The marketing community has reached a broad consensus that TV is a singularly effective channel in both the short and long term. Denying this is like denying climate change – you’ll probably be able to find a few people who agree with you, but you won’t be in good company if you do.
There have, however, been some rumblings in recent years that the decline in traditional linear TV viewing will erode TV’s ‘ROI advantage’ for two reasons – TV will deliver reduced reach leaving portions of your audience unexposed, and TV will become more expensive due to the increased scarcity of supply. These concerns are valid, but our current predicament puts a slightly different twist on things.
Since the nation has been advised (and now required) to stay at home, we have unsurprisingly seen a huge increase in traditional TV viewing, with daily reach increasing by 7% and overall viewing up 37% year-on-year.
Add to this the significant reduction in TV ad spend which is currently forecast to be in the region of 50% down YoY for April and May, and we get an incredibly soft market. All the major saleshouses are offering significant discounts in April and May, and there’s a good chance this will continue into the Summer.
So if TV is reaching more people than it has in years and can be bought at some of the lowest prices we’ve ever seen, why wouldn’t you fill your boots? Well it’s fair to say that some sectors are simply unable to advertise in this current climate – if your brand has ceased trading (and furloughed its entire workforce) it’s probably not the right time to launch a new TV campaign. But for those organisations that are lucky enough to be operating without serious impediment, the current situation provides a wonderful opportunity.
Past evidence proves that continuing to spend on advertising during an economic downturn reaps great rewards. There are numerous studies showing how brands that do stay on-air through a recession end up in a far stronger position than their competitors that pulled the plug, and in fact increasing spend could be the smartest thing to do. This stands to reason based on what we know about excess share of voice (ESOV): outspending your share of market will eventually lead to that share of market increasing. It is easiest to maximise ESOV when TV airtime is cheap, and your competitors are going dark.
But performance clients will also have concerns about the immediate short-term return of their TV activity, particularly when maintaining cash flow is of critical importance. For direct response campaigns, it’s worth making an obvious point: when CPTs are reduced by up to 50%, performance can be 40% worse than normal and the campaign would still deliver a stronger ROI. The reduction in price for TV massively mitigates the risk of reduced response.
At this point it’s worth noting that we haven’t yet seen a significant decline in TV response rates, particularly for our charity clients. There are few possible reasons for this. Firstly, whilst many people are experiencing some form of financial hardship and overall consumer confidence has dipped, those who are still working potentially find themselves with greater disposable income now that they are saving on the likes of travel, leisure, and entertainment costs. It’s amazing how much money we all spend in pubs…
Secondly, this boom in TV viewing is helping traditionally daytime focused advertisers reach a working audience that they might not have reached before. Unique reach is vital for response campaigns, particularly for subscription products that live or die by a constant influx of new customers. The most sought-after light-TV viewers are returning to their boxes in their droves, so now is a better time than ever to speak to them.
And finally, as we touched upon in our last COVID-19 update, charities in particular have an opportunity to provide purpose for people who are struggling with their identity in these challenging times, and who want an outlet for their feelings of altruism and generosity.
Over the last couple of weeks at the Kite Factory, we have been able to help advertisers go live on TV in a matter of days with last-minute campaigns bought at a significant discount, and without any late-booking penalties. All saleshouses are also offering the option of penalty-free deferrals, which provides a safety net for advertisers who still have concerns that their trading conditions may change in the not-too-distant-future.
If creative (or lack of) might be an issue, fear not – we are in contact with numerous creative agencies that are quoting turn-around times of only two weeks, and in fact the major broadcasters are offering their own creative studios at cost value in some cases.
John Eversley, Managing Director of WPNC says they are already helping clients create responsive ads from re-purposed footage, old ads or even still images. So, if your organisation has any material at all that could be used to make an ad, they have the people, the expertise and the remote working capability to turn these projects around quickly to help shore up vital income.
The net result of these factors is that yes, whilst times are hard and you may be tempted to tighten your belt, there is actually a real opportunity to use TV to drive business performance in the short-term and brand growth in the long-term. We’d love to help make this happen, so give us a call to find out what’s possible.
By George MacKean, Investment Manager