The ratings in a vacuum don't necessarily mean the public has no appetite for playoff football (the NFL ratings show there is an appetite), but ESPN has screwed up the marketing of the playoffs very badly. First, keeping the games on ESPN may help the company's bottom line, but no doubt it hurts ratings by not being on broadcast TV. Also, this is called a playoff, but it's really an invitational. Playoffs imply there's some sort of automatic entry, but these teams are selected by a committee. I think the public that watches sports on a regular basis has seen through this charade, and that's turning some people away. As college football fans, we're used to this type of process, but college football is the only major sport (college or pro) that clings to this unusual way of crowning a champion.
Another misstep is having semifinal games on NYE. That's a non-starter for a large chunk of the public, and those games get almost no casual viewers, which are needed to really boost ratings. This goes back to the problem of having one entity (ESPN) controlling all aspects of the playoff. The Rose, Orange, Sugar, Cotton, Fiesta and Chick-Fil-A should be able to negotiate their own contracts, and be with whichever broadcast partner they choose. This will help get the playoffs out of the NYE rut every couple of years, and allow those games to be played on New Year's Day. The NYE problem is compounded because casual viewers that didn't watch the semifinals aren't going to be as interested in watching the championship game.
While playing the championship on Monday nights isn't ideal, I really don't know how ESPN can avoid playing the game on Mondays. ESPN won't go head-to-head with the NFL in its final week of the regular season, so it's pretty much forced to play on a weeknight. Additionally, ratings will continue to slip if there's not enough variety in the matchups. Watching 'Bama play against another team from the south won't attract viewers from other regions of the country. Maybe that's just tough luck for ESPN that the playoff was created when arguably the greatest coach in the game's history was hitting his peak. Still, it's a tough sell for a lot of people casually interested in college football.