To TV’s detractors, Ebiquity’s recent report ‘TV at the Tipping Point’ provides more evidence of the medium’s impending and much heralded demise. Scratch beneath the surface though, and it’s not so clear cut.
Let’s rewind to the start of last year. Ebiquity and Gain Theory had just released their award-winning report ‘Profit Ability: The Business Case for Advertising’, which confirmed that TV is by far and away the safest and most profitable form of advertising in both the short and long term. Knowing this, the headlines that accompany this new report seem surprising – Ebiquity has completely changed its tune in a very short space of time. TV at the Tipping Point can be summarised in 3 key points:
- Linear TV’s reach and viewing time is declining for all audiences, particularly 16-34s
- This will lead to inflation, both in terms of cost-per-thousand and cost-per-reach-point
- In a worst-case scenario, TV will lose it’s ‘ROI advantage’ over other media channels by 2022
It is indisputable that linear TV audiences are falling. Over the last five years, commercial TV impacts have decreased by 7% for adults, and by nearly a third for 16-34 year olds. This is driven by a combination of two factors: fewer people are watching linear TV in any given period, and when they do, they are watching less of it. However, it has been pointed out that focusing on these five years of decline conveniently side-steps the fact they came off the back of four consecutive years of strong growth – and the fact that 7% more adults watched TV in the UK in 2018 than in 2008.
Regardless, there has certainly been a change in viewing behaviour over the last five years that does not look good for linear TV. Scary stuff for brands that rely on linear TV alone to deliver their video reach. But this ignores one crucial point: very few brands rely on linear TV alone to deliver video reach these days. If you consider Broadcaster VOD and premium online-video to be an extension of television, both of which are increasingly viewed on connected TV screens, then the reduction in viewing is almost entirely negated. BVOD viewing time has more than doubled in the last three years, and Thinkbox makes the case that spending £1m on an 80:20 combination of TV and BVOD will deliver the same 16-34 adult reach as it did 10 years ago.
Ebiquity’s report also makes several questionable assumptions. First, that falling impacts won’t be balanced by reduced ad spend in these uncertain economic times, thus slowing the rate of inflation. Second, that viewing habits don’t change as people age, and third, that other media channels will maintain their ROI positions – which is particularly dubious when you consider falling print circulations and the myriad of challenges facing digital advertising. Finally, Ebiquity’s report uses the US as an indicator of trends we might see in the UK, which overlooks the vast differences between the two markets. US linear TV is excessively commercialised, which has accelerated the rate at which viewers cut-the-cord in favour of subscription VOD services like Netflix. Add to that the multiple timezones that nullify the social-media connectedness provided by live TV moments here in the UK, and you have a very different picture.
There are also numerous industry experts who are confident that Netflix will eventually move to some form of ad-supported model. Once Netflix has captured enough market share with their debt-leveraged investment in original content, they will have to start turning a profit. To do this, they have two obvious options: significantly increase the subscription fee or generate additional revenue through advertising. If they choose the second option, advertisers could have more premium video inventory to play with than ever before.
In fairness to Ebiquity, they do end their report by reiterating that it’s very much a worst-case scenario forecast, and that advertisers shouldn’t panic – “for most brands, linear TV is still likely to be the most profitable advertising media line”. It’s no surprise that news outlets have jumped on the report to write more-doom-and-gloom headlines that generate lots of clicks, but the outlook for TV is far less certain. This isn’t the first time we’ve heard TV is dying, and it certainly won’t be the last, but let’s be clear: TV is not dead. Long live TV.
By George MacKean, AV Manager