It has been well-documented that television remains, and will remain, the core brand-building medium for the foreseeable future. Advertiser and agency confidence in TV is buoyant, supported by a plethora of studies from Thinkbox, Enders Analysis, Ebiquity and the IPA.
While interest rates are expected to remain at historic lows for much of 2015, inflation is falling and consumer spending power is on an upward trajectory. The TV advertising market in 2015 is forecast to grow 3-7 per cent depending on the source and what is included in the figures, such as broadcaster video-on-demand and sponsorship revenues.
Meanwhile, UK consumers have never had it so good, with more opportunities to watch exceptional content across multiple connected devices. Viewing habits are catching up with the pace of technological development and, in turn, more ad opportunities are emerging.
Of course, this makes measurement a greater challenge, and Barb has already begun to capture panellists’ viewing on tablets in addition to desktops and laptops. Given the viewing transition, this is a crucial milestone on the road to Project Dovetail, which will give us the "gold standard" hybrid measurement of panel- and device-based data in 2016.
Technological advances, as well as increased connectivity of devices and more widely distributed content, are leading to not only an enhanced viewer experience but also smarter advertising opportunities – for example, addressability via broadcaster and customer data sets.
Before we look at 2015, let’s take stock for a minute. Yes, TV is more expensive than it was in 2013 but, in real terms, the cost of TV advertising has fallen steadily over the past decade and is now at 2008 levels. So, in a world where the cost of a "basket" of goods and services increased by more than 50 per cent in some instances in the same period, TV still represents exceptional value for what is, in my opinion, an infinitely higher-quality product than it was ten – or even five – years ago.
While we are at it, I don’t believe that TV is in long-term decline. Over the past decade, it has been setting – and, in many cases, smashing – viewing records, assisted by a shot in the arm from the digital switchover. However, these records could not continue indefinitely and now, two years on, we are merely seeing viewing settle back to more expected levels. Some would argue that the buoyant economy and the milder weather also have a part to play.
People will forever want the live viewing experience, and social media has reinforced this. Research proves that TV remains the medium that people want to spend most of their time with and the most effective for advertisers. According to Barb, commercial TV reaches 89 per cent of 16- to 34-year-olds in any given week, and this percentage has not fallen over the past five years.
So my conclusion is that, while the absolute volume of TV viewed may have dipped marginally over time (with the increased convenience and portability of on-demand playing a part in this), the ability to deliver reach remains consistent and the size of the audiovisual "pie" is growing and will continue to grow. TV hasn’t died and isn’t dying. It is the overall size of audiovisual that has blossomed and grown – this should be celebrated. Looking forward, once Barb is able to capture the entirety of the medium to include viewing on all devices, the effectiveness of the medium can only increase.
Now, let’s get back to a couple of hot topics for 2015.
Will TV be traded programmatically?
While a greater proportion of video inventory will be traded programmatically in 2015, "linear" TV will not.
I embrace the benefits of programmatic but, until a significant proportion of TV inventory is distributed over internet protocol, we will not see TV traded programmatically. There needs to be significant structural change in the UK TV market for this to happen any time soon.
Tailored ad propositions
The increased amount of data gathered by broadcasters and platform owners will lead to more tailored propositions for advertisers. Sky has stolen a march on the competition with the launch of AdSmart, combining what it knows about its customers with other data sets to offer more relevant audiences for advertisers. It has attracted more than 300 campaigns to date, of which 60 per cent were new to TV and/or Sky. There are more audience segments in 2015 – including first-two-letter postal codes – but what we should all be excited about is the integration of first-party data with broadcaster data to make household addressability more relevant to advertisers.
Given the choice, who would turn down the opportunity to plan and execute a campaign against audiences built from their own data as opposed to a demographic proxy?
Given the choice, who would turn down the opportunity to plan and execute a campaign against audiences built from their own data as opposed to a demographic proxy? Sky is building custom attributes into AdSmart, which means that a client’s tailored commercials could be served to households of its customers or prospects as defined by first-party data.
What about non-Sky households and channels? I would be delighted to see Channel 4 offer a "meshing" of its 11.5 million registered users with first-party data and make this available programmatically via the All 4 on-demand service in 2015.
This addressability can help advertisers manage inventory, with the ability to dynamically serve messages and offers to the right prospects at the right point in time.
But herein lies the dilemma. An increased emphasis on data suggests a short- or medium-term focus; but we must not forget about the longer term and associated brand-health measures. There is ever-more "real time" data available to clients and their agencies, and the decreased cost of analysing it creates an opportunity for deeper measurement and attribution. TV advertising that drives an immediate response from one audience might not be the same advertising that drives long-term business success. So, for 2015 and beyond, it must be a balancing act and one that should not rely solely on short-termism just because it can.
TV as brand-builder
It may come as a surprise to some that, in 2015, TV will be used primarily as a brand-building broadcast medium: delivering mass awareness to current and new customers and, indeed, to potential future buyers of products and services through so-called "wastage".
Advertising spend on TV will rise in 2015, and one will need to focus on the audience that is most important and who will drive business value and results. Advertisers and agencies need to identify what they are getting out of TV advertising.
Holistic, rigorous and smart planning is more important than ever – it will ensure the appropriate investment and blend across audiovisual. This would negate an overreliance on TV weights and optimise schedule cost versus reach. It will also help combat unforeseen TV market inflation, as we saw in 2014.
Building on this last point, the proportion of online video can be dialled up at the planning stage for periods that we know are going to be inflationary (for example, the autumn). And, because those months of unforeseen inflation can always happen, video can usually be deployed at short notice – and, crucially, without the premiums associated with the legacy TV trading model. Similarly, video can be used as a cost-efficient regional upweight – especially in London and the south-east, where a TV buy is comparatively more expensive.
I am very excited about 2015. A buoyant, vibrant and evolutionary market brings further data-enhanced targeting propositions for advertisers. It’s an opportunity to "test and learn" these tailored solutions, in conjunction with a smart approach to the proven power of broadcast TV. This way, we are best-placed to achieve a sense of balance between short-term response and long-term brand-building.
Chris Allen is the head of vision at Havas Media