Is the future of television in question? DStv Media Sales CEO Chris Hitchings studies recent research and concludes it certainly is not.
“TV is becoming the cockroach of the internet apocalypse… whatever the internet revolution throws at it, TV survives and survives and survives. Its resilience is conspicuous at a time of turbulent change,” says Ed Richards, the CEO of Ofcom, the independent regulator for the communications industry in the United Kingdom.
The broadcast landscape in South Africa is changing rapidly with new and rebranded satellite players entering the fray, digital terrestrial television on the horizon and, of course, the existing pay-TV and free-to-air players. Increasing broadband speeds and penetration are also likely to change the game in future and the introduction of additional over the top (OTT) players (think Netflix, iTunes, and Apple TV) may not be far away.
For the first time in SA, TV is currently taking over 50% share of the total advertising spend and is in a robust state of health. But, given the above uncertainties, what does the future hold for TV and for TV advertising in particular? A recent study commissioned by Ofcom into the future of TV in the UK reveals some interesting lessons.
Internet penetration in the UK is currently about 87% with average broadband speeds of about 14 megabits per second (Mbps). Personal video recorder (PVR) penetration is now over 50% of all TV households. And you would probably imagine that TV (and TV advertising) would be under increasing pressure for survival, but – according to the Ofcom paper titled ‘Industry Perspectives on the Future of Commercial Communications on TV and TV-like services’ by Jon Gisby – this is simply not the case. The report draws on interviews with industry leaders across a wide spectrum that were conducted in the final quarter of 2012 and early 2013. It highlights some widely held assumptions on likely developments in the TV industry by 2020.
Here are some of the conclusions:
• TV viewing consumption remains strong and may have room to grow
The amount of time that viewers in the UK are spending watching TV daily is increasing. As technology improves – wider and flat screens, HD, 3D, and PVR penetration – so does the viewer’s experience. Social media and second screens (phones and tablets) are providing opportunities for broadcasters and platforms to engage audiences in new and interesting ways. Despite the increased availability of on-demand video content, non-linear viewing from PVR or online is currently only around 10% of total viewing. The consensus view is that this may rise to about 20% by 2020 but that 80% of viewing will still be to scheduled, linear channels that are watched live.
• TV remains the most attractive medium for big brands
Although internet-based advertising is now on a par, TV’s share of the total advertising market has remained remarkably consistent in the UK (26.9%), and is comparable with back in 2000 when it achieved its highest ever share. This picture is consistent with forecasts in other countries where TV advertising budgets are growing in both absolute and relative terms.
Okay, so why exactly is TV still so attractive to advertisers?
• Scale
No other medium can provide the same level of reach and impact.
“Ten million people watching ‘X Factor’ together on 42-inch screens has a much greater impact than 10 million people reached on different devices and services via the internet. Even if it was easy to reach that number at the same time online, their context and psychological mode is just different,” says a UK brand manager.
• Fragmentation
The digital revolution is decreasing the importance of print and radio while fragmenting audience attention across a diverse range of internet sites and devices. This fragmentation and complexity increases the attractiveness of large but still well targeted TV audiences. TV also provides the control of context and environment which marketers need.
• Accountability
Most interviewees confirmed that TV provides an appropriate level of targeting. The diversity of the schedule across multiple channels allows media planners to target the consumer segments they need with confidence using measurable, consistent and auditable metrics.
“Not surprisingly, in a space that offers sight, sound and motion, TV generates more profit per amount spent, the most efficient share of voice…(and) the highest ROI (return on investment),” says Chris Locke, Starcom UK trading director.
• Brand building
There was universal agreement that TV would remain essential to building brands by the iconic and creative adverts that capture industry awards and become part of the national conversation.
“Every brand wants to be famous,” says a UK agency executive quoted in the report.
However, the Ofcom study was quick to point out that broadcasters and brands should not be complacent about the future.
“Platforms, smartphones and broadband are a revolution. They are the new DNA that enables genetic mutation. It may take a little time, but it’ll be rapid and dramatic when it happens,” an agency executive says in the report.
Many of those interviewed agree that broadcast TV will remain strong, but they also highlighted the unprecedented and unpredictable technological changes that are now underway. These will have a progressive and potentially profound impact on consumer behavior, business models and content services.
This disruption is likely to curtail growth in linear TV spot advertising, and brands are already seeking new ways to engage consumers either directly or in partnership with others. These new routes to audiences already include direct investment in TV programmes, complementary advertising via second screens, investment in video content delivered by the internet, and investment in alternative forms of engagement marketing.
So, what might all this mean for our local TV industry?
In my view, while the broadcasting landscape is inevitably bound to change, TV viewing is likely to increase – meaning that TV will remain an important tool for advertisers to build their brands.
Viewing will naturally fragment across more platforms and channels, meaning that audience data will become even more important.
Broadcasters will need to assist brands and agencies in the planning process in order to reach their desired target markets.
The need for accountability and guaranteed audience delivery from broadcasters will increase.
Broadcasters and brands will need to explore new business models around second screens, product placement, advertiser-funded shows, sponsorships, video on demand etc.
While TV remains critical to brand building, digital is an ideal medium for activation – the two working in tandem is ideal.
I leave you with a final quote from the Ofcom study: “We always overestimate the change that will occur in the next two years and underestimate the change that will happen in the next 10. Don’t let yourself be lulled into inaction…” – Bill Gates.
This story was first published in the February 2014 issue of The Media Magazine.
