Telecommunications

UK broadcasters face advertising tipping point, new study finds

Broadcasters are facing a tipping point in the next five years where a faster decline in traditional viewing will make TV campaigns too expensive to be cost-effective for advertisers.

A new report is forecasting an “inflection point” for UK TV where the decline in viewing already well-established among 16- to 34-year-olds will spread to other key demographics ultimately threatening TVs greatest selling point of mass-market reach for advertisers.

The knock-on effect of the reduction in TV viewing will cut the amount of ads seen by 16- to 34-year-olds by 2022 by 45%, as much as 30% in the demographic known as “housewives and kids” and 15% among ABC1 adults (consumers from the three highest socio-economic brackets). This in turn will make it more costly to hit the same audience numbers, meaning advertisers are facing effective ad price rises of 90%, 50% and 20% for the three demographics respectively over the period.

“TV has been the go-to media channel for advertisers seeking mass-reach,” says Christian Polman, chief strategy officer at Ebiquity, the media audit firm behind the report. “We are saying that unless action is taken by advertisers and broadcasters that by 2022 TV will no longer hold the crown as having the highest return on investment on a media plan. Advertisers will need to re-evaluate their media plans and investment.”

Ebiquity’s report says that the 2022 tipping point is a “worst case scenario” with the expectation that traditional broadcasters will evolve with counter strategies including building real scale to their own streaming services and better TV ad targeting, while the impact of newer entrants such as Netflix will slow as they hit maturity in the UK.

Earlier this month, ITV’s share price crumbled by nearly 6% as investors took fright at a report warning the market is underestimating the decline of traditional TV viewing and the disruptive impact of services such as Netflix and YouTube.