Kelly Williams, managing director of commercial at ITV, Jonathan Allan, sales director of Channel 4, and John Litster, managing director of Sky Media, gave an impassioned defence of TV’s ability to build brands and insisted there is no other medium that can reach as many 16 to 24s despite a drop in young viewing.
They were bullish about the prospects for addressable TV advertising because it allows both mass and personalised marketing and they questioned the "appalling" environment for a lot of online advertising.
"If you start digging into why trust in advertising is in decline, it isn’t telly advertising," Williams said. "It’s what’s going on online. It’s like a Wild West. It’s unregulated and you’re tracked and you’re stalked."
Williams, Allan and Litster spoke to Campaign ahead of the inaugural Big TV Festival, a two-day event on 8-9 February in the New Forest, for young advertisers and agency planners with three to five years' experience who have been nominated by their companies.
Their decision to speak out comes as Netflix, Amazon and Apple ramp up their investment in subscription-based premium online video and Google’s YouTube and Facebook continue to push their ad-funded video platforms.
Britain’s £5bn-a-year TV advertising and sponsorship market has held up well in the last seven years. There was a wobble after the Brexit vote but revenues have stabilised and showed signs of growth at the end of 2017 and start of 2018.
Williams, Allan and Litster, who sit together on the Thinkbox board, Barb’s strategy board and the Advertising Association Council, appeared relaxed together.
They declined to answer questions on several topics around TV trading, citing legal and competition concerns if they spoke together as a trio.
ITV has about 45% of the TV ad market and Channel 4 and Sky each about 27%.
The broadcasters decision to collaborate publicly contrasts with the behaviour of the big newspapers publishers, which tried and failed to agree a plan to pool ad sales in 2016.
Here are the edited highlights of the conversation:
Why host the Big TV Festival?
Thinkbox, the TV trade body, already promotes the medium but Allan said the broadcasters began talking about two years ago about "how do we do even more because the world is getting more competitive from a global perspective". They feel it is important to "speak more with one voice" and "get more visible together externally selling TV", Allan said.
ITV, Channel 4 and Sky each do separate upfronts events to woo brands and agencies and The Big TV Festival is a chance to speak together to an audience of "bright young things" – advertisers and agency planners with three to five years' experience – about creativity, programme-making and effectiveness of TV.
"We think that audience is the one we need to do the biggest job on in terms of selling the merits of TV," Litster said.
Williams added: "We hope it’s quite motivational for people to be nominated by their bosses."
"Live in the now"
Williams: "Media agencies tend to spend their life thinking about the future and changing their behaviour based on what is going to happen, as opposed to what is happening today."
"We find it in our business [too]. We probably spend 80% of our time talking about the future of TV and 20% of our time talking about our current product. Our core product is still 95% of our inventory."
Litster: "We don’t tend to celebrate the continued success we have in traditional TV viewing. Last year, ITV had Love Island, Bake-Off came to Channel 4 and we had Game of Thrones."
Allan: "You sit in some conferences and hear young people don’t watch TV any more and there are three shows that young people are watching in millions. We want to encourage planners to be more evidence-based."
The threat from the duopoly
Allan said "there’s clearly a space for Facebook and Google" in the media eco-system but the broadcasters want a more "constructive dialogue" about the relative merits of TV.
"Two or three years ago, the narrative was, ‘It’s not about telly, it’s all about Facebook and Google.’ Given all the issues they’ve got around fake news, brand safety, viewability, effectiveness, it feels like it’s not all going their way.
"You’re not now seen as a Luddite if you propound the values of brand-building, equity-driving, safe, regulated media."
Do they worry about impact of ad-free Netflix and Amazon on TV?
Williams: "It is a much more competitive landscape. We’re not naïve. I’m not sure worry is the right word.
"From an advertiser point of view, a lot of these new global brands [such as Netflix] don’t take advertising, so I think that makes what we have arguably more valuable."
Mass marketing, not one-to-one personalisation, builds brands
"We’re still the only place that delivers mass simultaneous reach in a regulated, brand-safe environment with that ability to deliver an emotional connection between our programmes and viewers," Williams said.
"The combination of that means we’re the only place to influence millions of people on how they think and feel about brands.
"Brand-building is the key to this. Getting back to what brand-building means is part of this pendulum swinging back [to TV]. One-to-one marketing or this idea of personalising marketing isn’t set up to build brands.
"The reason people are attracted to a particular brand like Nike trainers isn’t just because you as a person think they are great for sport or fashion. It’s because you like it, but millions of people like it too. That’s a really important part of advertising."
Long-term and short-term benefits
Litster: "Short-termism is prevalent across a lot of marketing departments. We understand why because everyone is looking at last-click attribution. But part of our collective sell is talking about the longer-term benefits of continuing to invest in TV."
