Can Digital lure top advertisers?

With the digital age looming, advertisers must address the problems of fragmented audiences. John Shannon believes the networks will hold on to the lion’s share of ad revenue.

The expansion of digital television has inevitably generated a combination of excitement and trepidation about the future of broadcasting across Europe.

Advertisers have long been preoccupied with the question of fragmentation. How, they ask, will the hundreds of new competing stations deliver sufficient audience numbers to satisfy advertiser requirements? Even when the channels’ offers of accurate targeting is taken into account, many will remain unattractive as advertising vehicles. Without ads, the channels will be hard-pressed to find sufficient subscribers to make them viable.

A more fundamental, if less immediate, concern for advertisers is the potential of digitalisation to shift editorial power out of the hands of programmers into those of consumers.

Instead of sending out programmes according to pre-determined schedules, audiences will, theoretically, be able to retrieve programming according to their preferences. By attaching advertising to requested programming, advertisers would be able to accurately target their commercial communications. It is a scenario that provides the ultimate test of the argument that consumers would avoid ads if they had the choice.

A trial conducted by BT indicates that advertising may be more popular than critics claim.

The trial, conducted with UK broadcasters across 2,500 households, involved 40 advertisers setting up an interactive area called Adland, where consumers could choose to watch traditional commercials and access further information if they required.

Far from ignoring Adland, 90 per cent of those taking part in the trial used the site. Forty per cent visited every week and spent an average of 20 minutes per visit.

So, consumers do look at advertising if it provides them with information they require. Much of today’s advertising does successfully do this.

Whether or not all of the planned digital channels are strict in their quality control is less certain.

The recent deal between Leo Kirch’s German digital venture DF-1 and its rival CLT-Ufa suggests the television market is indeed limited. As The Economist pointed out: “One reason for Kirch’s failure may be that viewers already have plenty to watch… They are deluged with television that is ‘free’ – that is pre-paid through licence fees and cable subscription, or financed by advertising – and may be reluctant to pay for even more.”

If the European multichannel TV market develops along similar lines to its US equivalent, it’s likely that the mainstream, well-financed networks will continue to dominate and to claim most of the ad revenue. With newcomers fighting to attract limited audiences, the promise of limitless television may be harder to sustain.

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