Stop me if you've heard this one before, but TV in 2015 is shaping up to be like no other in Australian history.
As you may or may not know, I've been with AdNews for a grand total of three months, and in that time all sorts of people have been keen to bend my ear about how they see the future of TV in Australia – and apparently the verdict is that TV is on the way out as the dominant medium.
Of course, it wouldn't be the first time in history that sort of dire prognostication has been made about the beloved free-to-air TV players in this country.
It would be silly to say that they're about to go away, to be replaced by a plethora of online video to replace it as advertisers chase eyeballs.
YouTube turned heads when it presented an upfront-esque presentation in Sydney earlier this year, a clear indication that the online player is after the same pool of money that the TV networks typically wallow in.
Meanwhile, subscription video on demand services will further erode eyeballs. While they may not be ad supported, they may just decrease the number of viewers networks can point to when asking for more ad support.
There are even whispers that product integration dollars could make their way to SVOD players as they seek a revenue stream away from a pure subscription model.
The likes of an expanded Presto, StreamCo's Stan, and US giant Netflix are all set to hit the marketplace next year, giving TV networks an unrivalled shake for viewers.
But despite all the challenges facing the TV industry, TV still continues to be the dominant advertising platform for years to come.
As one TV executive recent told AdNews: “free is still one hell of a price point”.
Even one of the SVOD raiders have conceded the point that sometimes, all you want to do is get home, push a button and flop on the couch.
But with tastes increasingly niche and platforms increasingly diverse, TV along with other legacy media is feeling the strain on their traditional advertising structures.
What the buyers think
Media buyers, oddly enough, have been keen to play up the challenges TV face to hold onto yield in a fragmenting market.
National head of trading from Ikon Communications Bryan Magee told AdNews that while he expected TV networks would still be able to grab more money from the marketplace, that it would be harder to justify rate cards next year.
“The TV market for 2015 is going to be another tight year for the metro’s with minimal growth. For Seven and Nine it will be about maintaining what they have in terms of audience and we have already seen the rate card increases as they look to manage their yield,” Magee said.
“TV still has an important role to play but the annual rate card increases will be harder to justify as the value and efficiency of the TV spot comes under pressure.
“Just as audiences are presented with more choice than ever before, so are brands and if we can nail the measurement piece TV budgets will be under even more pressure.”
His comments echoed the theme on the buying side throughout the year.
"There's a lot more pressure on networks to increase their yield this year, and that's something we're seeing from our perspective," Carat's chief investment officer, Paul Brooks, previously told AdNews.
"You can't go and increase ads without a rationale behind it, but networks have been hard at work trying to demonstrate that it's not just TV anymore but they have a suite of solutions available."
Others have been a touch unkinder, with one buyer telling AdNews that TV networks were being “fantastical and delusional” with their rate card increases.
Of course, given the buyers are in negotiation with TV networks, it would be naïve to suggest that some of the comments in the marketplace weren't aimed at talking the market down.
The numbers
While their rhetoric may swing one way, their numbers more often than not swing another.
The odds may be stacked against TV in 2015, but it will carry on if the numbers put out from agencies have any bearing on their spending intentions.
GroupM's most recent forecast has TV's ad share in the Australian market to actually increase in 2015, after it dipped this year.
In 2013 the TV market hit $3.99 billion. Its market this year to has dipped to $3.94 billion. However, next year it has the market back up to $3.97 billion.
Meanwhile, IPG Mediabrands unit Magna Global has predicted the TV industry to be at a “tipping point”, highlighting the increasing nature of online video as cannibalising the industry.
In a recent report, it said the online video industry is expected to quadruple over the next five years and move from being a $200 million category to a $845 million category.
But the reported woes of the TV industry are hardly localised – it's happening all over if ZenithOptimedia forecasts hold true.
The international arm of the media buying agency recently released a global report which on the surface would be bullish for networks.
“Television is still by some distance the dominant advertising medium, attracting 40% of spend in 2014,” the report notes. "Television offers unparalleled capacity to build reach, and establish brand awareness and associations."
“We forecast television ad spend to grow by an average of 3% a year through to 2017.”
But there's a sting in the tail: while all growth is good growth, it's not as good as it once was.
According to the report, television's market share has grown steadily over the past three and a half year
Despite this healthy growth, television’s share of global ad spend is likely to fall back slightly over the next few years as desktop and mobile internet grow much faster.
It's grown from 29.9% in 1980, to 39.6% in 2014.
The party appears to be over.
It has forecast the market share to fall back slightly to 37.9% in 2017.
That may not seem like a huge deal, but at a time when production costs are going through the roof and networks are being challenged to produce premium content and bid for ever-increasing sports rights, flat to negative growth is troubling.
So what's the TV industry doing about it?
See here part two of our look at the challenges facing the TV market in 2015.
For more opinions:
2015 in TV land: the year yield takes over - Part Two
Why are advertisers so excited about programmatic trading?
2014 - the year of the female celebrity endorsement
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at jamesmcgrath@yaffa.com.au
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