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Nick Pugh 

A golden age for television advertising

A golden age for television advertising

Ignore the doom-mongers, writes Ebiquity's Dr Nick Pugh - here are five reasons why TV is in rude health

Throughout the infancy, childhood, and teenage years of the digital revolution, the obituary of TV has been written time and again. “It’s too slow”, “It’s not interactive enough”, “it’s a medium of monologue not dialogue, so digital natives have abandoned it”. Op eds and bylined articles have read like funeral orations. Unsurprisingly, many of these pieces were written by the founders and the funders of the very channels and platforms their authors predict are chasing TV into its grave.

The facts are rather more nuanced. Despite the gradual appearance of some clouds on the horizon, the truth is that we are living during a golden age of TV. Misperceptions and actual channel performance are very different realities. Here are five reasons why TV is in such rude health.

1. TV delivers audience

It is often claimed that TV audiences are drying up and the opportunity to share commercial messages with consumers is receding. Between 2010 and 2018, all adult impacts in the U.K. have remained remarkably stable – in fact, according to BARB data, they’ve actually increased, from 867.4m to 873.6m. Added to that, there’s a well-established relationship between TV and PPC results.

Why else would so many digital-only companies and brands choose prime-time, destination TV slots, including X-Factor and live sport?

It is true that among the much-coveted 16-34-year-old demographic, impacts have shrunk by a little over 20%, falling from 203.5m to 158.1m (BARB again). And it’s also true that 16-34s are both the economic powerhouses of the future and are the most active on social and digital media channels.

That said, this so-called Millennial generation has the least disposable income of all adults, and are most likely to have ad blockers on computers, tablets, and phones. And while linear TV viewership is shrinking among 16-34s, they are still a very long way from abandoning TV entirely.

The question is, will they sustain today’s viewing habits as they age, or revert to the habits of their parents?

2. TV commands attention

The rise and rise of ad-free, subscription-based television platforms – with Netflix and Amazon Prime the market leaders both in the U.K. and around the world – has been taken as proof that advertiser-funded TV is on the wane. Yet again, the evidence suggests a different story. Yes, more and more consumers are watching – often binge-watching – box sets, films, and series on subscription TV.

But this viewing and these subscriptions are incremental, not substitutional. While 2018 can boast record subscriptions in the U.K. to Netflix (9.1m) and Amazon Prime (4.8m), the same is true of subscriptions to the three leading pay TV cable and satellite platforms, all of which carry advertiser-funded channels: Sky, Virgin Media, and BT Sport (15.1m).

3. TV dominates spend

The spend behind TV advertising is reliable and robust. In 2010, advertisers in the U.K. invested £4.1bn in TV advertising. In 2017 – following the great recession of 2008-2010 and its medium-term consequences – the figure had risen to £4.8bn.

The same pattern is repeated in all major media markets around the world. Brands know that, if you want to build a brand and drive awareness at scale, the way to achieve this is through TV. TV is very often still the centrepiece of the media plan.

4. TV delivers the best efficiency

Across every sector and every category, the ROI data indicate that TV is the most efficient media available to advertisers. TV delivers the strongest ROI in the short term (£1.73 for every £1 invested), more than radio (£1.61), print (£1.44), online video (£1.21), online display (£0.82), and out-of-home (£0.57). Short-term – for campaigns measured in weeks and up to six months – ROI is holding up. In 2008, TV’s ROI was £1.70, whereas today it’s £1.73.

What’s more, TV has the strongest impact in the longer term too, and offers the largest multiplier effect of any medium. TV’s long-term ROI is £4.20 for every £1 invested, compared with £2.44 for online video, £2.43 for print, £2.09 for radio, £1.11 for out-of-home, and just £0.84 for online display.

5. TV is the most effective medium

No other medium delivers ROI at scale or offers as strong profit return as TV, enhancing profit better than any other channel. In a major meta-analysis of almost 2,000 campaigns by major brands from 2009 to 2016, our Profit Ability study for Thinkbox found that TV delivers 71% of profit return of all advertising investments, despite accounting for just 54% of total spend.

This study compared TV with radio, print, out-of-home, online display, and online video, as detailed in Figure 1., above

Emerging challenges

TV is clearly evolving and changing, with advances in addressable TV making it more targeted yet. Also, when linear TV is flighted together with video on demand and other online video, it is possible to extend reach in saturated markets.

Although the figures show that, on average, people spend only a few minutes less each week watching linear TV, advertisers are starting to face up to very real challenges of building reach, which is increasingly hard and expensive to deliver. And while broadcaster video on demand - think ITV Hub and All 4 - is growing in popularity and usage for streaming, the amount of information available regarding programme access is limited at best.

But for now, and for many, measurable reasons, TV is decidedly not dead. Because of its ability to capture audience and attention at scale, it is still often the single biggest line item in a media budget – particularly for FMCG brands, but also retail, financial services, travel, and automotive.

Not without reason, these are the biggest spending advertisers on the planet. TV is demonstrably more efficient and effective – and creative – than other channels, both for short-term sales activation and long-term brand building.

TV is dead? Long live TV!

Dr Nick Pugh is Head of Effectiveness UK at Ebiquity

Interested in the TV advertising landscape and want to hear more? Attend the Future TV Advertising Forum in London on December 4th, 5th and 6th to with keynotes from Europe, US and Asia and over 750 attendees.

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MattGreen, Boss, WFA on 27 Sep 2018
“Good article, Nick, but as to your question: "will they sustain today’s viewing habits as they age, or revert to the habits of their parents?", the answer is that they will, in my view, unquestionably sustain today's viewing habits.”