Falling TV audiences aren’t the problem, fixed inventory is
As television audiences decline Carat’s Paul Wilkinson asks if the problem is not so much falling audiences but rather the inventory model upon which free-to-air television is bought.
Ok, let’s not beat about the bush, let’s rip off the plaster and talk honestly for a moment; TV viewing is down.
There you go. I said it. Somehow I feel better for saying it. Phew!
2014 full year consolidated average viewing for Australia’s commercial TV networks in metro areas (inclusive of SBS & STV) show a 4% drop in overall viewing against Total People*, 7.4 per cent for people aged 25-49* and a whopping 14 per cent for people aged 13-24* as compared with 2011.
In fact the only age range maintaining average viewers appears to be those aged 50+ however given the number of People 50+ in Australia has increased by 489,000 since 2011** this suggests that the average monthly reach provided by TV in the last 4 years has fallen by 8.7 per cent (or 1.3 percent pts).
So what’s going on?
Well, rocket science, it is not: the rise and rise of online video viewing is taking its toll.
It’s hardly surprising really, given that Catch Up TV sites in Australia have quadrupled in popularity in the last 3 years*** and with the advent of streaming services such as Stan, Presto & US giant Netflix hitting the online waves, the impact on traditional TV is sure to increase further still.
Already we hear reports that over 200,000 Australian’s are circumventing cyber borders and accessing US Netflix content ‘through the backdoor’ via VPN’s and that’s based on an Australian marketing budget of exactly $0.
What this actually suggests is not that people are watching less content – they are actually watching the same amount, it’s simply that their viewing behaviour is changing.
They are moving away from the TV set and watching content elsewhere.
Again, this is not new news.
In contrast, appetite amongst advertisers for the good ol’ fashioned telly box appears un-phased.
SMI data for 2014 shows that, excluding SEM, 49.8 per cent of overall advertising dollars went into TV – largely unchanged since 2007 when it sat at 49.9 per cent.
And why is that? Well it’s quite simple – like it or loathe it: TV works.
But TV’s effectiveness was never in doubt.
The problem, as I see it, is the fixed inventory model by which we trade our FTA airtime, which is ultimately responsible for ongoing, industry wide, campaign shortfalls.
Let me explain my point: at this stage we buy a spot, at a fixed rate, in the hope that we will reach the audience we are targeting. If a programme fails to perform, more often than not, there is no airtime availability to fill the audience gap left.
And yes, it’s completely fair to say that should the reverse be true, and a programme out performs expectation, we do not pay back those over deliveries.
But the issue there is we can’t, because we can’t cancel spots out of the month, because cancelling spots means cancelling money.
What we need, dare I say it, is to move to a fluid, demand and supply trading model.
We need a model whereby we truly buy an audience, not a spot.
A model where we work to a CPM based on a specified target audience in much the same way we already buy online content.
Meaning, if a programme over delivers it’s expected audience, it is ‘worth’ more and we are able remove activity accordingly in order to remain within our budgetary confines.
Conversely, if it under performs it is ‘worth’ less and we are able to add activity to make up for shortfalls, and maintain both our audience targets & committed budgets.
This suggestion is not without its barriers: it means overhauling our entire free-to-air trading model, re-educating our buyers, re-educating our sales teams and re-building our tracking and buying systems.
MCN are already tackling this: beginning in March they are moving to such a trading model.
But until this is addressed with the free-to-air networks where the bulk of our spend sits, I foresee that the issues of delivery will continue to increase as audiences decline.
And as shortfalls increase, so will advertisers need and desire to move money into alternative media.
But by then, it may well be too late.
Paul Wilkinson is group investment director at Carat
*Oztam Consolidated Data, full year total viewers, all day.
** Oztam data, P50+ Potential 2011 vs 2015
***2014 Experian Report: “Catch Up TV Insights”
Great article Paul.
The real interesting point to note is this is exactly how TV was traded in the 80s when I worked at Thames TV in London.
Deals were done at a volume and share commitment based level against what was known as station average price, calculated as a CPM.
The inventory was still fixed in terms of the amount of commercial minutes, but rates were set by market demand due to published ratecards with up to 30 levels. TV buyers could buy spots even on day of transmission by simply paying a higher level on the ratecard. If you wanted to buy a spot and guarantee it stayed there you simply paid a premium for that spot.
Then your schedule was adjusted through negotiations between buyer and seller based on delivering the deal vs average station price. The key piece of information in the equation was being able to predict the audience a) for each spot, and b) for your overall schedule, so that you delivered the reach & frequency objectives set by the media planner.
In those days we had only two commercial channels but the country was divided into 14 separate geographic markets with airtime traded on a market by market basis. London was divided into weekdays (Thames) and weekends (LWT), and trust me the rivalry between each sales team was far more aggressive than the cosy rivalry between the networks here.
