After seven years of growth, UK TV ad revenue falls

After a record high in 2016, total UK television ad revenue fell 3.2% to £5.11bn in 2017, according to figures provided to marketing body Thinkbox by commercial broadcasters.

The decline, which brings seven consecutive years of growth to an end, has been blamed on a weakened pound and inflationary pressure, which has led some advertisers to reduce TV investment, particularly in the FMCG sector (-11.4% year on year).

However, the Advertising Association/WARC predict that UK TV advertising will return to annual growth again this year, forecasting a 1.5% increase in total investment.

“TV hyper-reacts to the economy, good or bad, and recent uncertainty saw growth stall in 2017,” said Lindsey Clay, chief executive of Thinkbox.

However, citing the AA/WARC forecast, alongside data from Nielsen that shows FMCG spend on TV advertising in Q4 2017 grew by 8% compared with the same period in 2016, Clay said she expects growth to return.

Additionally, Clay said she expects the pendulum to swing back to TV as advertisers re-evaluate the trust they place in different media following a series of scandals over brand safety, viewability and ad fraud in the online advertising world.

“We have more proof than ever that TV advertising drives business growth and outperforms all other forms of advertising,” she said. “TV is a proven, trusted, high quality environment for brands.
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“And TV’s strengths and unique assets have been thrown into even sharper relief recently following the much-publicised scandals and loss of trust in some areas of online advertising. Advertisers are re-assessing where they advertise and TV is well placed to capitalise.”

Interestingly, online businesses are also TV’s biggest investors. Based on 2017 data from Nielsen, the likes of Amazon, Trivago and Google collectively invested a total of £682 million in TV advertising, only 0.3% less than in 2016.

Mark Holden, global strategy director at Starcom said it was “no surprise” to see online businesses making an investment in TV, but “striking” that they now spend more than double than a traditional sector like retail.

“TV is perfectly suited for online brands,” he told Mediatel. “It drives national recognition for businesses that need scale (and need it quickly), which gets more effective over time thanks to the richness of response data that online businesses generate.”

Meanwhile, Monica Majumdar, head of strategy and planning, Spark Foundry, said although digital channels offer targeted reach and cost efficiencies, they cannot replicate the broadcast reach of traditional AV channels like TV.

“It’s also the depth of connection broadcast can create, which is a challenge across the board even for well established brands,” she said.

“If done well, AV can create those exciting, breath-taking and controversial moments experienced as a collective which contribute to social influence and result in the rise of many brands. Ultimately, this is what all brands are chasing, and placing too much emphasis on targeting and cost efficiency can mean this huge benefit is overlooked.”