Williams: "Brand-building is all about the long term. It’s only when you stop doing it, you don’t realize it straight away, but at some point your brand falls off a cliff if you stop investing in it."
Allan: "TV also delivers short-term sales. The growth in our e-commerce spend [by brands] over the last four or five years is massive and we’ve got evidence of the immediate increase in web hits and sales.
"Those short-term sales are much more difficult to track from TV to your website than straight from digital to digital but if agencies and clients do the modeling and the attribution properly, then TV will always deliver a far higher ROI over a six-month to three-year basis than any other medium.
"Just Eat and all those big ecommerce businesses that have gone into telly build an almost unassailable position and it’s very difficult [for a rival] to catch up once you’re top of mind.
"Then it drives massive benefits in terms of reducing the cost of your Google search and Facebook Cost Per Engagement acquisition."
Have you had it easy as the TV ad market has had a golden period since 2010?
Williams: "If you look at the amount of money combined that we invest in content, that’s a huge investment. It’s not easy creating break-out shows or big hits. They don’t just happen. Look at Amazon. They’re spending billions and billions and they’re struggling to find break-out hits. So easy is not the word I’d use.
"The TV sales side has changed quite a lot. Arguably you’re sat in front of a new generation of leaders. We’ve consolidated into three [sales houses, since IDS and Channel 5 shut]. So there’s been a shift and there’s been a change in the way we sell the medium. We’ve had to sell it better and we’ve innovated well – Sky has led the charge on that front. We’ve been much more creative in the way we work with brands and work with content."
Allan: "We’re not sitting here resting on our laurels. We’re healthily paranoid around the competitive environment and we’re working our arses off to get the message out there [about TV].
"We all individually care about TV and we realize that growing the market and that growing the business is as important as growing ourselves individually."
A London media planning bubble vs the rest of the UK
Litster: "There is a change in viewing habits. Video on demand is becoming a strong proposition but it is still small relatively. Our challenge is to give people a reality check as to what exactly is going on in the viewing eco-system. There is a London bubble or a media bubble where our consumption habits are somewhat different from the UK as a whole."
Williams: "There is really a media planning bubble. Our experience is not many people who are in charge of planning and buying media get outside the M25. We all have offices in Manchester."
But aren’t young viewers deserting TV with time spent down by about a third in five years?
Allan: "Everybody looks at TV viewing through the lens of linear Barb at the moment, until Dovetail comes along you need to recognize how many people are watching our shows on VoD and box sets.
"As broadcasters, we are pretty neutral where people watch our content whether it’s VoD or linear, but at the moment the public measurement of that is only linear, so Dovetail is going to be really important."
Williams: "The perception is that it’s hard to reach young audiences on TV but television’s ability to reach 16-24 and 16-34 year olds hasn’t gone down that much. Our reach has been pretty resilient. Television reaches 85% of 16-24s and 16-34s every week. There’s no other medium that does that. And yet we’re put in a bucket of ‘young people don’t watch TV any more’."
Litster: "The point we need to do is educate people as to how they can reach them. We’re not reaching as many people but the reach is still robust and you can still reach those people."
Allan: "If you use the right blend of VoD and linear against 16-24s, you can still reach that same audience as you could ten years ago for about the same price.
"What I would also say is they’ve always been the most difficult audience to reach, playing computer games and stuff. We need to make sure we’re making the right content for them. We’re still very relevant for that audience.
"Talk to 16 year olds or 24 year olds and they don’t say, ‘we don’t watch telly.’"
Are unskippable, multiple ads on ITV Hub, All4 and Sky Go a poor ad experience compared to, say, YouTube?
Allan: "What are you watching on YouTube? Crappy minute videos. It’s short-form hamsters on wheels and stuff. There’s a value exchange that viewers have.
"If you’re producing hour-long premium content, and 60%-65% of our content is watched on the big screen, I think people are fine with that because they’re used to ads on the TV."
Williams: "We have to remind our viewers they are getting it for free. It’s the ads that allow them to get it for free. And sometimes people forget that."
Allan added that "Netflix and Amazon not having ads" is less of a big deal in the UK which has the BBC, so "people are used to the ad-free experience – maybe that’s why Netflix is more appealing in the States [because of the higher ad load on commercial TV]".
Litster: "We’ve lived with PVRs for ten years and their effect on commercial impacts has not really been that significant."
Williams: "I’d argue the ad experience on these other global [online] platforms from an advertiser’s point of view is appalling – whether it’s viewability, brand safety, ad fraud."
Facebook and Google get criticized for "marking their own homework". Should broadcasters have third-party verification of their online viewing and viewability?
ITV Hub, All4 and Sky Go don’t have third-party verification but all are working with external companies.
