Is this the beginning of the end for TV?
TV is in turmoil if the results are anything to go by, but it’s spending too much time battling digital, writes Sabri Suby, founder of digital agency King Kong.
If you invest in TV in Australia in any way, shape or form, be it content production, advertising spend, or as an employee of one of the networks, this has to be a troubling time to some extent. For those in competition with TV, this is not something to gloat about, but hard questions have to be asked and reality has to be admitted to. That is, TV in general is in trouble, and there doesn’t seem to be an action plan.
Let’s be frank, Network 10 is having to be bailed out and rescued from drowning by US giant CBS, while the Seven Network has just reported extremely weak figures off the back of what could only be called a period of turmoil for its reputation. Meanwhile, streaming media is diluting the effect TV advertising once had.
While that should be great for flaming the fire of competition, the weakened networks aren’t in a position to compete at the moment. In the meantime, digital media is providing a bigger challenge than ever before for advertiser spend.
According to studies from Zenith and eMarketer, digital ad spend is set to overtake TV for the first time in 2017. The figures showed that global digital ad spend would hit US$205 billion while TV would take in US$192 billion. That digital figure accounts for over 36% of all ad spend.
The story is the same in Australia. eMarketer predicts that digital ad spend will hit $6.18 billion or 54% of all ad spend. TV, by comparison, will sit on just $3.3 billion. The writing has been on the wall for some time now, but reality has now struck and unfortunately some of the TV networks who should be responding with the most vigour are not in a position to do so, and don’t look like they will be in the near future either.
Digital is the way forward. It provides a multitude of execution options across almost every conceivable target audience, while it also provides significantly more granular ROI than any other medium. You can also market in real-time and take into account cold, warm and hot traffic.
The TV industry will point to the fact that digital growth is in decline. And it is, there is no denying that. But that will always be the case once you have taken top spot. You can increase your lead, of course, but the rate of increase will gradually begin to lessen as the gap becomes wider and wider. 20% YOY growth becomes 17% growth and this year is expected to be 13%. That’s not as important as the fact that the gap will continue to widen now, as the 13% growth is still greater than any of the other growth figures of competing sectors.
But here is where I may cross over to the opponent’s side just a little bit. After all, it’s good to have strong competition. One of the channels I built my business with, was – believe it or not – radio. It’s as traditional a medium as you can possibly get.
I used radio spots to reach a much older demographic that had built their businesses using traditional media, and this was a medium where they were. I used the medium to move these prospects online and then kept the relationship going there.
Radio and out-of-home are doing what vinyl began to do many years ago. They are reinventing themselves and sticking to a core set of values which is serving them well. They understand inherently what they can and can’t do and can communicate this to the industry well.
TV on the other hand spent much of last year battling the naysayers by pointing out how its ROI is comparable to, or better than, digital. Simply search ‘TV better value than digital’ and you will find a number of them, not least this one from the ABC in America.
A well-crafted argument, but I can’t help but think that time would be better spent working on the business directly. After all, many of these TV networks have large digital components that are very successful. So why fight against yourself?
This is not the death of TV. TV absolutely has its place. But this is the death of TV as king – that will never happen again. Digital has overhauled TV, and the gap is insurmountable.
So here is a tip to the TV industry: forget about competing with digital. Do what you do well and get on with it. Digital is doing just that.
Sabri Suby is the founder and head of growth at King Kong, a digital agency.
Australian FTA blew its chance to become a world leader and unsurpassed advertising medium when it refused to include smart-card/chip technology in specifications for digital conversion c2002. It would have offered a 100% secure voting platform (there’s $120m saving to the nation and larger response ratio already) the ability to store an utilise medical records, book travel, gamble, and receive personally targeted ads…. the scope and potential was huge and, by being relatively late into digital, we were the only “advanced” country where it was feasible to introduce the technology into every new TV hitting the market… but one Network vetoed the idea.
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Most FTA stations are self defeating – the number of commercial breaks and promotions have gone beyond the point of distraction for a lot of viewers – particularly the sector of audience that view their programs from sources such as ad free Netflix. Very much a personal viewpoint from one that views the latter and mostly catch up (less promos).
