Is TV approaching a tipping point for reach?
by Ebiquity Marketing
Thursday, January 31, 2019
From the advent of commercial television in the middle of the 20th century – late 1930s in the US, mid 1950s in the UK – TV quickly established itself as the dominant advertising medium. Brands looking to reach mass audiences at scale made TV the go-to medium of choice for decades. And although digital media have been disrupting the marketing landscape for almost 20 years, TV today still remains the safest bet for building reach, delivering ROI, and generating profit at scale. At the start of 2018, Ebiquity benchmarks showed that TV still commanded an ROI advantage of approximately 40% over other media lines. But the question is: for how long?
Today we’ve published a new, evidence-based assessment of what’s happening to TV viewing and how this will shape the effectiveness of TV advertising in the medium-term future; the next three-to-five years. Our report – TV at the Tipping Point? Looking forward to 2022 – suggests that TV may no longer be the reliable route to reach it has been for so long. The market is approaching a tipping point, where audiences are shrinking and rising costs are threatening the primacy of linear live TV in delivering a high ROI. Our study is based on changes to TV advertising and viewer behaviour in the UK, but we believe the findings have global resonance and significance.
Traditional commercial broadcasters have a mixed funding model – through ad sales, content, and subscription. But the businesses making the biggest dent in linear TV viewing are funded by subscription and often carry no advertising. Netflix, Amazon Prime, and other streaming services are changing the landscape fundamentally and forever. Almost 80% of US streaming video users are weekly Netflix users, 70% in the UK, and high-50s to mid-70s percent in most other major markets. Netflix now claims more users in the UK (~10m,) than Sky satellite TV subscribers (~9.6m).
We have detected new viewing behaviour in all major viewing demographics. We observed them first and most strongly among 16-34 year-olds. But they’re also evident in other key audiences, including ABC1 Adults, and Housepersons with Children. The data from 2018 suggest an acceleration of these recent trends.
Among the key findings of our report are:
- TV’s supply of 16-34s fell dramatically 2013-2018. There are 55% fewer 16-17s watching TV today versus 2013, but viewership is down a third-to-a-half across all subsets of 16-34s.
- Changes are strongest for 16-34s, but older viewers are deserting linear TV too. As younger viewers age and become more economically powerful, they take viewing habits with them.
- As a result of these changes in viewing behaviour, it will become harder and harder – and prohibitively expensive – to reach mass audiences at scale using TV.
- TV will lose its ROI advantage at some point between now and 2022.
Although the changes in behaviour and the structure of the marketplace are profound, all is not lost for advertisers. We’re don’t recommend that brands should stop investing in linear TV unless and until they have real evidence that this is the right thing to do. For many brands, linear TV is still likely to be the most profitable advertising media line for years to come. On a practical level, we recommend that brands should do the following:
- Consider investing in campaigns in terms of reach rather than weight of ratings.
- Consider more, lighter-weight campaigns over fewer, expensive, heavyweight campaigns.
- Diversify their approach to audio-visual advertising – investing more in broadcaster video on demand and online video – and not paying a premium for non-linear TV unless it outperforms linear TV for reach or targeting.
Our main message for advertisers is not to panic. They need to be aware of the seismic shifts taking place and already having impact in the TV market and adjust their media and marketing strategies accordingly. But consumers will continue to buy products, and competitors need to navigate the same headwinds. We believe that it is the brands that adapt to the changes in the marketplace – both the media available and consumer behaviour – that will win out in the long term.
Ebiquity Group Chief Executive Michael Karg will be presenting the key findings from the report in his opening address to the 2019 Mediatel conference, The Future of Brands, on 7 February 2019. The event will be held at Nomura in the City of London. More details here.
Andrew Challier is one of five authors of TV at the Tipping Point, joined by Simon Cross and Martin Radford for Ebiquity Media, Nic Pietersma from Analytics, Christian Polman, Chief Strategy Officer.