Digital growth is led by old school

Some see Greg Dyke, the former director- general of the BBC who this week chairs the annual Marketing Week television conference, as an emissary from the past – a successful product of commercial terrestrial TV in its heyday rather than a herald of the future. One important element they may be overlooking in this assessment is his background in programming – which, together with marketing, another area he actively champions – will be critical to TV’s future.

Dyke’s biggest single legacy from his BBC days was probably the fostering of the Freeview digital platform. At first, the success of Freeview’s free-to-air strategy against the BSkyB platform was like salt in the wound for the commercial camp, all the more so given ITV’s previously inept attempt to perform a similar feat. Now, however, the commercial companies cannot get enough of the rare Freeview spectrum. And for good reason.

Many media buyers and analysts believe that Freeview homes will have overtaken BSkyB homes within the next couple of years (the current figures are approximately 5 million against 7.6 million). Indeed, one independent analyst, Enders, suggests that Freeview will be in nearly 80 per cent of homes by 2012, the prospective analogue switch-off date, whereas its digital satellite competitor will struggle to exceed 10 million subscribers by 2010.

Numbers are not everything, of course. Many advertisers find the pay-TV platform developed by BSkyB powerfully attractive, because it can deliver younger viewers and also a larger share of households with children.

But they certainly explain a lot: not least the land-grab of free-to-air digital spectrum by commercial broadcasters. In the past few weeks we have seen Channel 4 announce free-to-air versions of E4 and E4+1; later this year we can expect to see More 4, a factual channel aimed at older viewers. Meanwhile, ITV has bought digital media company SDN, and with it the rights to one of the six digital terrestrial multiplexes; in autumn, it is mooting the launch of a male-oriented channel, ITV4, and possibly a children’s channel.

In effect we are witnessing a kind of reverse takeover of the new digital world by the old regime. Some, such as Sky and the BBC, have evidently managed it better than others, but no one, with the possible exception of Five, is losing out. As Dyke says, the power of the established terrestrial companies’ programmes has been behind their successful colonisation of terra nova, aided by heavyweight cross-promotion.

All this has caused a rapid expansion of channel sub- branding, with families springing up where once there was only a mother brand. Herein lies one of the biggest medium-term challenges for marketing. Because, without careful management of the channel portfolio, segmentation will become fragmentation and a nasty outbreak of brand cannibalisation will be the consequence.

Longer-term, of course, there is little doubt of the outcome. Programme-makers will hold most of the cards, and much of the marketing budget; channel loyalties, on the other hand, will become increasingly blurred and difficult to retain.

Stuart Smith, Editor