Phil Smith, director general at ISBA, discusses Enders Analysis' findings into the future of TV advertising and his trade body's mandate to examine the broadcast trading environment.
The covid pandemic has taught us many things – from pushing us towards greater use of technology in our working lives, to rethinking the balance we strike between working at home and in the office.
But as well as teaching us what’s new, it’s accelerated trends which were already becoming clear – and which are now impossible to ignore.
We’ve known for a while how some audiences are leaving linear TV behind – cutting down on time spent with the schedule and moving instead to streaming and video on demand.
Increasingly, people are getting the content they want, when they want it. What was already a run towards streaming in 2020 became a stampede.
Advertising has always had to evolve to meet new challenges – in order to remain useful, relevant, and successful at reaching the audiences brands want to reach. The evolution from linear to on-demand is no different.
This doesn’t, of course, mean the oft-prophesied ‘death’ of TV.
Television remains in the view of many, if not most advertisers, the single most effective medium for brand building, thanks not least to the size of the audiences it can reach.
But we can’t deny that there are real challenges.
These challenges are explored in the Enders Analysis report, TV Advertising: Evolving the Model, which was commissioned by ISBA and published in late April.
Our Council mandated us to examine the broadcast trading environment, in the light of the symbiotic relationship between the brand advertisers we represent and commercial broadcasting. The health of one inescapably affects the other.
The report set out to consider how the TV advertising model should evolve to ensure that broadcasters can continue to invest in quality UK content; to provide broad, attentive audiences in a suitable environment for advertising.
It looks at the strengths and weaknesses of the current ecosystem; what is likely to happen to video viewing and ad revenues, if the current trajectory continues; and what changes need to happen to improve the health of the overall advertising market.
For me, these changes need to mean a healthier evolution of the market as it increasingly becomes digital – an evolution which learns from our experience of digital migration to date.
With VOD, BVOD and connected TV getting bigger, there is the potential for TV to become increasingly opaque. It’s important that we have these conversations now, so that we can work together to make the market a trusted and transparent one.
So, what does the report recommend?
It argues that we should separate audience buys from premium context buys, with programmatic buying of standard inventory, and premium inventory sold with quality commitments to a four-week advance-booking deadline.
There should also be closer integration of linear and BVOD; investment in ad-tech; and a greater emphasis on volume commitment beyond the natural shift to BVOD.
It also identifies unintended consequences from Contract Rights Renewal (CRR), but rightly notes that calls for the removal of CRR would be met with resistance and demands instead for a wider market review, given the near-monopoly which ITV enjoys of programmes with high audiences, and given the distortions in the market that exist.
We need to accelerate progress. But if we are to do so, there are substantial preconditions which need to be met, given the current issues with transparency and accountability.
First and foremost, we need a unified system of audience measurement, complete with a comprehensive set of measures of quality – and this needs to go beyond CFlight and the measurement of BVOD to encompass all video and digital display.
Meeting this need is at the heart of ISBA’s current focus, Origin.
Second, we need transparent contractual arrangements and aligned interests between agencies and clients, from which impartial media recommendations flow – with a remuneration model that delivers strong, sustainable relationships.
One other significant recommendation to highlight from the report as a precondition for progress is the need for a standard and transparent Station Average Price, against which linear prices can be set.
All of this will take courage and collaboration.
At ISBA, we’re determined to do our part – starting with the absolute focus of driving forward with Origin, but also by launching the third version of our Media Services Framework as a basis for transparent relationships, with an extensive education programme.
We’re also looking to engage with broadcasters, agencies and auditors, to agree on concrete steps.
We and our members were glad to commission the Enders report and we are pleased with the findings, which offer concrete proposals for the evolution of broadcast trading.
We look forward to working through the relative merits and feasibility of each recommendation.
As Nick Manning wrote recently, there are many steps that can be taken by individual advertisers which will help them and the industry make progress.
As an industry, we do need urgently to address the issues of transparency and accountability, which stand in the way of the changes that are necessary if we want a vibrant, sustainable advertising ecosystem.
The commissioning of the report itself bears witness to the commitment of advertisers to step forward and play their part.
If that change does not come, the picture of the future painted by Enders is stark. With an acceleration in the number of brands ceasing to be TV-centric, revenues could fall by hundreds of millions of pounds by the end of the decade.
The choice before us is clear: evolve … or risk a steadily weakening TV programme and advertising environment.