TV is changing, but are the broadcasters falling behind?

The yearly TV deals are being finalised, and the murmurings of discontent are louder than ever. It is time broadcasters came up with a new model for the digital world. By Charlie Makin

Agencies are busily caught up in the annual round of television negotiations, frantically seeking out the best deals for themselves and their clients. Yet while advertisers continue to clamour for airtime, no one is sure what will happen to TV advertising.

It is almost impossible to get a clear perspective. There has been much commentary on the potential death or survival of the 30-second ad, while brands such as Heineken have declared they are turning their backs on the traditional TV model. The industry’s old guard want us to believe that the 30-second spot remains the way forward, yet this attitude could prove to be complacent. The TV industry needs to change – and rapidly – if it is to fulfil the needs of its most important stakeholders/ advertisers.

Sir Martin Sorrell recently forecast two paces of advertising growth: rapid growth in digital media and slow growth in traditional media. TV has the opportunity to be part of the digital future, but the industry needs to evolve if it is to compete effectively. The model that has underpinned the ad industry for the past 50 years won’t safeguard it for the next ten.

I don’t underestimate the power of the medium. There are many recent instances of advertising that has delivered success – most notably in the recovery of Marks & Spencer – but the industry needs a wake-up call: too many practices are antiquated.

Viewing habits are changing; high-value consumers watch less TV and are even less predictable in what they watch. ITV’s 16- to 24-year-old audience is down by 25 per cent in five years. Why? Possibly because too much programming is lazy, repetitive and uninspiring. Advertisers must pressurise broadcasters to innovate, rather than churning out the same old formats. Last year, 80 “reality” shows aired in the UK and earlier this year John Birt criticised the “tabloidisation” of television. He’s right – and it’s turning viewers off.

No one has worked out how TV will be funded in the future. Content delivery via broadband is a reality and more homes will eventually have broadband than satellite. Broadband is now in 8.1 million homes, with 25,000 new customers a week. The BBC is testing broadband broadcasting in 5,000 homes and last week BBC2 controller Roly Keating announced plans to air BBC2 via broadband from next year. The consequence is further fragmentation. Yet the ad industry has not resolved how to attach commercial messages in an unregulated market and make it accountable.

There are a number of possible models, but the issue is whether consumers will use their increased control over viewing to avoid advertising. It’s imperative that we develop a model that is attractive to both advertisers and consumers.

Unreasonably long TV booking deadlines remain a problem and are increasingly a barrier to entry for fast-moving businesses. The advance booking deadlines that trigger maximum discount are still eight weeks prior to transmission. Emerging media such as online and mobile allow almost immediate access; committing to TV months ahead is no longer economically viable for many advertisers.

Moreover, developing advertisements themselves is often slow and expensive. It was once a rule of thumb that ten per cent of a media budget was spent on production – fine when there were just two channels and airtime cost &£1m a month. It doesn’t any more, and the costs of high-quality production can be prohibitive. The commercial needs of many advertisers dictate faster access to consumers: digital media provide this. The development of digital technology should mean high-grade creative work reaches the screen fast and cheaply.

There are many executions that deserve plaudits, yet for every Honda “Cog”, there are increasing numbers of Crazy Frogs. Perversely, the explosion of availability and opportunity has proved a disincentive to improve standards. This is certainly no good for an industry threatened by personal video recorders. As PVRs fall in price, they will become part of everyday life – and the high-value consumers are likely to be the avid avoiders. There is a dangerous and prevailing complacency across the industry about PVRs. Advertisers need to devise new ways to engage consumers, yet that doesn’t mean better ads

A key reason for PVRs’ popularity is that break-lengths on some channels can be over four minutes. No wonder some advertisers feel their 30-second slot isn’t working – viewing across some of these breaks can vary by 30 per cent. Broadcasters must strike a balance between programmes and ad breaks to ensure viewer involvement and advertiser stand out.

There is little research on the real value of TV and how clients should use it in the future. McKinsey suggests that in ten years, TV could be 35 per cent as effective as it was in 1990. Admittedly this is based on US data, but it’s a damning view from a company that is likely to have the ear of advertisers’ senior management. If the best adland can say is advertising must become more like art, we should pack up and go home.

TV is not dead, but it’s under pressure to perform. And the greatest threat it faces is complacency.

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