Nick Manning looks in-depth at the recent Enders Analysis report into TV advertising and asks what measures can be taken sooner rather than later
In case you didn’t notice, the nation was gripped by the BBC’s ‘Line of Duty’ fever over the weekend, no doubt helped by the tail-end of lockdown and some typical Bank Holiday weather.
It must be said that the record-setting 12.8 million viewers demonstrated once again that great TV programme-making earns its rewards.
Although I wasn’t one of the audience, I have been devouring ‘Call My Agent!’ and this outstanding example of great TV has been such a success internationally that an English language version is being made and a fifth series and movie version are being scheduled.
So, as Bobi Carley rightly said in last week’s Mediatel, TV is alive and well.
However, neither of the programmes mentioned above are available to advertisers. Nor were last year’s lockdown hits ‘Tiger King’ and ‘The Queen’s Gambit’, not to mention ‘The Crown’ and ‘Bridgerton’, all of these being on Netflix.
While if, like me and many others, you view through Sky Q, you won’t see much advertising in any catch-up TV, even from ad-supported channels.
So while TV is resurgent, TV advertising is struggling to compete with subscription TV and ad-free On Demand across different platforms. This is happening now, in spades.
Last week saw the launch of a new report from Enders Analysis, commissioned by ISBA, which aims to address the ills of the TV advertising industry, some of which were examined in my recent article for Campaign.
The Enders report is a remarkably sobering call to arms. It points out rather brilliantly that TV advertising, still the most effective way to drive business, must reform and then it crucially describes how. It’s a must-read. The level of analysis is extraordinary.
Enders forecast that by 2027 the average person will watch just 1 hour 49 minutes of commercial TV per day, compared to 2 hours 14 minutes in 2019, and that total TV ad revenues could decline by between £364 million to £1.35 billion depending on various scenarios. As wake-up calls go, this is pretty effective.
However, the problem of lost audience exists now.
Netflix, Amazon Prime, Disney+, the dynamics of different on-demand platforms and the perennial lure of the BBC have already eaten into the available audience and especially those lighter viewing groups who are vital to absolute reach.
More frequency against heavier viewers is not going to help those advertisers who rely on TV for brand growth. The pond is drying up.
The market solutions set out in the Enders report are undoubtedly a major step in the right direction, but they are inevitably rooted in the structures of the commercial sector, and are broadcaster-centric.
The problem for advertisers is bigger than this, given the loss of audience to ad-supported channels, and it’s immediate.
Enders estimates that the complicated process of achieving industry-wide cross-platform measurement, taking into account the variables of viewability, sound, screen, attention and context, will happen by or in 2023.
This may be right but it feels somewhat optimistic given the need to align so many parties, including the big digital platforms.
The other Enders prediction for 2023 is that deal structures will finally have changed, including the move towards more volume-led trading, across linear and BVOD.
Given the sclerotic nature of change in the TV trading market, this may also be on the optimistic side.
There is no doubt that industry-wide change will be complicated and therefore slow. Getting consensus from rival parties is never easy and as Google gets stronger (see its Q1 numbers) the influence of YouTube is magnified.
However, there is nothing to stop individual advertisers from taking immediate action to address the majority of these tasks.
The first of these was not covered by the Enders report because its remit was different, but it’s actually the most important of all:
- Advertisers should ask their media agencies to continuously analyse and report on what the key trends are for their audiences across all TV viewing points, not just the commercial options and not just from BARB data. They need to know the extent to which the people who matter have moved to ad-free environments, and the effect this has on reach. This insight can only be gained through combining different types of data (including commissioned panels) and modelling.
This level of insight is crucial to decision-making on how to plan TV across linear, BVOD and online video but also on whether to use other brand-building techniques to support TV if reach is likely to be lower. This may include Out-of-Home and Cinema but other newer forms of video, such as TikTok, may increase in importance.
- The Enders report is very thorough on the need for cross-platform measurement and the need for an industry-wide system. Pending this, advertisers should conduct their own testing programmes across the various ‘AV’ channels, using the relevant metrics for their specific audiences.
They should work with their media agencies, independent research and data companies and modellers (ideally in-house) on testing initiatives across platforms, controlling for attention factors and the effectiveness of different user experiences.
