Growth of BVOD and ‘circuit breaker’ programs to accelerate TV advertising spend, execs argue

Commercial television executives are predicting growth in revenue from broadcast video on demand and ‘circuit breaker’ programs, as major drivers for TV advertising spend going forward.

For fiscal year 2018, television’s total advertising revenue increased to $4.15b, up 0.5% compared to the year prior.

Total television ad revenue for FY18 was $4.15b

According to new results provided by KPMG, one of the biggest growth sectors of ad spend in television is through BVOD platforms 7Plus, 9Now, Ten play and Foxtel Now, with BVOD contributing $50m for the six months to June 30 this year – a climb of 40.5% from the year prior.

For fiscal year 2018, Nine contributed 38.6% of total revenue, just beating Seven’s 38.1%. The result marks the first time Nine has beaten Seven, since FY06. Nine also won the calendar year in February this year. Meanwhile, Ten’s FY18 share was 23.3%.

In the year prior, Seven’s share was 40.2%, Nine’s was 35.6% and Ten’s share was 24.1%.

Michael Stephenson, Nine’s chief sales officer, said there were a number of reasons for Nine’s revenue growth.

Michael Stephenson said a number of things have contributed to Nine’s growth

“[There’s] a real focus on creating marketing platforms for brands which ensures they have a greater experience when they advertise with Nine and, as a result of that, hopefully that delivers greater outcomes for business,” Stephenson said.

“We’ve doubled the amount of clients that we’ve worked with closely through Powered in the course of the last 12 months. That’s been a really important part of our business and a great focus for us. And of course, the flip side of that is how do we making trading with Nine easier.

“We’ve spent a lot of time making sure that 9Galaxy as a product is right, and we launched that to the market in January. We’ve now got a pretty significant percentage of our off-peak and multi-channel inventory going through the platform, and of course when advertisers use 9Galaxy it removes all of the heavy lifting because it is all done in an automated transaction,” he said.

Seven, with the help of the Commonwealth Games and The Winter Olympics had a strong start to the year, but now the focus is on its second half slate. For January to June 2018, Seven is leading from a revenue perspective, up to 39.91% compared to Nine’s 37.04%. Ten’s share sits on 23.04%.

Kurt Burnette, Seven’s chief revenue officer, is adamant “circuit breaker” programs, like the cricket which Seven acquired the free to air rights to earlier this year, will help deliver similar numbers in FY19. But he’s careful not to rest on his laurels.

Burnette is confident in the strategy currently in place

“In any business you need disruptors and you need things that can be circuit breakers and everyone’s had those at a particular time. Ours this year was the Winter Olympics and Commonwealth Games and I have to say that the programmers at Seven and the publicity and marketing teams have done a phenomenal job in the way that they’ve scheduled a marketing strategy for this half,” Burnette said.

“It has been a big factor in why we have turned it around and the continuation of the circuit breakers into next year. Why we believe we can repeat it again is because we’ve got the cricket from January all the way to mid February. Tests and Big Bash for the first time together on free to air are going to be able to deliver the equivalent of what the Commonwealth Games and the Winter Olympics did from an audience and a revenue perspective.”

When asked whether Seven could sustain its lead off the back of the first half, Burnette said strategies don’t always move “fast”.

The audience to date has been exactly how we would have liked it to be the growth has been strong year on year, phenomenal in fact,” he said. But, he admits, they have been growing revenue from “less than stellar numbers”, as the company flagged last year.

In July, Seven gained more traction, up 4.1 percentage points from last year’s 35.6% share to 39.7%, something Burnette is proud of. Compared to last year, Seven’s year to date ratings share is up 1.4 percentage points, from 29.7% to 31%.

“The shows that are launching over the next few weeks, Take Me Out, Dance Boss and Altogether Now, those shows have to perform as well. So again nothing we take nothing for granted and no one’s resting on their laurels or high fiving halfway through the game of the year. But you know we were feeling confident that we’re going to be delivering growth like we said we would and that then works for brands and that works for us ultimately by getting the revenue in,” he said.

“The revenue on that is going to take time because we’re selling this year into last year’s numbers were. But as we start to see the numbers build year on year we were winning the demographics, we’re winning the weeks, the short-term revenue is starting to flow.

