Good afternoon all, I’m John Shepherd, part of the Strategy and Planning team here at RocketMill, and today I’d talk around this real sense of tension we have between digital and traditional TV advertising. How this is underpinned by the way that, as consumers, we engage with TV content, and what implications this has for the advertising market that is so well established around commercial TV.
The role of TV in consumer culture
So, we all acknowledge what a contribution TV has made to consumer culture. Here is your typical family picture from yesteryear; father leaning in to get closer to the only broadcast available, mother’s all ears, the eldest is on the bottle, what else is there to do?
The TV was the hub of the home. It’s replaced the hearth as the centre piece of the room they live in. Fast forward into the present day, some things haven’t changed. No one is still speaking to each other, of course. TV is still there but this is a room of multiple screens and personal engagement and individual consumers. Father is trying desperately to find something worth watching across the long tail of channels to choose from, the youngest looks as if he is being trolled, possibly by the oldest, and mum’s just getting a bit of downtime, doing a bit of browsing.
And we know, of course, this isn’t the true picture of modern content consumption in the home. Multiple devices exist in every room of the house. There won’t be anyone in this audience unfamiliar with Twitch, videos of gamers watching each other playing with themselves, playing with each other, watching each other playing with themselves. Two and a half million of them a month. Not everyone approves.
The problems with online advertising
These gentlemen certainly do not and they want you to know about it. This is Messrs. Allan, Litster and Williams, sales leaders of Channel 4, Sky and ITV respectively and ahead of the recent Big TV Festival, they shared their distaste for some of the newer things to be found on screens.
They said: “If you start digging into why trust in advertising is in decline, it isn’t TV advertising, it’s what’s going on online…
“It’s like a wild west, it’s unregulated and you’re tracked and you’re stalked and there’s click bait.”
So, what’s new?
Well, here’s the TV change maker if ever there was one. Jay Hunt has the rare distinction of having had a lead role in commissioning content across BBC, Five and Channel 4, so delivering the shows that deliver the audiences that the gents we saw previously sell to advertisers.
In her time in British TV, Miss Hunt signed off on what is considered seminal programming, such as Sherlock, Great British Bake Off, Gogglebox and Extreme Fishing with Robson Green, and many more besides.
Where to from such dizzying heights? Well, when there was a vacancy in the role of CEO at Channel 4 last year, Jay Hunt quite fancied a crack at it. Alas, they went with someone else. Jay wasn’t about to stick around to play second fiddle, so she went elsewhere. Where would she end up next? Well, she has ended up as the European Creative Director of Apple.
What could a company who make computers offer one of the most influential figures in TV Programming? Well, there is a billion reasons why she would go there. That is the budget Apple have set aside to produce content in 2018. That matches what ITV Studios, the biggest investor in TV content in the UK, are able to do.
Apple are not the only ones, of course. We know that Facebook has itself put over a billion aside to produce content dedicated to their Facebook Watch proposition. Both of these have got some catching up to do, however, as most of us will already be customers of Amazon Prime, who have put $4.5 billion aside and they’re going big because they don’t want to give an inch with what has become a true battle for the remote in living rooms today, and that’s their battle with Netflix, who have put $7 billion into producing shows in 2018.
The role of traditional TV advertising
And so, what of it? Well, it’s important at this junction that we consider what TV has traditionally represented to advertisers. The market prides itself on two things, being the medium to deliver audiences experiences produced by the greatest talent in sound and vision; and having an established, independent platform to audit the size of those audiences.
If we think of the first one, can we say that our terrestrial broadcasters still have a monopoly on professionally produced, appointment to view content? Emphatically not. When we think of some of our most favourite, most talked about, most eagerly anticipated shows of 2017, many of them are not transmitted on a terrestrial channel. When we think of the talent that we see on the screen, or that we know is working behind the camera on these shows, it’s clear that high production values are no longer the sole domain of the traditional TV stations.
