Couch Potato Future Dulls, Nobody Cares

Michael Hedges December 12, 2013 Follow on Twitter

The health of the television business has long been predicated on a robust market for television advertising. For decades, selling a TV campaign to advertisers has been easy. Broadcasters responded in kind by welding viewers into their couches with comedy, drama, variety shows, sports and even news. The digital dividend, along with new attitudes toward access to video content, changed all this.

Yet another global media buying house projects gloom, if not doom, for television advertising. ZenithOptimedia (ZO), part of Publicis, sees the TV portion of ad spending at 40.2% this year, dropping to 39.3% in 2016. GroupM, part of WPP, similarly last month prognosticated stagnation for TV advertising.

The big media buyers are in slight disagreement over mid-term ad spending growth. ZO forecasters see the Winter Olympics, FIFA World Cup and American election campaigns, largely television events, pushing up next year’s global ad spending 5.3%. GroupM lowered its 2014 prediction to 4.6% growth, pessimistic on major markets in North America and Europe. Interpublic’s Magna Global was most bullish, their crystal ball glimmering with 6.5% growth.

Television of the couch-potato era is gone. Certainly, most TV viewers sit and watch, often for long periods, whatever free-to-air channels offer. Advertisers like captive audiences. The explosion of digital channels gave viewers and advertisers more, so much more that the time is hard to fill.

While TV ad spending has, generally, grown through the Great Recession ad rates, the amounts media buyers pay, have not risen. And when broadcasters attempt to raise the rates, advertisers simply disappear to less expensive media. The advertising business, note the share price growth of majors like WPP and Publicis, cheers the digital dividend.

Traditional cable and pay-TV operators enticed viewers with exclusive content and, thus, took a slice of audience without, in many cases, adding to advertising inventories. Public broadcasters, generally, added little or nothing to spot availability. But these are couch-potato media, aging to obscurity. The advertising people – and their clients – want young people, less set in their ways and, hopefully, with disposable incomes.

Those young people – digital natives, to generalize – have little patience for linear media requiring an appointment. They choose music moment by moment and the CD has disappeared. Television has been replaced by video, online and anytime. Advertising attached to online video offerings – think YouTube, et.al. – is the fastest growing ad segment. Digital publishers, formerly known as newspapers, are seeing revenue sunshine from video content. Big German publisher Axel Springer bought TV news channel N24 not to be in the television business but to provide more – and better – video to existing online platforms.

Now here comes Netflix and expanding video on demand (VoD) clones. These, too, are subscription services with limited or no advertising. If subscription VoD is television – and it is – advertisers are being cut out. The forecast slight drop in TV ad spending needs no further explanation.

For “the first time in the past 20 years…a new platform is expanding overall media consumption without cannibalizing any of the other media platforms,” said the ZO forecast report. But media platforms, on the whole, are being restructured. And the advertising people have less control over it all than ever.

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