Is TV advertising dead?

Posted 27 February 2015.

​By Scott Keddie, Chief Investment Officer – OMG New Zealand

​There is plenty of speculation and commentary that TV advertising is dying, that is if it hasn’t died already; but look a bit closer and there’s still plenty of life behind the static.

Not surprisingly, given the growth trajectory of the last few years, the incoming ad spend report compiled by ASA looks set to confirm TV as top dog in 2014, although digital will not be far behind. Having overtaken newspapers in 2014, digital ad spend will likely overtake TV in early 2015.

Indeed, 2015 is shaping up to be an interesting year and one possibly full of disruption. New Zealander’s already have access to Neon, Lightbox, Coliseum Sports Media and Quickflix, with Netflix launching in March. Consumers will have more viewing choices available to them, at a price, but the quantity and relevancy of content will play an important role in the success of these offerings up against traditional TV.

Nevertheless, traditional TV will continue to bring some key strengths to the party.

In order to continue to attract a large slice of advertising budget, the TV Networks must continue to invest in content that will appeal to mass audiences. Sport broadcast rights are hugely important to SKY TV to retain subscribers, but they also act as a delivery vehicle to inform subscribers of new content coming to SKY TV channels. Live global sporting events also attract advertising spend in the form of sponsorships, which are now largely being used to deliver content as opposed to just a logo and message association.

Local reality formats broadcasted across multiple nights are hot property across both TVNZ and Mediaworks and will go head to head for viewers in 2015. These 7:30pm formats continue to perform well for the free-to-air TV Networks and due to advertiser partnerships, can be profitable. Without advertising partner support, these programme formats most likely wouldn’t see the light of day.

Fundamentally, advertisers are starting to see a blurring in the distinction between the lead channel (TV) and the multiple alternatives that might supplant it. Television audiences, especially young and high income viewers, may be falling, but it remains a fast and relatively cost effective way to reach a mass audience, while the niche audiences of digital are still comparatively expensive and complicated to tap in to. Audiences for TV will continue to wane, and the blurring will grow greater; but the relative simplicity of TV advertising will continue to exercise a strong appeal.

One thing that’s clear, is that there will however be more emphasis and opportunities to reach audiences via multiple screens, therefore the TV Networks with OTT services will continue to find new ways to attract an audience and compete against video providers.

In terms of time spent with media measured by Roy Morgan across a week, TV is still the media channel of choice, however time spent has declined over the last 5 years by 11% (All People 18+) to 19hr31min. Time spent with Digital on the other hand has increased by 39% over the last 5 years to 17hr12min a week, surpassing Radio into 2nd spot.

In short: TV advertising isn’t dead, but it is under threat from advertisers shifting more investment into digital formats. I hope that we continue to see brand messages on TV and avenues devised to enable more brand messages. If TV ends up as simply a channel for retail messages, then TV advertising will die. Encouragingly, TV appears resilient and continues to transform.

Like all traditional media channels, TV must continue to innovate if it is to ensure the role it plays remains an important part of advertiser’s communication strategy.