When it came to auditing it was simple. Good buyers delivered on the usual campaign objectives – TARPS, WEEKLY STRIKE RATES, R& F GOALS, PROGRAMME QUALITY, ETC – and price was audited a) against your deal, and b) against the pool of other buyers. Good buyers who consistently performed well against these metric got paid more or were poached. Bad buyers became sellers, and vice versa.
Sigh…how i miss those good old days. Ask any of the Poms out here, Whitey, Wristy Wright, Mal Dale, Gary Hardwick, Chris Walton, Greety – the list is endless. Have I missed anything boys? Oh, I forgot, we didn’t have mobiles and we went to the pub for lunch and after work most days, usually paid for the the TV networks.
i wonder if a back to the future approach could work here?
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“There you go. I said it. Somehow I feel better for saying it. Phew!”
Your industry’s in a ton of trouble if an obvious fact from the 90s is this hard to articulate.
Here’s a new “fact”, 400 million people are using ad-blockers. Many, many more access torrents. Don’t have the stats for Australia, but in my extended social circles adblock usage and file-sharing runs at about 90 per cent.
Time for a new advertising dynamic based on mutual respect, because the old model of deceiving the crap out of your audience has earned nothing but disdain and led to the modern phenomenon of entire families (such as mine) enjoying all their digital content blissfully ad free.
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@jack – you know this is a media and marketing website?
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Hey Jack,
In the past 30 years the most effective campaigns (i.e. those that sold the most stuff) have had TV at their core.
In the past 2 years my team has executed our two most successful campaigns in the history of the business, and guess what 80% of our marketing investment has been on TV.
If you read the Effies guide to winning cases, most of them have TV as their core medium.
Good on you for exercising your freedom of choice (to potentially break the law, depending on how you download all your content), but answer this question, if you shut out all advertising, how do you know what stuff or brands to buy?
That wasn’t hard to articulate. Neither was my comment above. Given your love of audio visual content you’re probably a visual learner. Would you like me to draw you a picture of how it used to work in the 80s?
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Hi Paul,
Don’t ‘make goods’ effectively play this role? Crude I know, but still effective. Or is the issue that these ‘credits’ go to the buyer rather than the advertiser?
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Yes, and right from the beginning, a major demographic is left out of the picture, as usual: what about the stats on people who *don’t* live the The City? Yes, such creatures do exist. Indeed, more and more people are moving to rural areas: when we first moved to the country, our shire was the fastest-growing in NSW outside of Sydney proper.
The impact of the viewing habits of non-urban dwellers may be more significant than you have given thought to. When the nation made the switch to digital, many semi-rural and rural dwellers immediately experienced reception problems or lost their television signals entirely. The solution? Have a VAST antenna installed. Cost in my area is around $800. That really changes the notion of ‘free to air’.
But that’s not very expensive, the installer said to me. Really? Not everyone with a mortagage and kids in schools can justify the spend all in one hit. Nor can people on fixed budgets.
Maybe it’s a small point, but people can’t watch television if they don’t have access to it.
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Paddy – Your questions: “if you shut out all advertising, how do you know what stuff or brands to buy.”
You do realise that people also read articles, listen to friends, talk on forums, use social media and can do a lot of that with adblockers etc and still manage to make up their mind on what toothpaste to buy etc? You may want to stop thinking people are so dumb that they can only go buy things based on seeing an advert.
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Hi Scott,
Thanks for the comment.
My original comment (short essay / story) was in response to Paul’s original opinion piece, and I thought relevant due to personal experience of working in different markets in a pre-digital era.
The comment that you have tried to take issue with, was a very simplistic observation with more than a small dose of irony / sarcasm.
I am fully aware of all influences on ultimate purchase decision, including word of mouth, catalogues, direct mail (soft and hard versions), just seeing the product in use (football boots), on my favourite team’s jumper (our national, and the world’s biggest airline – not the same by the way), even down to the message at eye level and arm’s length at point of sale – the price promotion.
As someone with a 30 year career that has covered roles in media sales, media agencies, creative agencies, my own consultancy, and now on the client side I’m happy that I’ve pretty much all bases covered.
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Aleta,
Gee, you must live in a pretty remote area to not be able to receive a TV signal. Do you have a phone line?
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Hey Scott,
Are you the same Scott Rhodie who works for the NBNCo?
If so, can I introduce you to Aleta, I think she needs your help more than I do. 🙂
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Paddy, sadly I left NBN Co two years ago (ah how time flies!) so there is nothing I can do to get Aleta some faster internet 🙁
Thanks for your response also. Was just curious as I see too many people focus on Advertising as the only solution.
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Scott, no worries.
Just goes to show how up to date I am!
Have a great weekend.
Paddy
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Article on TV viewing down
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Tosh, I’m sure Jack is aware that this is a media and marketing website, with the emphasis on marketing.
Where better to make the point that TV is crippled by being overloaded with advertising?
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I’m with Jack. Its a bit of a concern that Paul’s just noticed the TV audience decline. HUTs have been more or less in decline for years.
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