MBPT Spotlight: Numbers Game: CIOs & CMOs—TV’s Most Crucial Partnership

The most crucial relationship in TV today is between the chief information officer and the chief marketing officer, who are under immense pressure to deliver viewing experiences and engagements across any device at any time.

There’s no point in sugarcoating it—There has been a 50% decline in broadcast TV audience ratings since 2002. The mythical cord-cutter turned out to be real; pay-television penetration peaked in 2009 when nearly 82% of homes in the U.S. had a pay-TV subscription, according to PricewaterhouseCoopers’ Global Entertainment and Media Outlook; it was 81% and falling by 2013. The same study said that pay-TV penetration would decline to 77% of homes in the U.S. by 2018.

Time Warner Cable lost a whopping 825,000 pay-TV subscribers in 2013 alone, much of which was attributed to a dispute with CBS.

So bad news, right? Maybe not.

At CBS television, chief research officer David Poltrack noted at the 2014 Media & Entertainment Industry Forum in New York, “We actually make more money per viewer streaming than we do on television. If you stream our programming online, you’re seeing a full complement of advertising—you can’t bypass it.” On average, CBS generates 10% to 20% more ad dollars per viewer from Internet-streamed programs than TV.

That’s all well and good, but only because CBS has been able to develop and manage a fleet of its own online distribution technologies—and is able to sell against those platforms. This is especially important as media consumption increasingly mobilizes. In many markets, the market penetration of mobile exceeds 100% (more than one mobile device per consumer) and as these platforms proliferate, any company trying to reach these markets must quickly realize that they are in the business of creating digital distribution products for an omni-channel world.

How the CIO and CMO collaborate on these initiatives in terms of more than just goal setting is crucial.

Software services company EPAM, together with industry leaders CIO magazine and the CMO Club, recently released a new report looking at the challenges CIOs and CMOs are facing in pursuing omni-channel strategies. The results of the survey—which combines responses from more than 400 marketing & IT executives—illustrates the ongoing challenges with C-suite roles and responsibilities for roadmap ownership, budget and staffing when it comes to technology and new media. The full analysis can be found at EPAM.com.

The report found that dual claims of ownership over mobile strategies are creating significant conflicts while others are discovering profitable and new depths of collaboration. When asked who owned mobile, 86% of CIOs claimed it for their own, with 76% of CMOs saying the same.

The survey also identified another potential stumbling block—technology funding. Of those asked, 68% of CMOs think that the CIO will get less, while 44% of CIOs think budgets will remain relatively stable. It would seem that funding is a division, but in reality, the entire organization is seeing an increase in technology budget.

These kinds of stats indicate that navigating this new reality requires far more than just common goals. It pushes both the CIO and CMO into a shared process that does away with the “specialness” of digital and gets back to the basics of doing business with the heart of technology.

Technology isn’t only what runs the studio or the broadcast operations center. Technology is also what defines how broadcasters need to reach consumers, and consumers decide what technology they want to use—or not.

In short, broadcasters are software developers now.

The point is this—the most valuable audience is shifting away from a “what’s on when” model facilitated by broadcasting to the “any show, any device, anywhere” model—and the delivery of media in this context requires a fundamentally different “digital products” approach. Digital products are custom technology solutions used by a company to embody a customer-centric business model.

Only with effective CIO and CMO collaboration can a network create and manage digital products successfully.

But television is a strange beast, technologically speaking. Both the absolute cutting edge of new technology and the creaky old “tried and true” systems coexist everywhere from the studio to the home, and the road to change is bumpy and full of dead-ends. Remember 3D television?

The same study revealed that although there is an increasing desire as well as efforts at better collaboration and communication between the CIO and CMO, there are some deep differences in understanding about how and why technology initiatives work for (or against) the business. From basic definitions of words such as “agile” (yes, it has very different meetings for the CIO and CMO) to the way that mobile applications are designed and deployed to the marketplace, the CIO and CMO roles are only recently beginning to pull the same end of the rope.

CIOs and CMOs find themselves needing to communicate better as they define what it means to be in the business of media production and distribution, because the technological capabilities in the marketplace are doing more than simply offering new ways to discover and consume content, they are forcing marketing people to understand technology platforms and they are forcing technology people to think about marketplace dynamics.

This need for mutual understanding requires more than just collaboration between the CIO and CMO, it requires a change in the way they both communicate about the role of technology and marketing in the organization itself.

Martin Focazio has been helping companies develop strategies for the digitization of content, community and commerce for over 20 years. He has worked with an eclectic group of clients including AT&T, Sony Entertainment, Discover Card, The London Olympics, Comcast, Warner Brothers, Focus Features, DirecTV, Paramount Pictures, SiriusXM, Verizon, HIT Entertainment and Cineplex Entertainment.