The results of these tests should feed the planning process and thereafter the right trading mechanisms, in that order.
- Enders proposes that the advertiser-agency relationship be more transparent with impartial media recommendations, including all rebates, free space and other benefits being returned in full to the client.
This is achievable now.
It’s not easy but savvy clients will negotiate full transparency and remunerate their media agency accordingly, with incentives for performance based on real business results, not just the illusion of discounts versus Station Average Price or an auditor’s pool.
The ISBA template contract is a good place to start. Not taking ‘no’ for an answer helps, too.
They will recognise that the media agencies cannot actually deliver complete transparency in online media if trading via DSPs and SSPs/Ad exchanges and set the agency the challenge of resolving this through more transparent trading techniques, with more direct deals.
- Enders is very strong on how volume and share should be combined across the various linear and BVOD options to deliver the most realistic formula. Every advertiser will have their own version of this according to the reliability of their investments, so it’s entirely feasible for advertisers to ask their agencies to negotiate with all of the tools available across the channel options. Too often, the default mode of agency share deals is used because it suits the agency, and this should be resisted.
- The Enders proposal for day-to-day trading is the most radical and interesting, proposing that the majority of ‘standard’ TV airtime be essentially traded automatically, and with BVOD sold on a multi-sales channel basis in the manner of The Ozone Project.
This is the most innovative recommendation and the least immediately achievable.
However, it provides a great basis for advertisers to task their media agencies with providing solutions that challenge the norm. Enders suggests that this is a post-2023 likelihood but there is nothing to stop advertisers asking their media agencies to take the necessary first steps now.
While the Enders report does not contain any recommendations on how advertisers should work with Media Auditors, it does report on industry criticism of the lack of innovation in the audit sphere and how this has helped perpetuate some of the trading practices that have hampered industry change.
Some of this criticism is justified but it understates how some client practices have contributed to the problem.
Media pitches have for far too long been decided on the infamous spreadsheets that agencies have to fill in to guarantee media pricing, usually blind to the client’s prior terms of trade.
This race to the bottom has been going on for several years to nobody’s benefit.
The game is also played out on spreadsheets that create the illusion of ‘savings’ that are rarely real, but they give procurement departments the appearance of success and, no doubt, delivery of KPIs and incentives.
We shouldn’t understate just how pernicious this is for the entire industry.
The Media Auditors do what clients ask of them, organise the auctions and measure the results post-hoc. So while they can be blamed for failing to innovate how the measurement works, the root cause is poor client practice.
The good news is that more advertisers have seen the light and are using their Media Auditors differently.
They are working with their Media Agencies and Auditors collectively to create cross-channel tests (not just in TV), look at their effectiveness against client-specific metrics and use the results in their planning.
In turn, the more enlightened Auditors are developing new advanced statistical techniques that marry different data types to facilitate this process.
The better Auditors are also working with specialist data and measurement providers, such as Lumen, to bring a fresh perspective on attention metrics and other new techniques, and are working better with the Media Agencies where the client sets common objectives.
The advertisers who are doing this tend to be domestic clients not tied into the energy-sapping cycle of international spreadsheet manipulation that fixes the audit result to earn a performance-related fee (and sometimes the dreaded ‘malus’).
If international or domestic procurement departments continue to pursue suicidal cost guarantee commitments, it will be to the detriment of the entire advertising industry and will yield virtually no benefit to themselves at a company level.
In summary, TV is in rude good health but TV advertising isn’t.
This needs to be fixed and can be. While industry change will be laborious, individual advertisers can take immediate measures to address the need for a different approach.
This should begin with a better understanding of how all TV is being viewed by the audiences that matter (and not just the BARB definitions) and an approach to TV planning that determines the best way to reach the right audiences across the available options, some of which may not be TV.
Only then should considerations of TV trading practices be addressed. It’s time to put the horse before the cart.
TV advertising is vital to brands and ultimately to business and therefore the economy.
The way it is conducted is currently out of step with consumer reality and it is too important to leave it unreformed.
The Enders report is a vital step on the road but advertisers should act now. The audience isn’t waiting.