Television is shining white hot in the media agency playbook as advertisers scramble to get their brands airtime, pushing ad spend growth numbers into positive territory for the first time in years.
The restrictions and regulations of COVID-19 increased consumer time with television in all its forms, including free-to-air and the various catchup and BVOD.
Brands joined the flow, following a hungry audience — attracted by the content and the safety of familiarity — to leverage the power of moving pictures and sound.
Media agency booking numbers, after a long slide starting in 2008, have been growing since September 2020. TV’s total ad spend was 3.4% higher in January/February 2021 than in the same two months last year, according to Standard Media Index (SMI).
“Fortunately, TV has benefitted from record levels of January/February ad spend from the food/produce/dairy, restaurants, communications and in-home entertainment categories, while the insurance category’s TV investment for this period is at its highest point since 2018,” says Jane Ractliffe, SMI managing director, Australia and New Zealand.
Key product categories such as automotive brand, travel, live entertainment and movies/cinema — still reporting significant declines in ad spend — will add to momentum when they return.
The June quarter in 2020 was the trough, the lowest point of the economic fallout from the pandemic, for ad spend. When overall ad spend dropped a record 40.4% in May, television was down more than a third.
Since then there has been a steady improvement, apart from a blip in January caused by a shift in the Australian Open tennis to February.
And advertisers are shifting to a greater emphasis on brand.
Analysts at investment bank Jefferies: “The ad market is showing green shoots of growth, with television benefitting from advertisers shifting back to brand building, as opposed to shorter-term sales boosts through digital advertising.”
Ben Willee, GM and media director, Spinach, says the pandemic gave marketers an opportunity to reassess their activity.
“There is a lot of evidence to suggest that video formats are very powerful because they include sight, sound and movement,” he told AdNews. “Therefore it’s no surprise that TV and digital video formats are performing well.”
One of the main effects of the pandemic, from a media consumption perspective, was to accelerate the digitisation of viewership.
“As such, it has never been more important, both from an agency and marketer perspective, to take a holistic view of consumers’ engagement with, and experience of, advertising,” says Anthony Ellis, MD of Publicis Media Exchange.
Publicis Groupe has been at the vanguard of the “screen” approach. Linear TV and online video advertising should not be planned, bought or measured in silos.
“Recognition of the importance of this joined-up approach has accelerated significantly over past years and is strongly reflected in the initiatives being driven by the Australian television networks,” says Ellis.
Publicis Media Exchange has been tracking TV ad revenue growth numbers against a 2019 baseline. “From this point of view, growth across linear TV doesn’t look as strong — it is currently level with 2019 — and looks unlikely to reverse the trend away from terrestrial advertising over the longer term,” says Ellis.
“What OzTAM’s Video Player Measurement (VPM) numbers tell us though is that TV content is absolutely not dead. Broadcaster VoD viewership continues to soar [still tracking at +35% year on year, at time of writing].
“This is clearly reflected in the networks’ revenue performances, too. In their last financial results, Seven’s digital revenue had grown 73% year on year. Meanwhile, digital now accounts for 41% of Nine’s group EBITDA, which is hugely encouraging.”
Dan O’Brien, commercial director and head of strategy at independent media agency Frontier Australia, says TV sits in a strong position heading into the second half of 2021.
“Advertiser demand has never been stronger, with no signs of slowing down — yet,” he says. “What remains to be seen is how long increased demand can be sustained alongside increased fragmentation of viewership. We’ve seen huge growth in the consumption of on-demand platforms during the past year. Total TV strategies can no longer be avoided.”
O’Brien says the economy is unquestionably doing well, with the exception of some categories such as travel.
“That breeds confidence, and confidence leads to spending, first, by consumers, and, second, by business,” he says.
“Brands that have recognised this have invested funds back into advertising to capitalise on it. And TV, being a platform that can very effectively reach audiences at scale, has been the beneficiary of this investment.”
Frontier Australia is predicting a restabilising of both audiences and advertiser demand post-Olympics.
“No doubt linear TV audiences will continue to see some decline given the increasing availability of on-demand content,” says O’Brien.
“This is where we need smarter measurement approaches to ensure we are activating against ‘Total TV’ audiences, not just linear. I look forward to when we don’t use the terms linear or BVOD. Isn’t it all just TV? That is a while off, but it is on the TV networks to attract viewers with compelling content running across all platforms, and it’s on all of us to make sure we are planning, activating and measuring effectiveness properly.”
O’Brien says the growth of TV, from a viewership perspective, relies heavily on content itself. “This is a significant challenge for the networks, however this is nothing new,” he says. “With the quality of content accessible via a growing number of on-demand platforms, getting this right consistently is crucial for TV publishers in Australia to make sure we have audiences to activate against, regardless of the platform.
