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Advertising trends in TV

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February 19, 2016
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      ‘Once Upon a Time in Gaza’ by Nasser brothers to screen four times at Cannes 2025

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      Home Opinion

      Advertising trends in TV

      Guest Columnist by Guest Columnist
      February 19, 2016
      in Opinion
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      Linear TV viewing is set to drop worldwide for the first time in 2016, with online video consumption (which grew by 23% in 2015) to expand by a further 20% in 2016. Audiences today don’t think of their consumption of media in separate compartments – TV viewing, listening to music, internet surfing, movie watching – […]

      Sachin Gokhale.
      Sachin Gokhale.

      Linear TV viewing is set to drop worldwide for the first time in 2016, with online video consumption (which grew by 23% in 2015) to expand by a further 20% in 2016. Audiences today don’t think of their consumption of media in separate compartments – TV viewing, listening to music, internet surfing, movie watching – they are increasingly one simultaneous stream of content consumption. The macro social shift in media consumption is also changing how advertisers look at TV and other media to reach consumers.

      Unfortunately, TV rating companies all over the world have been very slow to develop new methods of audience measurement that incorporate all these major viewership shifts. For instance, in the US, Fox’s highest-rated TV show, Empire, drew an audience of 25m for its season premiere this fall. Yet, only about 20m of those viewers registered in the three-day Nielson ratings, with the other 5m not reflected due to the fact that they did not watch the show on traditional linear broadcast TV. Nielsen is only now developing a new methodology that will give the industry a show’s total audience on television and online, including smartphones, for more than a month after it airs, but progress has been slow.

      Recent news about FTA channels not being able to sustain their cost structures in the light of low advertising, with some in fact closing down, is coupled with rapid developments in the regional pay TV space. BeIN has launched its entertainment packages, Netflix is now available in the region – and then there are low-cost challengers like My-HD, Icflix and new ‘slim’ packages launched by IPTV players like Etisalat and Du, all pointing to the fact that premium content will now increasingly have a first window on pay TV and only then will be available to FTA.

      According to a recent industry report, the MENA region presently has an average pay TV penetration of 20%, estimated to grow to 25% by 2021. The number of pay TV homes is estimated to double in this period to over 20m. Pay TV revenues are also expected to grow by 80% over this same period, to more than $5 billion.

      This trend, coupled with the fact that pay channels have lesser mass reach but deliver affluent audiences with higher disposable incomes, means advertisers will also look at these channels more seriously, and more ad dollars will move away from FTA to pay channels in the years to come. This will further hamper FTA channels’ ability to acquire premium content, which will further diminish their attractiveness. This will in turn lead to an increased interest in pay content (a vicious cycle for FTA, but a virtuous cycle for pay TV). Over the next decade or so, the MENA will start looking more and more like other mature pay TV markets in Europe and the US.

      The falling price of oil, recessionary conditions in Russia, China and Europe, and instability in parts of the MENA have led to either an actual drop in sales or at least pessimism in sectors like consumer goods, hospitality, real estate and retail. This led several advertisers to cut advertising spends by as much as 8-15% in 2015, and I see this trend continuing in 2016 as well. This will make advertisers put greater pressure on broadcasters to justify their relevance to a marketing plan, and will also lead to increased competition among broadcasters in an attempt to retain their share of a smaller pie.

      One can, therefore, expect downward pressure on rates and increased freebies and value-adds given out by broadcasters, which is somewhat negative for the TV industry in the short term; but thankfully, this negativity is expected to be a short-lived trend and sentiment is sure to bounce up again in preparation for Expo 2020.

      Sachin Gokhale is Vice President & Business Head, Middle East & Africa as well as Head of Sales & Marketing, APAC at Viacom18/IndiaCast.

      Tags: IndiaCastSachin GokhaleViacom18

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