Aerial challenge

Broadcast bosses have mounted a case in recent weeks that the old free-to-air TV warhorse still has legs – linear TV audiences, they claim, are back on the rise and an anaemic ad market is close to turning upward.   

Nine CEO Mike Sneesby told a media and analyst briefing after an earnings update two weeks ago that linear audiences were on the rise again this year. “We’ve seen free-to-air audiences grow for the first time outside Covid in about ten years,” he said, adding free-to-air TV might also be close to bottoming out in its audience declines. The struggling $16bn ad market is also close to the bottom of its cycle, Sneesby argued.

“The strength of those audiences combined with the continued growth in BVOD would give us the view that there is a far more cyclical impact on our dollars today. Without putting a timeframe on when we think that cycle turn, Nine will come into that … with growth in free-to-air audiences, even greater growth in BVOD audiences and a marketshare from the ad market which we expect to grow in 24 over 23. For all those reasons we feel very strongly that we will benefit. There is a greater cyclical effect than structural.”

The outgoing CEO at Seven, James Warburton, was equally vocal and ready to pounce on the ad market bounce after reporting a 40 per cent fall in earnings for the December half and a 5 per cent drop in revenues.

The enthusiasm from TV bosses may hit more contained sentiment tomorrow where more than 600 TV and video streaming execs debate with advertisers and media buying groups on where audiences and dollars are going for this year and beyond at the Future of TV Advertising forum. 

“There is no bounce for TV,” one senior media agency executive told Mi3 on the condition they remain unnamed. Another said “$300m will go from linear this year, no question”. But that was tempered by a rival who said last year’s revenue bleed for FTA TV might be down a similar percentage – maybe more – but could be less than $300m in dollar terms because it is coming off a lower base. 

If the sentiment eventuates, it would leave a $500m-600m revenue black hole in two years for free-to-air TV. 

Pearman Media’s Director of Strategy & Research, Steve Allen, whose 25 year media policy is to only talk on-the-record, stated what many are debating: “Last year we were increasingly concerned at the decline in average audiences, peak night in particular,” he said. “BVOD [Broadcaster Video On Demand] is recapturing about half of linear FTA audience losses, which are obviously in annual decline by – however you want to cut it – 10-15 per cent a year.  “There’s a simple over-aching conclusion – viewers are consuming less programmed TV, as has been the case for possibly a decade. They’re most probably doing the same hours of viewing but from an increasing array of sources.”

SVOD 'peaked'

Where Allen likely breaks from his peers is on growth outlook for subscription streaming services. “SVOD, we believe, plateaued in 2022/23,” he said, arguing cost of living pressures will slow switching from free, ad-funded broadcaster services, particularly in the 25-49 demographic where rent and mortgages are highly concentrated.

Still, for many media buyers the appeal of tapping SVOD viewers on an ad-subsidised tier is a welcome alternative to FTA, YouTube and even BVOD, although both, along with TikTok, digital out of home, cinema and the fastest growing channel in advertising at present, digital audio, are all capturing the spill from FTA TV’s reallocation of advertising budgets. 

But it is getting complicated. Marketing science and advertising and media effectiveness luminaries are increasingly at odds with armies of marketing practitioners who are diverting large budgets into some digital channels which might not be losing audience but have even lower attention levels to advertising than TV.  Advertising effectiveness proponents like the UK’s Peter Field argue it partly explains why metrics around digital marketing can appear robust while business results underwhelm. 

Field cited work done by Adelaide-based Amplified Intelligence in which 80 per cent of digital advertising impressions failed to meet a minimum viewer attention threshold of 2.5 seconds required for video ads to remain in a viewer’s memory for three days. If an advertiser can keep 10 seconds of viewer attention on a video ad it will likely surface in their memory at a purchasing occasion for 49 days. TV, said Field, retained the highest attention scores in media along with cinema. 

But in contrast to most media companies the world over citing an ad recession, attention deficits are not biting tech-advertising platforms like Meta, Google, Amazon and retailer media operations like Walmart or Woolworth’s Cartology – all posted strong advertising increases in their last investor updates. Meta’s revenues were up 25 per cent in the last quarter and outgoing Woolworths CEO Brad Banducci singled out its media unit Cartology as a material contributor to the retailer’s margin improvement.  

More broadly, the tech platforms are taking an estimated 60 per cent of all new digital advertising budgets, leaving every media sector and media company to fight over the remaining 40 per cent.

Whether the market is in a broader advertising contraction or just for most media companies, 2024 will end with some definitive answers on whether broadcasters are facing structural or cyclical headwinds.