“From an advertiser investment perspective, growth will continue to come from improved targeting and measurement capabilities attached to BVOD/CTV platforms. It’s certainly shaping up to be an exciting year in this space.”
Kim Portrate, CEO of industry body ThinkTV Australia, says linear TV audiences swelled during COVID-19 as Australians turned to TV as a trusted source of information as well as respite from the challenges of lockdown — from homeschooling to working from the dining room table.
“Understandably, audiences have come back a little now that we can head out to see family and friends, but what we’re noticing is the growth in audiences has led to advertisers shifting their perception of TV advertising from a simplistic cost view to a much more sensible assessment of effectiveness and value,” she says. “Research shows TV’s value is incredibly strong in the short- and long-term with TV the greatest driver of incremental sales, further highlighting its value.”
After a challenging year in 2020, Portrate says marketers are looking to make up for lost sales or get a fast start this year. Either way, delivery of results off the back of media investment is a key for advertisers. TV can, and does, support this.
Recent ThinkTV Payback Series research examined campaigns for 60 Australian brands across nine media channels and found, across categories, that investing $1 in Total TV returns an average of $4.30 in three months. For longer-term campaigns, the return is $18.30.
And content works. Portrate says all the top 50 shows during 2020 were locally made, a trend continuing now that broadcasters have returned to pre-COVID-19 production levels.
Production is back with shiny floor shows leading the charge, from MasterChef Australia to The Amazing Race Australia, LEGO Masters, Big Brother, The Masked Singer, Beauty and the Geek, The Bachelor, Celebrity Apprentice, Australian Survivor, Married at First Sight, Dancing With the Stars and Big Brother.
And growth is ahead. Portrate points to two key areas.
“BVOD, Australia’s fastest growing advertising medium, is thriving in audience and advertising revenue growth,” she says. “More than 1.6 million hours of BVOD content is consumed every week Australians embrace the platform. And in the second half of 2020, BVOD revenue increased a healthy 52.7% to $133 million.
“In many ways BVOD is the ideal companion for linear TV. Linear delivers high-velocity reach while BVOD offers targeted precision — it’s the perfect combination to capture, captivate and convert customers.”
The second area of growth for TV will come from VOZ, the new OzTAM database coming in late 2020 that will allow targeted advertising in ways not previously possible.
The pandemic had a large impact on the world of media. Rising advertising spend on linear TV can largely be attributed to Australia’s handling of COVID-19, according to Will Chapman, senior industry analyst at IBISWorld.
“With international borders closed, and economic activity household incomes supported through the JobKeeper program, a significant amount of discretionary spending that would otherwise be spent on domestic and international holidays is being redirected to other markets,” he says.
“This spending has supported a range of retail and other industries, with ABS data showing strong growth in household goods retail spending during the past year compared with levels recorded pre-COVID-19.
“In particular, as consumers have spent more time at home, they have spent more on home renovation projects and furnishings.
“This trend has also been partly driven by rising house prices in capital cities, which have produced a ‘wealth effect’ that has bolstered consumer sentiment and spending.
“Advertisers have consequently increased their spending to reach these consumers and attract a share of this expenditure.”
Steve Allen, director of strategy and research at independent media agency Pearman, sees growth and recovery for the next two years.
“The marketing/effectiveness/ROI effort by ThinkTV should go to stemming the structural decline beyond that,” he says. “However, we do not see TV going back to any meaningful growth long-term.
“Very modest revenue growth, through the work by ThinkTV in the past couple of years, should boost growth as they use both research and CMO advocates, demonstrating TV’s effectiveness, plus ROI, to bring TV brand performance into focus, and marketers back to the medium.
“In addition, like all media, travel and tourism is yet to truly return and was worth more than $100 million for TV.”
And BVOD is huge, with growth up 52.7% in the last half year to $133 million, and will hit around $325 million by year’s end.
Most marketers who use TV have sales captured in ABS Retail Sales series. This has run hot for a year now, at twice the rate of growth of the previous decade.
“Thus, many achieved sales growth without the same marketing effort,” says Allen. “So many are playing catch up now, and using what they have captured in sales and margin to boost effort before the June 30 balance date.”
At Ten, Rod Prosser, chief sales officer at ViacomCBS, was pleased from a business perspective, despite everything, at the end of last year.
“We had some nice momentum going into those really terrible months, around May, June and July,” he says. “We just continued to deliver a fairly solid plate. Our audiences went up and our revenue share went up during that period. Not our revenue, but our share of the pie went up.
“And then for us, throughout the whole of the second half, that momentum just continued. I don't know how many businesses can say that, but we certainly felt like we weathered the storm, so to speak, fairly well.”
In uncertain times, people tend to turn to things they trust.
“And television is no different,” he says. “We saw brands leaning on TV during those difficult COVID-19 months in the middle of the year.
“And of course people weren't moving around as much as they normally would. I think we were able to capitalise on that as a medium.
