Industry leaders are upbeat about the future of TV advertising despite declining younger audiences and the emergence of streaming giants such as Netflix and Disney+.
Ofcom’s Media Nations 2022 report, released yesterday, found younger adults (aged 16-24) now watch almost seven times less scheduled TV than those aged 65 and over and TV broadcasters' share of TV and video viewing had fallen to 59% in 2021, down from 67% in 2019, while rival streamers' viewing has remained stable at 18%.
The decline in linear TV viewing figures was not a surprise to media buyers and agency bosses.
Starcom’s head of investment, managing partner, Emma Morris, told Campaign the findings of Ofcom’s annual report reflected “adjustments to UK consumption following the nation’s embrace of the ‘new normal’”.
“What may be a little more surprising is the fact that when comparing time spent watching TV from broadcasters (including linear, recordings and on-demand), consumption across 2021 when compared with 2019 reduced by just 4%. Yes, you read that right, just 4%,” she added.
“It’s also clearly highlighted in the report that while younger audiences have returned to ‘normal’ consumption patterns, older audiences are consuming more linear TV than they were 10 years ago. While this is phenomenal, it’s influencing the average profile of the medium, but one that is thankfully offset via BVOD viewing for the benefit of advertisers needing to reach audiences aged 16-44 for example.
“BVOD consumption continues to go from strength to strength (albeit negating the need to watch anything but live events live).”
Older audiences undervalued
Carat UK chief executive Clare Chapman said although declining younger audiences were a long-term trend for linear TV, advertisers could still reach them on shows like ITV’s Love Island.
She said a positive trend identified by the report was that older generations were watching TV more than ever.
“Why is that not celebrated? This is such an underappreciated and overlooked audience. Over-55s sit on 60% of all UK disposable income, so actually, what's more interesting to me is to flip the usual script (about younger viewers watching less TV) and to go older viewers watching more of it, which is brilliant,” she said.
Chapman also believed the focus on linear “is a bit boring” because UK broadcasters were investing heavily in their BVOD offerings.
It’s a point echoed by Morris, who said: “BVOD’s performance is in total contrast to that of SVOD penetration, which appears to now be declining in totality. Disney+ and Now are the only ones to buck the trend with penetration plateauing (and both Netflix and Amazon Prime are struggling).”
The Ofcom report found that on average viewers increased the time spent watching BVOD programmes by three minutes, and 82% of people said they used a BVOD in the past six months, which is almost identical to the proportion of people who used SVODs.
SVODs impact on advertising
Another interesting development, which the report touches upon, is how the introduction of advertising on SVODs, such as Netflix and Disney+, will impact the wider TV advertising market.
Chapman said this could be an “exciting” development for advertisers as it would allow them another opportunity to reach younger audiences who, according to the Ofcom report, bypass linear TV for streaming services like Netflix.
“It's going to be really interesting to see if more people release their subscriptions, because we've seen a bit of that with the cost of living crisis and the cost of energy in the autumn will really bite,” she said.
Dave Carpenter, head of digital at Goodstuff, also questioned how many subscribers of Netflix and Disney+ would jump at a tiered advertising model.
“I suspect, given the cost of living crisis, this move to a 'freemium' model may simply hold minutage levels,” he said. “This is great news for advertisers as it provides more commercial minutage from which to reach younger audiences in particular.”
He believed one channel advertisers underinvested in was YouTube, which he said was “more than double the size of BVOD and offers a plethora of ways in which to target and attribute campaign success”.
Some TV broadcasters, including Channel 4, now view YouTube as a platform where their content can reach younger audiences that have moved away from linear TV.
TV still delivers
Carpenter pointed out that TV’s effectiveness in terms of reach and ROI “remains dominant against most audiences, even in the face of continued price inflation”.
He added: “Nineteen of the top 20 programmes for all adults are still on linear TV.”
It is a sentiment shared broadly across media planners and buyers speaking to Campaign.
MediaCom UK’s chief strategy officer Geoff de Burca told Campaign: “It is clear from this report that traditional broadcast television still holds an important place in the media habits of the country and, therefore, must be factored into any comprehensive advertising campaign in addition to streaming platforms."
Although the decline in subscribers from SVODs is likely to be temporary, he added: “The decline highlights how external pressures can have a significant influence on media consumption habits in the short- and near-term and that marketers need to ensure that their media strategy is agile enough to adapt to these changes.”
Roku UK director Richard Halton said the Ofcom report showed that British broadcasters would remain valued by viewers, but what would change over time was how TV content was distributed and consumed.
“All TV content will eventually be streamed,” he said. “Ad-supported services provide great value to consumers and have an increasingly important role to play in their TV streaming mix.”
This article appeared in Campaign on August 18, 2022.