So, what of independent validation? Well, it’s time we talked about BARB, the Broadcasters Audience Research Board. What is that? Well, it’s a panel placed in homes across the UK. Not that many homes, only 5,100 of them, in fact, and that would represent about 12,000 individuals. From the TV viewing behaviour that is recorded by the set-top devices in these homes, the whole of traditional TV’s audience figures are models.
Let’s just conjure with that number for a moment. With the population of the UK about 65 million, if you’re an individual on the BARB panel, you’re representing five and half thousand TV viewers; it’s a big responsibility.
BARB numbers provide the total TV audience at any time and the share of that audience that each station represents. Commercial airtime across all stations is represented by these three sales houses, run by the three gents we encountered earlier.
The price of the TV audience
What price for a share of TV audiences? Well as any economics graduate will tell you, price is determined by two things: demand and supply. What do we mean by supply in a TV market? Well that is simply eyeballs, the size of the audience that is tuned into a show at any one time. What do we mean by demand? Well that is simply how much money you’ve got to bring to the table.
And this is important because it is the sole reason media planning and buying agencies have sprung out from traditional buying agencies in the 80’s. Even the biggest advertisers in the UK cannot match the returns derived from the buying power of the pooled resources of a TV trading company. Leveraging the scale of their spending power is what buying agencies exist for, it’s their raison d’être. They may do all sorts of other things around the edges and they may quite often do it quite well, but they’re only able to do that on the back of the ability to leverage their spending power. That is their business model.
What about the biggest players in the new marketing economy around digital? What are they trading in? It doesn’t take much thinking to realise that you can’t think about digital touch points in terms of a share of the internet. Even if we could think of tracking individual’s time online in terms of what proportion of everyone’s attention online it represents, we’d quickly realise that the internet is not a single market. So, let’s think about the way Google trades it’s products and what advantage could be derived from having a huge spend to leverage. Well, they’re not about to compromise their real-time bidding model.
And perhaps we get a feeling for why these new, non-BARB affiliated models of audio visual consumption are so maligned by the status quo. Not only are they not part of the club, but they have absolutely no aspiration to be so. So, they are represented by something else, something that doesn’t represent the same value to an audience, and therefore an advertiser has a true TV experience, and something that should be considered a dodgy market as it’s not reported by a 12,000-strong panel.
Let’s just consider that measurement challenge a little further, because here’s the thing, it’s a common challenge. All the broadcasters are quick to tell us that they have a digital audience and they’re very desperate to find a way to record that.
I mentioned earlier that the whole of the traditional TV market is represented by three sales houses, one of the clear indication that some traditional content providers read the demise of traditional panel reporting less than others, when we look into the future, I thought this article on the Discovery sponsorship of the current Winter Olympics was quite instructive.
In it, one Mr. J.B. Perrette, president and CEO of the Discovery Networks International, is quick to observe: “The reality is, we’re still living in a world where people talk about the health and progress of TV based on TV set rating. That’s completely prehistoric.”
He talks about how looking to capture and represent to the market engagement with his TV content, across multiple touchpoints and how this strategy is informing their approach to the transmission of the Olympics all the way through to 2022. And showing that Mr. Perrette should not be considered some proud and indignant TV Canute, he rounds off the interview with the prophetic: “The one number that continues to increase is social and digital viewing.”
Digital vs. TV; why so angsty?
So, returning to the question posed at the start, digital versus TV, why so angsty? Of course, the angst is due to the fact that the change in consumer behaviour has happened and the market will inevitably follow. In terms of both the content available and the audience consuming it, TV is already digital. Advertisers should be approaching these opportunities with strategies that are aligned with their approach to other digital platforms, which depend on retaining service and expertise across tech and data rather than them be distracted by who’d get the best price for a Coro-centre break.
This ,of course, is not unique to TV as medium. We live in a world where the most compelling and exciting opportunity to get the right message in front of the right people at the right time is through digital. And this is the whole point. To think of pieces to the pie being cut now between online and offline marketing solutions, is to miss the point. I’m interested in digital marketing, not because it is digital but because it is marketing