“Brands have moved back to television and invested more into TV. It's actually really worked for them. Their advertising campaigns on
TV have been validated. A lot of marketers are saying it's done better than they've seen for many years. And they've consolidated their expense rather than having it all fragmented into various online channels. Those advertisers are sticking around and staying on TV.”
Lead times for bookings have stretched
“If you're not booking 12 weeks in advance, you're not necessarily getting the exact schedule you want,” says Prosser.
“But the notion that TV networks are just running full, month after month, is not factual. We can accommodate most bookings and clients, it's just the selection or environment they're after gets more challenging as we get closer to on-air dates.
“I know there's certainly been some noise, I think, from some other competing media sectors, saying, ‘Television's full, advertise on us.’
“That’s not the case.”
Is there a feeling of a renaissance around television at the moment?
Prosser: “That's an interesting word to use, but if you think about all the parts of TV that are now coming together… you’ve got VOZ coming, you've got broadcast video-on-demand platforms really forging forward at a rapid pace. Whether that be from the advertising revenue point of view, or just sheer eyeballs watching on that platform. And indeed, the linear broadcast channels are holding their own fairly well.”
Kurt Burnette, chief revenue officer at Seven: “It was a watershed year that's for sure and it changed everything. But what's been interesting is how we came out.
“The questions being asked around this time last year was how long would this last? What would the recovery be? Would there be a recovery?
“And as it turns out, thankfully, things began to get better and recover a lot faster than what
anyone had expected or hoped.
“We had been thinking the TV market would possibly be going back 25%-30% July to December, and BVOD would be marginally up.
“But the market ended up being slightly ahead year-on-year of 2019 and the BVOD market grew by 47%. So we got that dramatically wrong in the most positive of ways.
And the same for the start of 2021. The market is tracking higher than forecasts.
“It's been a hockey stick,” he says. “It's certainly creating a lot of demand for television and a lot
of brands are coming through it. For the last half of last year, television was the fastest growing sector and I don't recall when that's been in the past. It was a very good result for television.”
In July to December, the growth categories were healthcare food, FMCG, retail, technology, in-home entertainment, streaming, household supplies and alcohol.
“There were some big shifts, especially into Q4, as people started to see there were opportunities to come out of lockdown,” says Burnette.
The strong demand for television spots is putting a strain on resources across the board for media agencies and clients.
“What we're seeing is that the pace picked up through the latter part of COVID-19 last year and it has continued this year,” he says.
“And we've had to find new ways of working and processes and systems. It's never an exact science, but yeah. It's a champagne problem in that there's lots of activity, but the teams are becoming very adept at working at that pace and with the changes.
“It's a two-speed economy as it relates to TV because we're talking around brands and into the Olympics coming in July, and sport into the latter half of the year with the Ashes, and even the Winter Olympics next February.
“We're encouraging people to go longer because the market is running hot. And we’re having good long-term strategic conversations, and that's a positive sign.
“We're really sort of doubling down on the cultural moments that matter and across the year. Has there ever been a more important Olympic Games for bringing the world together? It's going to be a very significant moment in time as the world comes together for all the right reasons around the Olympics.
“And of course we've got home Ashes as well, the AFL grand final, the Supercars, the Bathurst 1000 back on Seven.
“The BVOD marketplace in December was up 77% year-on-year, which is the largest month in the history of BVOD. It goes from strength to strength.
“Seven Plus is a powerhouse now with a majority of the content, not just catch-up — it's standalone content. And that's growing our data capabilities. Real IQ is just accelerating that growth.
“A lot of new brands are coming into BVOD as they see the benefit because it's proven to add incremental reach to television. So when you combine the two, it's definitely a reach growth opportunity. And connect televisions continue to represent, for us, close to 70% of the entire streaming video on demand. So there's a couple of massive growth areas in there and a huge opportunity.
“The connected television is the most underutilised marketing weapon in the country right now. It's huge growth. While the other devices are still getting a lot of support through the brands, I think the connect television still has a big opportunity to have more brands investing in it. So that's going to be the big story of 2021.”
Richard Hunwick, Nine’s director of sales for television, lives in Brisbane and works in Sydney so during the pandemic he spent more time with his family.
Normally, he is a fly-in, fly-out worker. Being at home more was a personal positive.
“But it was very difficult not being able to see the teams,” he says. “People are the most important thing, and managing them through that process was a really big part of what we had to do.
“We've got a young workforce, and for many of them, making sure they were OK was a really important part to me. Many of them live alone, many in apartments. Guys in Melbourne were locked up for 127 days. Trying to make sure we looked after our people was a really big part of last year.
“It was challenging but I think everybody rose to it. We're very proud of the way everyone's come through in the past 12 months and bounced back. So we're in good shape.”
Hunwick says the growing resurgence in branding isn't slowing down.
