Advertising Growth on Demand.
You only have to look at the stick given to the Olympics coverage by Channel 9 in Australia and NBC in the US, to see that network television channels are going through their final days of life as relevant content providers.
The funny thing is, they still can’t see the writing on the wall.
NBC received some of its best ever viewing figures for a non-US Olympics. And according to The Age (during the Olympics), ‘Despite criticism of Nine’s coverage it has been averaging around 1.7 to 1.8 million viewers every night, which Mediaweek editor James Manning said was “probably spot on with what they were hoping for”.’
Both Channel 9 and NBC are making a classic mistake. They see an increase or plateauing of viewership and assume they’re on the right track. What they can’t see are the millions of viewers that didn’t watch their service.
Such as the millions of Americans that used social networking and online applications to watch the Olympics live, rather than being forced to watch delayed coverage on network TV.
It also explains why Foxtel’s eight-channel coverage knocked Channel 9 for six. As The Age reported, ‘Foxtel attracted its biggest audience ever for an event, with an audience peak of 1.2 million on Sunday night and averaging over 900,000 since then across its eight channels.’
Put simply, about 20% of the Aussie households that have a TV watched Channel 9?s coverage, whereas about 36% of the Aussie households that have cable or satellite TV watched Foxtel’s coverage.
It’s proof that people want choice. They want to decide what they watch and when they watch it…not when a stiff-necked media crony tells them they can watch it. Viewers want a choice of events, not the one event the TV exec chooses.
And if the TV execs want more proof, they should check out the latestadvertising growth rates forecast for 2012-2016. They’re not good viewing for network TV execs…or for magazine and newspaper men either:
Free-to-air TV advertising is forecast to grow slower than even outdoor and cinema advertising at just 1.8% per year. Compare that to the 12.1% forecast growth rate for Internet advertising.
The forecasts are in a report by PricewaterhouseCoopers (PwC),Australian Entertainment and Media Outlook 2012-2016.
There are two big reasons for the shift. First, the Internet is still a growing medium. That’s thanks to the advent of social networking websites, but future growth will also come from Internet TV (IPTV).
The second reason is that online advertising can be tracked, monitored and reported on much more effectively than TV, radio or newspaper advertising.
Advertisers can set up and adjust an online advertising campaign in seconds — Google and Facebook are two of the more popular online advertising markets. This means a company knows exactly how many people have seen their ad, how many of those clicked on the ad, and how many of those actually bought something.
A marketing manager can tell within hours whether a campaign has worked or not. That’s not the same for TV, radio or newspaper advertising. The outcome is much less clear. The ratings and circulation numbers only tell you how many people were tuned in to the TV or radio, and how many bought the paper.
But it doesn’t tell you who actually saw or read the ad. And you can’t be certain whether someone bought the product because of the TV ad at 6:07pm, the radio ad at 8:14pm, or the newspaper ad from the day before (or which newspaper ad in which paper).
In other words, the old style of advertising is immeasurable, whereas Internet advertising is measured down to the individual buyer. And if PwC is right, the new advertising medium is about to take another leap.
As the Australian Financial Review pointed out, ‘PwC predicts mobile advertising spending will achieve compound annual growth rate of 46 per cent over the next four years, to reach $90 million by 2016.’
That’s still only a fraction of the free-to-air advertising market, which stands at $3.3 billion per year. But it’s fast catching up with magazine advertising, which this year fell 8.5% to $571 million.
Given a choice between a high-risk but growing sector and a high-risk but declining sector, we know which we’d rather bet on…Internet all the way.
Kris Sayce
Editor, Money Morning.
This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.