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Why aren’t TV audiences listening to Ritson and watching TV and reading the Sunday paper like he does!?
It defies belief and boils my blood!
Bloody people!
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So long as advertiser funded TV provides value for money for investors, measured in the behavioural change of its consumers, it will always survive. In many cases, the change that digital has created is to move advertiser funded TV from a ‘need’ medium to a ‘want’ medium. Many of the TV companies in many parts of the world however refuse to recognize this. Whilst it is generally accepted that there are obvious targeting benefits on line provides, one of the main advantages that is so often over looked that is front and centre in every other business, is the ease of doing business. So many TV networks are still holding on to archaic trading methods that don’t allow technology to bring about far more efficient trading for both buyer and seller. Until the networks realise that the cost of doing business is factored into the buyers (agencies and advertisers) cost evaluation, the only outcome must be increased pressure on TV pricing and in a ‘want’ environment that can only increase pressure on revenue.
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@Mal. A great point raised. It isnt the technology disrupting these traditional TV stations, it is themselves. Viewers love quality. It is a joke, how many ad breaks there are on FTA TV. Imagine if a channel announced a relatively new movie and it was only going to have one ad break at 8.30pm. Within that ad break there would be a hidden character, which if users spotted and completed a riddle on the channels website and then submitted a competition entry, they might win a car… Does that seem far fetched? Well you could watch a movie, pretty much without distraction, also enter for the chance to win a car and advertisers would know that viewers would be engaged in the ad break – win, win, win.
C’mon FTA!!!!!!!! Think outside the box! User first!!!!
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TV dying again, ho hum. These predictions, generally from folk in the ‘Digital’ realm with vested intersts, have been going on for a decade or more.
It’s still alive & will be in another decade & the decade after that.
Frankly this prediction has become boring.
So doomsayers, I challenge you to place a predicted time on the demise of TV. In fact I’d be willing to run a book on it, with very generous odds of course.
Suspect my offer shall be ignored!
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The best screen available will always be the most compelling option for video and TV is here to stay for a long, long time yet but that large flat screen in most people’s house is already being taken over by digital players. TV will live on but the current FTA companies may not.
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21st century TV is about video content distribution across many platforms. The FTA networks are copping their karma for believing Ozzie viewers would accept their dated model for so long.
Will FTA survive – of course it will – just as radio and cinema did with the introduction of TV. But they will have to substantially reinvent themselves and it looks like its going to take an injection of global expertise and competition to get them there. Welcome CBS!
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Chill…
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Where TV is failing is that it can’t match the reach of some digital platforms which are just so brilliant that they reach more young people than live in Australia.
C’mon! Why settle for 90% reach when others are around 140%. Just because it is an impossibility shouldn’t deter you or dampen your enthusiasm!
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As noted by Captain Oblivious this is about the death of FTA as the supreme attention owner, not TV screens.
Bill Gates famously said “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”
Word.
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worked in FTA for a long time. The debate as to the demise of the medium goes back decades and I mean decades. Like all things people have views on matters and express them on sites like this. I can recall asking the chief engineer of the network I worked at the time, a brilliant man what would happen between Betamax and VHS what would survive?. Without a flinch he said VHS would never make it never. I think readers will get the drift.
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Even cat videos will be disintermediated over time. Your gravy train too will come to the end of the line one day; and probably a lot sooner than you realise.
Great stories, well told– however distributed– will always be sought after.
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Such are the fruits of deregulation. Yes, TV advertising used to be regulated! Those regulations saved the channels from themselves. Then they were abolished. The networks have since proved that they could not be trusted to operate without public oversight.
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What does ‘digital’ actually mean in the context of this article? Placing ads on Google and Facebook? Someone has to make content though as cat videos and your friends’ FB posts only have so much appeal – and the organisations that have been doing that for 50 years in Australia are largely the free to air networks. They actually are already ‘digital’ and they’re only going further and further into new forms of delivery and platforms. The traditional free to air terrestrial delivery oligopoly is also still there, and there’s still a very big chunk of life in that old dog yet.
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