Allan: "As broadcasters, we come from a place that is highly regulated by Ofcom. We’d give open access to any agency that wanted to test our own data on viewability, impressions and so on."
Williams: "Trust is a really important word. This year should be the year of trust. If you start digging into why trust in advertising is in decline. It isn’t telly advertising. It’s what’s going on online. It’s like a Wild West. It’s unregulated and you’re tracked and you’re stalked and there’s clickbait."
Has the 5,000-strong linear Barb panel been robust enough? Can Barb's Dovetail, which launches later this year to include online viewing, make a difference?
Williams: "I do think that lack of online measurement probably has hamstrung us a bit in the last few years. The reason it has taken time is it’s really difficult to do it at a gold-standard Barb level that is absolutely thorough."
Litster: "Dovetail can measure viewing minutes for video on demand and streamed viewing and live viewing to tablets, PCs, etc. What it can’t do is smash it together with linear Barb viewing and give an overall view of coverage. But we’re getting there."
Allan: "The big request from advertisers and agencies is: ‘what is the reach of everything?’ - and that’s quite an important planning currency and we need to deliver it. We’re spending a lot of money measuring 4% or 5% of our viewing because advertisers and agencies want it. Sometimes people forget that we’re potentially overinvesting for the amount of money it is because we realize how important the measurement is."
Isn’t it anachronistic to give TV advertisers discounts for booking two months ahead? Don’t these Advance Booking deadlines effectively penalize those who place ads nearer the time in a world of real-time bidding in digital media?
Declined to comment.
Does share-based trading and the Contract Right Renewal mechanism make it easy for you by giving each of the three sales houses a share of the TV market?
Declined to comment.
ITV and Channel 4 still haven’t joined Sky’s addressable advertising platform AdSmart. Why the delay?
Litster: "There are a couple of challenges. One is technical. It took us a long time to set it up. Second is commercial – investing time and money in AdSmart and getting fair recompense from these guys [ITV and Channel 4].
"We think it’s to the benefit of TV to do that. At the one end, we can talk about the brand-building power of TV and at the other end what we can do in the short term from a targeting perspective to drive sales."
There is an argument that Google and Facebook offer "full funnel" attribution that linear TV cannot. Will AdSmart or other addressable TV change that?
Litster: "We’re not focusing our marketing attentions on competing with Facebook and Google. We’re trying to do the best for TV in terms of the broad spectrum of choice that agencies have to spend their media."
Williams: "It feels to me that Facebook and Google are trying to be more like TV than we’re trying to become more like them."
Allan: "Google and Facebook do not have a clear attribution model. Just because someone clicks through does not mean they made the sale. I don’t buy the fact that digital has better accountability than TV. If you attribute everything to a click or where they came from, then you’re not marketing properly or you’re not doing media planning properly.
"What’s been total bollocks is the myth that digital is accountable and TV isn’t. TV is more visibly accountable because when you go on TV, your sales go up – that’s pretty much a fact.
"Addressability gives more of a continuum of choice between big advertising hitting everybody and targeting more granularly.
"Hopefully, in the next five or ten years, it’s going to get better and better and more and more advertisers are going to use TV. You could assume the market is going to grow."
Facebook has won lots of small business advertisers. How does TV win more SMEs?
Allan: "There’s a barrier to entry for SMEs with TV. TV doesn’t work without a good creative. It’s got to be of a certain standard. You can write a search ad, a Facebook ad on your computer at home. The cost of TV production and making a TV ad are coming down massively and we can help with that.
"A lot of people are starting to build their businesses on Facebook or Google quite cheaply and then they get to a certain scale where they can’t grow any more. They come to TV and then we massively accelerate their business. With VoD and AdSmart and addressability, we’re more able to take and transfer those clients into telly quicker."
The future for TV
Williams: "We are working together as a TV industry to promote the power and effectiveness of TV. We hope this is a start of much more collaboration for us as an industry."
Allan: "We’re still very focused on competing with each other but we leave our swords at the door when it comes to talking about telly. There’s a reality that because of the development of platforms and digital – there’s YouView, there’s Virgin and Sky, there’s OTT, there’s Samsung TVs – to leverage all of that, we’ve got to work together, to get the pipes working together."
Litster: "The relationship between us and media agencies and us and advertisers is changing. Maybe we’re moving to a tripartite conversation rather than one where we talk individually to a media agency. Given what’s going on in the viewing eco-system, it’s incumbent on us as a group to talk to advertisers as well as agencies more often."
Favourite TV ads
Williams: Channel 4, Meet the Superhumans by 4 Creative (2012)
Allan: Sony Bravia, Balls by Fallon (2005)
Litster: The Guardian, Points of View by BMP (1986)
Litster: "Whenever you ask people their favourite ad, they always say a TV ad. They don’t say that 48–sheet poster."