising Age’s “Media Agency of the Year” under his leadership.
Steve is currently in his 13th year leading TVB. Under his leadership, membership has grown 20% to over 800+ member stations, accomplished through the creation of national and local new business development teams, renewed research offerings and a concerted effort to ramp-up advocacy efforts within both industry press and general press. Additionally, TVB’s annual conference has grown tenfold.
TVB is now in its 19th year of partnering with the Ad Council and the National Highway Traffic Safety Administration on Project Roadblock: Local TV Puts the Brakes on Buzzed Driving with over 1,000 stations participating in this campaign. In addition, Steve serves on the boards of the Broadcast Foundation of America, The Ad Council, and the Emma Bowen Foundation. He is also involved with Drug-Free.org and The Greater NJ MS Society.
Steve has been the Principal Speaker at numerous events including Goldman Sachs Communacopia Conference, JP Morgan Media Summit, Forecast 2022, Wells Fargo Advertising Day, Sanford C. Bernstein’s Future of Media Conference, ANA Annual Conference, NAB (National Association of Broadcasters) Annual Conference, and the NADA (National Automobile Dealers Association Conference) where his presentation was chosen as best in class.
Steve is married and resides in East Brunswick, New Jersey. He has three children, and six grandchildren.
Cross Screen Media is a leading CTV activation managed service for marketers and agencies, built on a proprietary technology platform that enables advertisers to plan and measure advertising across Connected TV and audience-driven Linear TV at the local level. We seamlessly fit into existing workflows to help agencies scale, differentiate and deliver high-impact campaigns for their clients. For more information, visit CrossScreenMedia.com.