October 21, 2008

Using Soap Opera Data To Understand Multichannel Marketing Trends

It's my birthday, so I get to pick an unusual topic!

Assuming Wikipedia is correct, we can draw considerable inferences from the history of Soap Operas.

Going back to the early 1950s, Soap Operas have been a staple of afternoon network programming. The image below illustrates two trends --- the number of afternoon network Soap Operas, and the average rating of the top three Soap Operas.

Notice the trends. Soaps increased from just four in 1953 to a peak of nineteen different shows in 1970. During this time, ratings were generally on the decline. A brief surge in ratings around 1980 (Luke and Laura on General Hospital, I am told) fueled a short-term increase in the number of shows. But as ratings decreased, shows were cancelled. Another brief ratings burst in 1993 - 1994 led to one final surge in the number of shows. Notice the lag in ratings and shows. When ratings improve, there is a one or two year gap until new shows come in to capitalize on increased ratings. By the time the new shows arrive, the ratings bump is gone.

We multichannel marketers know this trend all too well, don't we? Something works well in a catalog --- by the time we capitalize on the trend, the trend is already over! We have such an opportunity to use the online channel as our channel of experimentation --- test, learn quickly, iterate, evolve --- using print to capitalize on the immediate learnings available online. Our method of measuring "winners" must change, must become more flexible, so that our survival is guaranteed.

Also notice that ratings are absolutely awful --- in an irreversible downward decline that shows no hope of changing. This isn't any different than the downdraft observed in telephone sales. Sure there are blips from time to time, but on average, there is no stopping this trend --- the genre is dying, just like catalog marketing is dying.

Next, take a peek at the "death" rate of new shows during the past fifty-plus years.

The dark bars indicate the likelihood of a show being cancelled in any given year, provided that the show survived up to that point. The lighter colored bars indicate the cumulative probability of a show being cancelled by year.

What matters here is the steep hurdle a show has to get over to survive. Nineteen percent of shows are canned after just one year, fifty percent of shows are killed within the first three years.

If a show could survive the first three years with reasonable ratings, it had a chance for long-term success.
  • The Edge of Night took five years to crack the top three rated shows, then hung in the top three for five of the next twelve years.
  • As The World Turns took four years to crack the top three rated shows, then stayed in the top three for twenty-one consecutive years.
  • General Hospital took nine years to make it into the top three, then was in the top three for twenty-four of the next thirty-eight years.
  • Another World made the top three in year five, staying in the top three shows for eight of the next eleven years.
  • Days Of Our Lives made the top three in season seven, staying in the top three for the next four years.
  • One Life To Live finally made the top three in season fourteen, staying in the top three for six of the next nine seasons.
  • All My Children made the top three in season nine, and stayed there for sixteen of the next eighteen seasons.
  • The Young And The Restless made the top three in season four (1976), and has not left the top three in ratings since 1984.
  • The Bold And The Beautiful cracked the top three in season seven (1993), and has not left the top three in ratings since 1996.
In other words, it takes time to build a winner. Zappos is an overnight success, one that took nearly a decade for anybody to notice. Amazon.com was lambasted in the mid and late 1990s for their reckless approach --- now, they own e-commerce, while some of us beg for the opportunity to sell our wares on their site.

Look how long it took those folks to build success. And we sit in conference rooms with jaded executives. We describe how we want to experiment with channels, only to have power brokers tell us "we tried that in 1997, it didn't work then, but somebody at a research organization published a $389 paper that says we should align all of our merchandise across channels, so by golly, let's invest in the information systems that allow us to do that, and then we'll innovate."

Notice that once a show "made it", the show stuck around. Humans are creatures of habit, it takes something innovative (or more important, something our friends talk about) to knock us out of established habits.

But when we're knocked out of an established habit, we generally don't go back to what we used to count on. Take a look at these shows.
  • Search For Tomorrow was a top three show from 1953 to 1966. After dropping out of the top three in 1967, the show only had two additional top three appearances before being cancelled in 1987.
  • The Guiding Light, still on television today, was in the top three every year from 1954 to 1968. The show experienced two top three performances between 1969 and 1977. The show has not been in the top three in the past thirty-two seasons!
  • As The World Turns dropped out of the top three in 1979, appearing only once more, in 2008, at a time when one-fourth of the audience is left.
  • General Hospital and Days Of Our Lives have been able to survive problems. GH survived slumps from 1974-1978 and 1996-2000. Days survived a twenty year slump from 1976-1995 (but never had bad ratings during that time), and has only been in the top three once since 2002.
  • One Life To Live has not appeared in the top three rated shows since 1989.
We experience these trends all the time in our businesses, don't we? Sears and K-Mart are like One Life To Live --- consistently declining comps, but churning out too much cash to kill outright.

The data indicate that it is very hard to turn a floundering Soap Opera into a perennial favorite. Retail is littered with comparable trends. When Eddie Bauer comps turned negative in 1998, there were a few years when comps turned positive --- but positive comps weren't sustainable, and were offset by huge declines in performance.

When momentum works against you, it's downright difficult to reverse the mojo. Those who are able to reverse momentum are gifted --- those who reverse momentum at multiple companies should be in the Direct Marketing Hall of Fame!
Quick, name an executive who fixed two companies in a sustainable manner?

We have merchandise lines that exhibit these trends too, don't we?

At Nordstrom, we sold stirrup pants --- store managers and merchants HATED stirrup pants --- yet we had a passionate and decreasing niche of customers who craved them in catalogs. Multichannel pundits might suggest that we offer this merchandise across all channels, yet it may make more sense to bury t
he product in catalogs where the product can profitably serve a small niche.

Soap Operas are all-or-nothing propositions, they have to be on television every day, every week, without repeats (or do they?). Multichannel merchandising allows for considerable flexibility in the merchandise assortment across channels. We need to merchandise to the customer who is passionate about a channel, not merchandise to the ten percent of customers who shop all channels. Whoever made up the rule that we have to serve the ten percent of customers who love shopping all channels? How did t
hat become a best practice?

One wouldn't think that Soap Opera metrics are worthy of comparison to the business models we manage. A quick review of the information suggest there's a lot to learn from other disciplines.

Added 2008/10/24: Take a peek at the long-term ratings decline --- this image illustrates soaps that were on the air for at least five years, so that you can see the life and death of various shows over time. Again, pay attention to the huge ratings decline --- your thoughts, what becomes of television as ratings continue to implode?

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