What the grown-ups think about TV

Ahead of this week’s Future TV Advertising Forum, and with a hefty new GroupM report by his side, Dominic Mills outlines the most important issues now facing the television industry

I’ve been prepping for various sessions at this week’s Future TV Advertising Forum. There’s no shortage of stats and viewpoints, much of it useless concoctions of hysteria, misinformation and disinformation. You know the narrative: linear is dead, millennials (however they happened to be defined that week) a lost cohort, targeting is everything.

Thank goodness for the latest piece of thinking from GroupM, its State of Video Report 2018. And here’s the thing that stands out: it’s written by the grown-ups, in this case Rob Norman, former head of digital and now a consultant, and GroupM’s head of futures, Adam Smith.

I wouldn’t want to be ageist, but I’d guess they have 55+ years of experience between them. This matters because, above all, they have perspective, which in today’s febrile climate is a much under-rated value.

That, of course, does not make them apologists for the old order, or die-in-a-ditch flag wavers for TV. Yes, they say, even as its audience “shrinks, ages and atomises, [TV] remains outstandingly safe and effective”.

Nonetheless, they caveat, “current performance is only enough to sustain current levels of investment at best. It is hard to imagine how TV will ever grow its share of investment again.”

I can’t hope to do the entire report justice here, but I’m going to pick up on a few things that caught my eye. If you want the whole thing, including a really good overview of the shifting Facebook, Amazon, Google and Instagram propositions, download it here.

1. Comparing 2017 and 2018, life has changed in some ways – but not all. Linear audiences continue to decline, but a death spiral is a long way off. New ad formats have not emerged. But advertiser demand has been sustained, which means that broadcasters are buoyed by higher unit prices. The emergence of a new advertiser category – direct-to-consumer brands – will also fuel demand.

2. Despite the lack of the granular measurement tools everyone claims to crave, there is no perceived decline in linear TV effectiveness.

3. Addressable is still in the ‘promising’ category rather than the actual, despite the prevalence of set-top boxes and connected TVs. The biggest barriers, say Norman and Smith, aren’t technical but commercial. In the US, the issue is that the biggest sellers are the local cable operators, who only make two minutes of time available per hour.

Elsewhere (and this is my guess) it may also be down to trading dynamics and the market (buy and sell sides) obsession with share. But the good news is that, in the US, the AT&T acquisition of Time Warner, and in Europe Comcast’s of Sky, will add proper momentum to the market.
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4. As things stand still in this particular zone, therefore, we are sort of in ‘nowheresville’. This is how Norman and Smith describe it: “In 2018, we are in limbo between the traditional and the modern. We have a choice: Force-fit digital video into linear mechanisms, systems and pricing structures, or modernize television to look more like digital – targeted, automated and optimized.” Quite so. The latter will no doubt come, but not soon and not without some painful adjustments.

5. And how does addressability combine with reach? As the report reminds us – and I think there is a tendency to forget this – TV’s big weapon is reach. Here’s what GroupM says: “Herein lies the paradox of modernising television advertising with addressability. Television’s core function is still reach. Data adornments are welcome only if they make that reach more intelligent and more intimate, expanding television’s relationship to sales and downstream financial and performance metrics, as any advertiser on earth would hope to achieve.”

6. One of the ways the modern media world has distorted a basic truth is in the idea of what constitutes a view, somehow by implying that sound-off, completion and viewability don’t really matter. Here’s a slap in the face/wake-up call for those who peddle this rubbish – all the stronger for being made with withering understatement: “A growing body of evidence shows that a fully viewed ad does a better job of improving brand recall, perception and purchase intent,” the report says. “This should be no revelation, but in today’s market it is, and that is staggering.”

7. But this doesn’t stop Norman and Smith turning their fire on their peers – but not GroupM, one assumes. “Investment patterns,” they say, “suggest this message [i.e. the efficacy of sound-on, brand safe, user-initiated video] isn’t always landing with clients and planners alike.” Bang on, to which two categories you might also add buyers chasing cheap CPMs.

8. There’s a fascinating section on Netflix’s impact on linear viewing (p18), with the report citing a Morgan Stanley study showing that the point at which Netflix’s US penetration hit 20% was the point at which linear viewing began to decline – in perfect correlation with further Netflix growth (now over 50% of US households).

How will that work in European markets like the UK and Germany, where that 20% penetration level has now been breached? The assumption, certainly in the UK, is that Netflix households are heavy TV users anyway and therefore impact on linear viewing is lower. Maybe not, cautions GroupM, citing figures which show that in Germany linear viewing in Netflix homes is 30% below the national average.

9. One potential driver of Netflix (and Amazon Prime) growth is viewer disenchantment with heavy ad loads, certainly in the unregulated US market. As more advertisers chase declining audiences, broadcasters may compensate with increasing ad spot volumes – which of course would only compound the problem. One way round the problem is to make ads shorter – in the UK the default seems to be 30” – and to this end the report cites a (albeit limited) Nielsen US study this summer which showed that in certain categories 15” spots outperformed 30” ones in action intent, emotional response, attention and effectiveness – but not memory. That’s a surprise to me. A move towards shorter ads on broadcast TV would certainly shake things up for viewers, as well as echoing the trend in many parts of the VoD world.

10. The value of the social media giants to brand advertisers – one of the big issues of the day – is put under the spotlight. But the authors sum up their attractions pithily. One, safe delivery of old-school reach-and-frequency curves – if you aren’t too fussy about details.

Two, convenience. Three, they are evidently too big, and their CPMs too superficially cheap, to fail. Four, they are ubiquitous and consistent. Five, they offer easy penetration, profile, and price, as well as copy standards, self-service and dazzling targetability (albeit landing light punches). Six, there are few, if any, alternatives. Hmm, damned with faint praise.

And finally – and why should we begrudge them, even if there will be those who disagree – the authors make a plea for the value media agencies add. If the ultimate goal of advertisers is to make more money by selling more stuff more efficiently, the report says, they need to to be able to look at everything they do, from planning to channel allocation to buying to optimisation and attribution in a holistic way. Which is where media agencies fit in.

Putting words in their mouths, I think this translates as: “don’t go in-house”. You’d certainly be hard put to find advertisers who can demonstrate this same knowledge, understanding and perspective of TV and video.