“People have been moving towards investing in brand, and I don't think COVID-19 stops that,” he says. “And television does it best. There's very few places that you can still reach those massive audiences in one place.
“The audience has been strong, and broadly speaking, pretty resilient right the way through.
“Sport now is really strong. And AFL has been good. And I think there's going to be more of that to come through the back end of the year.
“What we're looking forward to is growth and recovery of the market, ongoing. And a remarkably healthy total television ad economy, all things considered.
“And it's hot right now. What we're hearing from investment directors is they see it running through to the end of the year.”
And good content. “We've got some good stuff coming back,” he says. “LEGO Masters, Australian Ninja Warrior and The Block off the back of Married at First Sight. Add to that the return of Celebrity Apprentice, launch of Parent Jury, and picking up Beauty and the Geek from Seven, that provides us with a really powerful stretch of material right across the year.”
On high demand and finding a spot on the network, he says: “I can assure you that people can get advertising on Channel Nine. They just need to give us a call. We'll find a way.
“Demand will drive availability issues. We're recommending to clients at the moment they don't try to book two weeks — try 12 weeks out. And it's just a change in the cycle, but it's changed quite quickly.
“The bounce back's been really marked, and the change in behavior is something we're talking to agencies and clients about.”
On TV audiences, Hunwick describes an evolution rather than a structural decline.
“Brands are looking to drive sales and the brand, which TV obviously does well,” he says. “And from a linear-versus-BVOD perspective, we're seeing an evolution there rather than a structural decline.
“We're talking about total television, that’s where we're going to.”
Mark Frain, CEO of Foxtel Media, says 2021 is proving that, in times of uncertainty and turbulence, TV is the most trusted advertising medium.
“Demand is also coming from the fact that Australians have a higher disposable income at their hands to spend locally due to the lack of international travel,” he says.
“Marketers are looking to tried and tested brand environments like TV. Flexible work arrangements also mean that viewers have more time to engage with content. This, coupled with the quality content that is currently available makes for a great TV advertising environment. The viewing customer has never had it so good when it comes to availability of content choices.”
Food, gaming, and health and beauty have been some of strongest sectors to bounce back, says Frain.
“Given the challenges of lockdown and travel restrictions, it has not been surprising to see a spending decline from travel, and location-based hospitality and entertainment sectors,” he says. “But when these sectors come back, and we’re already seeing positive signs in domestic tourism, they will further propel the growth we have seen across the board.”
Frain says brands are looking for effective advertising. They want to reach the right audience, create awareness, change behaviour and ultimately drive sales.
But they are increasingly becoming more sophisticated in their briefs, demanding personalisation and addressability to make those moments of impact and attention even more engaging.
“For Foxtel Media, it’s about providing the media platforms that offer brands and their agencies smart options for securing audiences, one that marries mass appeal with quality content and an enhanced viewing experience,” he says.
“As an industry, we know there is a slowly trending decline in overall linear audiences as a result of how we view content. However, the massive growth across BVOD and streaming audiences is more than making up for this.
“We are also seeing a ratings bump across marquee events, such as sport,” says Frain. “2020 gave us the highest ratings season for live AFL and live NRL and the highest ratings cricket Test series and one-day international series on STV. This, in turn, gave our brand partners fantastic ways of engaging with fans, through the use of QR codes, for example.”
Juliette Stead, SVP, for independent sell-side advertising platform Magnite, says TV is excellent for brand exposure and awareness.
“Last year, the industry saw a significant increase in OTT and CTV viewing across catch-up, catalogue and live linear, and we expect to see that growth continue this year,” she says.
“On the content side, live sports will be a big driver of TV viewing with the Olympics slated for later in the year.
“On the business side, there’s also been a shift from IO to programmatic buying so brands can have greater flexibility.”
According to the IAB, 61% of video was bought programmatically in Q4 2020, and Magnite expects to see that trend towards programmatic carry on through 2021 and into the future.
Gai Le Roy, CEO of IAB Australia, says investment in digital video advertising more than tripled between 2015 and 2020 with the total Australian digital video market worth $1.9 billion in 2020.
Early revenue reporting in 2021 shows continued strong growth in digital video investment, with content publishers seeing a 31% year-on-year increase in January and 45% year-on-year increase in February (IAB Australia Online Advertising Expenditure Report).
“Although there was strong growth in linear TV into early 2021, we’ll see this shift with serious growth in audiences via digital channels, including SVOD, BVOD, YouTube, gaming and other digital offerings on the TV screen,” says Le Roy.
“Advertisers and brands will follow this growth in audience reach and time. There are already signs of this, with video investment on CTV increasing from 35% to 45% between 2019 and 2020.
“For the convergence of traditional and TV worlds to become a reality and deliver on the promise of CTV at scale, the industry will need technical standards that enable interoperability and efficiency.”