“We can see that as we go into the back quarter of this year there’s never been a December like we’re about to see on free to air TV where all the Test and Big Bash are in there for one month.”

From Nine’s perspective, it’s the growth in BVOD which has helped explode revenues.

Pippa Leary, Nine’s commercial director for digital sales, explained: “In June, we had 48% share, and in July we will have recorded 100% year on year growth.

Pippa Leary (L) said BVOD has been a major driver

“BVOD is amazing. Everyone asks me why it’s happening – being able to put forward a brand safe, fully viewable, fraud free environment that’s got really compelling content, for a marketer, it’s kind of a dream come true.

“There is a real difference between ads seen in professionally generated content and ads seen in user-generated content,” she added.

“When you are sitting back and binging on a big screen with professionally generated content, you understand the value exchange content.”

But it’s the simple strategy first voiced by Nine CEO Hugh Marks, which Leary said has helped boost business revenues overall.

“It really comes back to Hugh [putting] a really simple strategy in place. Create great content, distribute it widely, to engage audiences and advertisers. And literally everybody through the whole company can recite that to you. What it means is we’ve been able to work really closely with the guys creating the content in Willoughby, and the way they think about it now, they don’t just think about it in terms of linear TV.”

She offered an example: “We don’t think of Love Island as a linear TV show. We think about Love Island as an entertainment brand that is distributed across platforms.”

The importance of BVOD and connected measurement, which has previously been flagged as important for growth in the sector, has been reinforced this week with the announcement of a new OzTAM database, known as Virtual Australia (VOZ).

Both Nine’s Leary and Seven’s Burnette agree this database will continue to drive revenue which comes from BVOD.

“It’s really important for TV buyers and people who want to buy those big reach audiences, to be able to see their total audience and that’s what VOZ will give you. There’s a lot of talk and unease about TV audiences are fragmenting – when you add in VPM numbers, you can see they are still big again. They are just watching at a different time of their own choosing,” Leary said.

“That really reassures buyers that they are getting the reach and that will give them a better targeting that they don’t currently get in TV.”

When combining linear TV with digital, all three commercial free to air broadcasters – Seven, Nine, and Ten – are focused on continued revenue growth for their respective companies and the sector.

“There’s a number of things happening around that [growth] and that is a flight to the facts and there’s been a lot of information in market about what is happening around media and there’s been a lot of experimentation,” said Seven’s Burnette.

“People need to see what can happen and when they see what happens they can recalibrate. You can put that down to the education of what’s happening through experimentation and seeing what happens the cause and effect and the other thing is that television is certainly proven to be brain safe. It brings trust in when you go to the brands over the last six months I think last 12 months in particular.”

Nine’s Stephenson told Mumbrella if the network kept with the plan – great content, distribution, and brand integration – it should be able to deliver long term revenue growth.

“My job and my focus is to continue to deliver long term revenue growth for our business across TV and digital. I’m a firm believer that that formal is have great content, distribute it across every platform to ultimately engage the greatest amount of audience that you can and then integrate brands into that content,” he said.

“If you’ve got those things, you can continue to grow, and we’ve got those things.”

Rod Prosser, Ten’s general manager for client revenue and partnerships, is also looking to build out its second half of the year.

“We’re continuing to invest in advertiser-friendly, engaging content. Ten has its biggest schedule of programming ever this second half with huge investments in new and existing Australian content. The advertiser response to our line-up has been phenomenal,” Prosser said in a statement to Mumbrella.

Rod Prosser is optimistic about the future of the sector

“There has also been plenty of work done around TV ROI that proves TV delivers the best ROI across all major advertising categories. An average TV campaign achieves sales revenues (ROI) of $ 1.74 per $1 invested by FMCG companies. It’s great to see advertisers realising the value TV can provide their brands.”

But overall, Prosser said the results released yesterday were a testament to the strength of TV.

“The industry has done a great job not only in diversifying across platforms, but also in creating premium content to suit these platforms,” he said.

“The strength of linear TV continues to be its ability to reach mass audiences in a brand safe, highly-integratable environment. BVOD platforms target audiences who want to choose when and where they want to watch their favourite programs and we’re seeing incredible growth in this area.”


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