The Fundamentally Uncertain Future of The UK TV Advertising Market |
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The Fundamentally Uncertain Future of The UK TV Advertising Market

Since the introduction of television as a mass broadcast medium in the UK in the mid 1950’s the perceived wisdom within the marketing industry has been that TV advertising has always been the strongest and most persuasive form of all advertising formats. Its unique ability to combine dynamic visual and audio elements has captured huge audiences and sold products and services in vast numbers since its inception.

From its creation to the 1990’s TV advertising was limited by analogue technology to a few TV stations and finite airtime inventory. The high costs, both in terms of creative production and TV airtime meant this exclusive media was only accessible by major companies with very deep pockets and very big distribution. The TV advert format was typically always 30 seconds long and the budgets were always very high. TV was big – audiences of 15million plus were regular events for ‘peak’ programming – and the commensurate commercial results delivered were huge.

TV advertising was independently audited in terms of viewership at an early stage and regulated effectively by the government to ensure that the content was true factually – it was a marketing medium relied and trusted by both business and the consumer alike. Many brands were literally ‘born’ overnight with the use of effective 30 second TV advertising campaigns, and their saliency in many cases is retained in our psyches to this day.

The introduction in 1998 of Sky Digital turned the business model upside down in the UK with the cost of launching a TV channel on the burgeoning Sky Digital platform being 10 times less than analogue TV channels.

Now over 650 TV channels broadcast in the UK alone, but this is not necessarily good news for TV channels, agencies and brands alike. TV airtime became significantly cheaper with an abundance of new inventory to buy and far greater competition, but the quality of the programming on our TV channels deteriorated too.

As the traditional TV ‘advertising funded’ production model started to falter we have become accustomed to many TV channels with virtually no new programming content – the ratings splintered, and the audiences fell. Whilst the digital TV channel business became far easier to enter than analogue it is undoubtedly harder to grow ratings/audience without the ability to invest substantially in content. The simple favoured choice of broadcasters became to keep costs, and therefore risk, low but the inevitable outcome was stagnant or declining audiences.

Whilst on the surface UK consumers enjoy broadcast technology that is the envy of the modern world in truth the veneer of choice of TV channels is something of a mirage. This fragile commercial paradigm is now being structurally challenged by the FAANGs (Facebook, Amazon, Apple, NetFlix and Google) with all five of these technology monoliths proposing major investment in ‘original programming’ from everything from UK prized sporting broadcast rights to exclusive high-quality dramas. Without a profound brave fiscal fight back from the traditional TV broadcaster’s substantial audiences will inevitably be drawn, grown, retained then lost to these relatively new digital platforms where video will now be at their core of the propositions looking ahead.

Couple this heavyweight deep pocketed competition with a generational fundamental shift in consumption of TV content – my 17-year old son has not watched a television in years! – then something of a ‘perfect storm’ is brewing for the traditional TV advertising funded model of the TV industry as we knew it.

Recent Introductions of broadcast related technology including interactive capacity and Video on Demand have not proven to generate significant incremental revenue to plug the gap in the fall in ratings. In short, a solution to the structural problems outlined by the advent of the rise of new digital competition have yet to be adequately found from the traditional media owners.

Linear TV is still a very strong media for advertisers and consumers alike and ‘pound for pound’ versus all other media formats delivers the best results both in daytime for DRTV advertisers and for brands in all dayparts. However, unless a bold approach is taken by key broadcasters in terms of new investment in original programming the industry is facing an inevitable ‘race to the bottom’ in terms of ratings, advertising revenue and ultimately its very viable commercial future. The future is very uncertain and certainly not bright for all concerned…