Seven West Media has partially blamed the election for the decline in TV advertising and predicted the medium will see “aggressive marketing” following the establishment of Think TV earlier this year.
The network’s chief executive, Tim Worner, also claimed advertisers and buyers are “for the first time” admitting the swing away from TV has been “overdone”.
The comments came as Seven West Media reported a net profit after tax of $207.3m for the 2016 financial year. The company flagged the TV advertising market as “short” and predicted it will be “flat to down” in the next 12 months.
Speaking to investors and media, chief revenue officer Kurt Burnette said big advertisers traditionally drift away when an election is imminent.
“There was strong support as you would expect from the Government, but – and we often see this – advertisers refrained from spending, and some big categories like telcos and retail pulled off,” he said. “We can expect them to come back, but that certainly had an effect.”
ADVERTISEMENT
Worner said: “There is nothing much we can do about what has already happened. What we are concentrating on is what we can do about what is going to happen.
“For the first time advertisers and our buyers are coming out and saying they think the swing away from traditional media, particularly television, has been overdone. In tandem with that, we have seen the establishment of Think TV and you are going to see far more aggressive marketing of television as a medium in the very near future.”
Asked what impact the Olympic Games will have on advertising revenue, Worner said major sporting events are not so much about driving advertising revenue as a platform to promote its future programs.
“As I was at pains to point out, when we purchase these rights, let’s take the Olympics as an example, it’s not about the revenue that is written for the 30-second spot during the 17 days, even though I think that will be an excellent outcome for Seven West Media.
“It’s far more about the investment that we are making in our future. It’s the programs we are going to launch out of the back of this event, it’s the digital products we are going to be exposing to this audience. And there are other less tangible things like brand definition. If the subtext to the question is do we think the Olympics is worth it, then absolutely we think they are worth it.”
Burnette added that incremental advertising dollars from an event like the Olympics helps the rights holders far more than the overall market.
“We are definitely seeing a significant increase in incremental dollars but what it will do for the market is less impactful,” he said.
Meanwhile, Worner flagged closer co-operation was continuing to be discussed with its free-to-air rivals as networks look to control costs.
Worner: “It’s about the programs we are going to launch out of the back of this event”
He said talks have progressed “quite considerably” since releasing its half year results.
“We are already sharing news helicopters and we are now sharing a service for captioning,” he said. “That is significant progress when you consider the competitive environment that we have come from. We are fast-tracking discussions regarding other costs and I’d say they are significantly larger lumps of cost.”
Turning to Verizon’s acquisition of Yahoo 7, Worner said Seven West Media was “in the very early stages of any discussions with Verizon”.
“We are looking at various options that we will have under the agreement. I can’t go into specifics but each represents opportunities for Seven West Media,” he said.
“We have options and opportunities to evaluate. However, given transactions can take six to nine months to complete, it will be business as usual and Yahoo7 will charge on with maximum support from all of Seven West assets.”