How Is Brexit Affecting the AV Marketplace?
During the last UK recession, back in 2008 and 2009, people were watching more TV than ever before. People stayed in more and found viewing TV as a great money-saving initiative. It was the rise in TV viewing that contributed greatly to the deflationary market 10 years ago and those advertisers who were spending, were reaping the rewards of cost-efficient TV campaigns.
Being an optimist, I am in no way saying that there will be a recession in 2020, and it is even predicted that UK ad spend will increase by 4.9% in the UK (Zenith Global Advertising Expenditure report). However, there is much conversation that, on the flip side, TV is going to experience another year of spend decline as advertisers look to reduce their TV marketing spends, due to the uncertainty of Brexit and due to the high entry cost of TV.
The TV landscape is now in a very different place to where it was in 2008 and 2009. SVOD (subscription video on demand) services had not come to market (Netflix didn’t arrive in the UK until 2012), and BVOD (broadcast video on demand) was very much in its infancy. Therefore, while I still believe the TV market will be less inflationary in 2020, this will not be largely driven, this time round, by rising impacts in linear TV viewing. Impacts may actually slightly pick up in 2020, but we will never reach the same levels of viewing now that we have experienced in the past.
What I am very excited about is Project Dovetail finally coming to fruition in 2020 (fingers crossed). This means that we’ll have the data and viewing numbers to help prove that, while linear TV maybe showing a decline, when looking at the overall commercial TV landscape, it is actually in buoyant health. On the back of this, I would like to think advertisers would have a new energised approach to TV advertising.
TV body Thinkbox does a great job in highlighting the merits of TV and how it is far from dead and people need to stop looking at TV in just its linear format. TV has always been at the forefront for being the media that delivers fame, brand awareness and long-term brand building for clients. We are currently experiencing a change in times where short term ROI has been pushed to the front for many brands and a big piece of research in 2018 (Profit Ability: the business case for advertising), commissioned by Thinkbox, from Ebiquity and Gain Theory, found that 58% of advertising’s profit return is overlooked when ignoring the long-term and how TV, out of every medium, delivers the highest scale of return. That being said, TV does not and should not be compared directly against or in competition with online forms of marketing. In fact, taking a multi-channel approach with the same branding or campaign can further stimulate brand recognition and growth.
As an industry, we are here to help our clients understand the importance of customer lifetime value and to ensure that our plans and recommendations reflect consideration for acquisition of new customers and retention of existing ones. In order to keep our clients on course, it’s important not to panic ourselves and to hold true to what we believe and know are the facts. We have to ensure we are 100% sure on what our client’s KPIs are and truly understand the value of all our media for our clients.
We also need to be watching and scrutinising the government’s moves very closely, as in the near future, advertisers will also have more legislation to adhere to such as advertising legislation for foods that are high in fat, salt or sugar (HFSS). With a government ambition to reduce childhood obesity by half by 2030, there is renewed interest from politicians and celebrities alike to tighten up on HFSS regulations which could have huge implications on TV advertising.
Due to the nature of the UK TV market place, we can’t cap linear inflation as we would need the TV sales houses to trade in a completely different way. Everybody may be talking about TV inflation but it’s important to look at TV in its wider format and understand that TV comes in the shape of every screen that it is viewed on, using all the types of technology to distribute all TV content. We don’t have any inflation occurring across addressable TV in the form of AdSmart or any inflation across BVOD. Fewer conversations are had when it comes to inflation across the digital landscape and as TV moves more to converge with digital, I would like to think that one day, inflation in TV specifically will become a thing of the past.
Evita Salas is head of AV at Starcom