[Podcast] Episode 6: Industry/TV What changes have we seen in the last 12 months?

Creativity is significant in shaping product offerings and brand stories, but there’s a delicate balance between brand-building and direct response tactics.

In our latest episode, we explore the importance of targeted audience segmentation, efficient allocation of resources, and the invaluable role of ARMalytics in making data-driven decisions.

Additionally, we explore lead harvesting techniques, strategically leveraging PPC campaigns to capitalise on consumer interest. We stress the importance of seamless channel alignment to optimise conversion potential.

Watch the full episode or read the blog below.

The Changing Landscape of the TV Industry: An Insider’s Perspective

The State of Traditional TV in 2023

2023 has been a particularly challenging year for traditional broadcasters in the TV space. Caroline McCall, the CEO of ITV, called it the “worst advertising recession since 2008”. Earlier in the year, Channel 4 announced 200 redundancies. This turmoil reflects significant shifts in the industry.

Viewing Figures and Revenue

As we move further into 2024, we’ve gained better insights into last year’s viewing figures and advertising revenues. Overall, linear TV saw revenue drops between 8% and 12%. ITV and Channel 4 experienced some of the largest declines, while Sky was somewhat cushioned from that by Premier League football.

Looking ahead, 2024 appears slightly more positive with expected growth of around 1-2%, though this won’t fully compensate for the declines in 2023. Viewing figures for linear TV continue to drop, particularly for Channel 4 and ITV. Channel 4 saw a 7% decline in adult viewing and over 16% in the 16-34 age group. Now, we see that viewing is dropping from a linear perspective, but we are seeing that move to more digital services.

Shifting Towards Digital Services

With the decline in linear TV, there’s a notable shift towards digital services like broadcast VOD (BVOD) and subscription VOD (SVOD). Platforms such as ITVX, Channel 4’s All 4, Sky OnDemand, and others are gaining traction. According to IPA touchpoints data, 7-9% of the average adult’s viewing time is now spent on these digital services.

Investment Challenges for Traditional Broadcasters

Traditional broadcasters face difficulties in investing in new quality content due to revenue declines. Competing with American giants like Netflix and Amazon Prime (which have large budgets for new productions consistently) is particularly challenging. Channel 4 faced criticism for cutting back on new content investment, opting instead for more repeats. However, successful productions like ITV1’s “Mr. Bates vs. the Post Office” earlier this year, demonstrate there’s still strong demand for compelling content from traditional broadcasters.

The Role of Subscription VOD Services

Most households now subscribe to at least one SVOD service. Nearly 60% of UK homes have Netflix, around 45% have Amazon Prime, and Disney+ is also growing with approximately 7.6 million subscribers. However, the cost-of-living crisis makes it difficult for consumers to maintain multiple subscriptions. To mitigate that affordability issue, Netflix and Amazon have introduced ad-supported services. While Netflix’s ad-supported launch faced challenge (lower than expected viewer uptake and difficulties delivering ad campaigns) it’s a step towards making these services more accessible. The investment required for testing on Netflix’s platform remains high, with some campaigns needing upwards of £500,000.

The Fragmented CTV Market

The CTV market is large and fragmented, encompassing BVOD, YouTube, Amazon Prime, to name a few. This fragmentation presents challenges for media planners in achieving continuity and consistency across formats, platforms, and measurement. When it comes to measuring incremental reach across linear TV and across BVOD, there’s definitely a lot of developments happening, one example being CFlight the new BARB scheme. However, advertisers should approach CTV with caution. While linear TV continues to perform well (especially for older audiences), younger viewers are increasingly turning to VOD and CTV. Advertisers might find value in BVOD platforms like All 4 and ITVX, which offer clearer targeting and pricing.

The Potential of Amazon Prime’s Ad-Supported Service

A significant development for 2024 is Amazon Prime’s move to include advertising by default. This change will create numerous advertising opportunities, and we are closely monitoring this development to understand its implications.

The Enduring Value of Linear TV

Despite the rise of VOD, linear TV remains valuable. Its measurement and optimisation capabilities, supported by BARB’s gold standard data and our in-house tools like Armalytics, are currently superior to those of VOD. With that, we can measure spot-by-spot level, and get some really good and fast insights, and we are able to optimise spot-by-spot to those insights. Alongside that, its high engagement level means it’s still a great way to get an audience’s attention. Lastly, linear TV also tends to be more cost-effective, maintaining its importance in advertising plans.

Conclusion

Though the TV market is undergoing significant changes (with both challenges and opportunities) at All Response, we are always keeping an eye on any developments or opportunities so that we can always stay ahead. If you have any questions or need further information, please reach out to our client teams or marketing team.

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