It’s coming up to two years now since the Australian TV market saw the beginnings of probably the most significant shift in its ‘once-upon-a-time’ consistent track record of audience delivery.
With the first half of 2016 viewing now collated (for the most part anyway, at the time of writing), it’s fairly clear to see that 2015’s tough times were not just a blip on the TV radar. This year, FTA audiences have continued to slide – albeit to a lesser extent than 2015, subscriptions for the likes of Netflix / Stan / Presto continue to grow, and Australia is still the global #1 pirate of Game of Thrones.
But you know what? Whilst my friends and colleagues in TV land might disagree, I actually see this structural change in market as one of the most positive to impact the industry since the birth of the internet.
Here’s why:
Change drives change:
Looking back at 2015, I think it’s fair to say that the Metro FTA TV market as a whole had not advanced for quite some time. We were still penned into an outdated trading model (fixed inventory), the idea of working to deliverable CPM was laughable, we had hours and hours of the same stripped reality programming viewers had seen for years, and Catch Up TV was just buffering quietly in the corner.
But nothing motivates a sales team like falling revenues.
Full Year 2015 SMI data reported that total media spend was +4.8%, however TV remained more or less flat (+0.2%) – therefore, relative to the market overall, TV revenues declined.
Cue the 2016 network upfronts, and we saw networks Seven & Nine embrace the changing landscape more so than ever before; both Seven & Nine launched a live streaming service and began placing a true focus on their digital assets, seriously revamping their ‘screens’ offering. Nine conducted a major marketing overhaul and became a ‘branded house, not a house of brands’, to which Seven responded in kind with their ‘Everywhere’ proposition.
All three networks are now gearing up to trade programmatically in 2017, CPM deals are coming to the table, and there are calls from Nine for a single industry trading hub (yes please), not to mention the raft of new programming that has hit our screens this year.
Furthermore, early in 2016 we saw the launch of ThinkTV, which heralds a level of collaboration across the FTA TV market never before seen in this country.
Change has indeed arrived; anyone sounding the death knell of FTA TV is most certainly doing so prematurely, and in my opinion, foolishly.
Change drives opportunity:
With overall ad spend increasing but TV seemingly still in the bad books with advertisers, other media channels have finally had the chance to take on the behemoth that is the $3bn TV ad spend.
The radio networks have significantly upped their game over the last few years; gone are the days of straight spot buys.
Now we create strategically lead ecosystems that live on and off air, using radio networks talent & extensive range of assets to drive integrated campaigns, delivering to a range of communication & business objectives. The result according to SMI was a +7.8% lift in revenue across 2015, and a further 6% increase across Jan – May 2016.
Outdoor have been aggressively upgrading from static to digital panels, lowering the production & install barriers to entry of old, and opening up the market to new entrants.
We can now run seamless interactive campaigns, combining the power of outdoor with mobile to deliver exceptional results for the savvy advertiser, and I’d argue the level of creativity seen across outdoor is the highest it’s ever been.
Furthermore, the rate and scale of digitisation in OOH is creating huge advantages for brands, that are now able to make the most of the increased flexibility and creative opportunities this offers. Whilst automated buying and true algorithmic ‘programmatic’ are still some distance in the future for OOH, this is a big step forwards.
Similarly to radio, the result can be seen through SMI, with 2015 revenues finishing +16.2% and Jan – May 2016 sitting at +14%.
News Ltd & Fairfax, who were arguably Australia’s first revenue victims to the rise of digital, have ramped up their video, digital, programmatic & content offerings to the point where 23% & 33% of their revenues (respectively) were driven by digital in 2015 – up from 18% & 29% in 2014. Granted their overall revenues have still declined (driven by their more traditional divisions) but this diversification of revenue streams means they should be able to stem this decline as they operate more and more across a range of assets.
Last but by no means least, we have seen a dramatic increase in the level of video running online, with a +33% increase in spend into online video across 2015. Sure the base volume is relatively small, but the trend is there for all to see.
So what does it all mean?
At the risk of sounding trite, the old adage of ‘pressure makes diamonds’ has never been more apt.
Faced with obvious challenges, TV has been forced to do better; faced with a moment of unprecedented opportunity, other channels have more than risen to the occasion.
The result is better work across the board, which can only be good news.
By Carat Melbourne head of investment Paul Wilkinson