TV continues to defy the odds in the age of the smartphone. It is engaging, thought-provoking, family-centric, diverse and unequivocally brilliant.
The programming content has never been better and although TV is no longer consumed just via linear means, we still consume nearly four hours of broadcast TV a day in the UK. The vast range of high-quality content means the TV set, connected or not, continues to be the focal point of all UK households. The 2017 upfronts confirmed as much.
ITV highlighted that Love Island reaches about one million of that elusive 16-34 audience every episode. Sky championed HBO’s global colossus, Game of Thrones, and introduced us to a new phenomenon, Westworld.
Channel 4 continues to make us laugh via "sofa TV" in the form of Gogglebox. Even Google, so long the broadcasters’ nemesis, declared that the TV set was the fastest-growing device for YouTube viewing for 16- to 34-year-olds.
Even Google, so long the broadcasters’ nemesis, declared that the TV set was the fastest-growing device for YouTube viewing for 16- to 34-year-olds
TV advertising revenue has remained robust, growing 2.5% in 2016. This was no mean feat when you consider consecutive high-single-digit growth in both 2014 and 2015 and the "Brexit factor". However, the commercial TV industry must not rest on its laurels and needs to keep innovating.
TV has to embrace automation
TV is still a mass-marketing channel and generates the best ROI for advertisers. Only recently, a senior client suggested to me that the "wastage" from TV was actually a positive.
An advertiser targeting ABC1 25-44 adults might actually be interested in 45- to 54-year-olds (and older) as well. However, automation is here to stay and opening up the opportunity for advertisers to dynamically deliver advertising to consumers should further enhance their experience.
There are positive signs as Sky has upgraded its AdSmart capabilities and has included Channel 5 and its suite of Viacom stations. Without ITV and Channel 4 (for now), there are obvious limitations.
The broadcasters have been making advances in online video. Advertisers can expect ITV to open up programmatic to the wider market in 2017 in a muchneeded move. There also appears to have been a change of mindset regarding audience data.
Sky has led the way with AdVance, which uses its pool of three million households to retarget linear TV viewers across online platforms. What I believe the broadcasters need to embrace is a digital approach to their video-on-demand offering, rather than a TV trading mechanic.
This will allow greater flexibility that advertisers and agencies demand in this space.
Video is part of the ecosystem, not a threat
Linear live TV viewing will continue to dominate the landscape. It still reaches about 36 million adults and 42% of all 16-to 34-year-olds each week despite the much-publicised loss of commercial impacts (particularly around headline entertainment shows) for younger viewers.
However, I believe we cannot ignore that more than 45% of all video viewing for this demographic is on non-linear channels – whether broadcaster VoD, YouTube, Facebook or other online video. They all have a role to play in a videoneutral ecosystem – just different ones.
Naturally, linear TV (and to an extent YouTube in the case of a high-street stalwart such as John Lewis) will deliver mass awareness by showcasing a brand’s advertising. But both social and online video (delivered programmatically) with bespoke online creative can enhance that experience by providing a more targeted message.
Subscription VoD will continue to grow but I am not worried about the supposed threat to mainstream TV and advertisers. The likes of Netflix and Amazon Prime attract nearly 10% of young adult viewing and Jeremy Clarkson’s The Grand Tour has been widely advertised. But it was telling that linear TV was the vehicle Amazon chose to promote the series.
Subscription VoD should be seen as a "frenemy" rather than a threat. Indeed, there’s evidence that a lot of young adults who watch subscription VoD also pay for traditional TV. More than 40% subscribe to either Sky or BT. The best subscription shows, such as Breaking Bad, House of Cards and Vikings, are among the best programmes on all TV.
Subscription VoD will continue to grow but I am not worried about the supposed threat to mainstream TV and advertisers
Importantly, this subscription content is being consumed on-demand via the TV set. Viewers believe this broader range of high-end content makes the TV viewing experience better and, as a viewer myself, I agree.
TV content is still incredibly valuable, as 21st Century Fox’s £11.7bn takeover bid for the remaining 61% of Sky has shown.
ITV continues to look like an attractive target for foreign buyers but, like the rumours about a possible privatisation of Channel 4, nothing has yet materialised.
Perhaps the most hotly anticipated battle of 2017 surrounds the next round of Champions League rights. Expect Sky to bid aggressively after losing to BT Sport last time.
The big question is whether an online player enters the fray. Could it be Google, adding fire to its existing football coverage? I believe the competition is more likely to come from a subscription-based business such as Amazon, which already has a consumer base used to paying for content.
There may well be other areas of concern that TV must address in 2017, such as continued government pressure on food high in fat, salt or sugar, alcohol and, most likely, gambling advertising.
However, the outlook remains promising. Viewers demand the best programming and the TV set continues to provide that for UK households – whether via linear or connected capabilities.
The ease of consumption and diversity of access points in an internet-enabled world has already enhanced the video-viewing experience. Providing the TV industry continues to embrace technology and the evolving video landscape, 2017 should be another good year.
Ben Chesters is the managing director, investment, at Publicis Media Exchange.