Jaundiced outlook

Broadcasters' apparent failure to fix frequency capping is turning off both audiences and major marketers who suggest YouTube’s ad experience is much better – and delivers results. Integration is getting way too blatant, “doesn’t feel natural anymore” and audiences “are getting wise to it”. Global streamers are piling into ads and will now come “thick and fast to ensure their survival” – with some already lowering prices while touting much lower ad loads than their local BVOD counterparts. Even those marketers sitting on piles of evidence to underline the effectiveness of traditional TV are fighting a constant battle to sway younger team members – with budget responsibility – who claim they don't watch it. Ultimately, “the unfortunate reality is that I don't think this market can sustain four locally owned television businesses.”

The views from four marketers collectively overseeing a nine figure ad spend to a breakfast session audience ahead of last week's Future of TV Advertising conference were brutally honest.

Held under Chatham House rule – which means comments can be reported but not attributed – the marketers didn’t hold back. They are all bullish on TV – just not TV as it was once defined.  

Per one marketer, Australia’s commercial broadcasters’ best chance against global platforms that can spend $15m on a single episode yet ultimately undercut them on ad rates is to “pull together on a free commercial offering”, change the way they compete and “sell it differently to the market.”

Should the networks get that kind of collaboration off the ground, said the marketer, they would grow their share of its media budget.

But that was largely the extent of the positives.

Local loyalty?

Ad effectiveness supremo Peter Field in December told marketers at the Future of TV Advertising conference in London they would be “stupid to walk away from TV”. The Sydney panel agreed. It’s just they are now defining streaming, CTV and YouTube as TV.

“I'm doubling down [on investment],” said one marketer. “It's just where I put it – and I won't be putting as much into the local guys. I'm going to put it where the eyeballs are … We track everything under the sun … and the movement of that money is still working really, really well for us.”

Local broadcasters face incoming restrictions on gambling, junk food and alcohol advertising. With Google the only game in town, there’s also much less money to support news via the bargaining code’s next round. While some of the marketers said they are discussing internally whether their business has a duty to support local news, and by default, society – the S in ESG metrics now reportable by many blue chips – broadcasters and publishers may find philosophical intent splinters against the cold reality of commercial imperative.

“The pressure coming at them is huge – and I’m sympathetic. Should we not be supporting commercially a local media owner for the common good of policy and debate and social conversation?” mused one marketer. “But you also have this commercial exchange. I've got to reach people to sell products … I have to make money … Is this the best return for shareholders?”

Another: “It's probably a luxury to be loyal to the local guys. We have to just put our money where we know we're going to see the returns.”

Experience issues

The panel did not dispute TV’s effectiveness. Just its credibility against the more measurable forms of TV with lower ad loads, skippable formats and arguably a better handle on frequency capping versus broadcaster’s BVOD channels.

The latter issue, which made headlines at the same conference two years ago, ­appears unsolved.

One of the marketers claimed they spent the last month watching BVOD in preparation for the panel. They suggested the main three commercial free to air broadcasters remain repeat offenders.

“My consumer experience has been so poor,” per the marketer. “As a brand, I was really frustrated in terms of how my ads would be perceived by my consumers. In one hour, five or six ad breaks on something you may be watching on your phone or iPad seems really excessive. If you’re lucky it can be the same five [ads] six times. But generally it can be the same two or three ads twenty times,” they added.

“Compared to Netflix, Foxtel, SBS and ABC it's a poor experience … It’s something that really needs to be fixed.”

Some suggested after the panel session that some broadcasters were "flicking the switch" on and off capping BVOD ad frequency based on demand.    

Another marketer suggested TV networks should lift some of the formats and functionality of platforms like YouTube.

“If you talk about the ad experience, skippable formats are good. I think that’s something we should consider giving to all consumers. I love shorter format, I love six seconds; I think it plays a role. I think the local platforms need to replicate some of that approach to how ad loads are managed and where consumers have more control.”

Experimenting with different ad formats is not foreign to broadcasters, at least internationally. Hulu in the US offered viewers a 'choose your ad' menu and said engagement surged.   

Other marketers had no issue with longer ads – just the load. “We see really good results from 30-second [formats].  But in YouTube, it's one or two – it's not six. That’s the issue.”

Asked if they would pay more for lower ad loads, the response was qualified. Better data has to come with it, per one.

“I know the [global] platforms are walled gardens,” they said, acknowledging trust issues with those that mark their own homework, “but I get a lot of good information back … I'm in the fortunate position that when I do run a video campaign that is only on YouTube … we track everything … and it really does work against certain audiences.”

Would better, more robust ‘total television’ measurement help? “When did I first read about VOZ, 2018? … It took so long I gave up reading the headlines … I use my own metrics.”

Lost generation

Another challenge facing local TV companies is that the next generation of marketers are already biased against linear TV – despite many working for global brands with libraries of data proving its effectiveness. Two of the four marketers said they regularly have to counter that bias.

“Everyone [in my team] will hold up their hand and say they don't watch television. I constantly tell them they are not who we are talking to,” per one.

“We have some really robust measurement. We’ve done it for a very long time and we spend a lot of money in TV. But we’re dealing with a lot of marketers who are under 40 and who claim they don’t watch TV. Yet I can chat to them about Love Island. I can chat to them about MAFS. I’ve got a bet with a couple about who is going to win Survivor. So they are all talking about it, but they are not necessarily consuming it in the same way that they used to,” said another. “So that is something we need to battle with. Because we know TV is still effective, but you’re dealing with marketers that don’t necessarily agree.”

Either way, they said, “the growth in our investment isn’t matched in linear TV”.

Impatient CEOs

Asked about Adgile Media’s three year study that found swapping linear TV for BVOD and YouTube saw brands quickly lose share of search and share of web traffic, one marketer agreed pulling out entirely is “detrimental” to brand health.

“But I also have to have that conversation with my CEO, [whose view is] ‘we spent x on this and we haven't yet seen an uplift’,” they said.

“We know brand awareness and brand consideration take time and investment … Marketers do understand the value and are committed to the longer term. But then there are people within your business who rightfully want to see more immediate results – which with some of the other platforms, we can demonstrate more readily,” they added.

Ultimately: “We will put our money where it works. We will continue to use TV as long as it continues to be effective. But then we will move to the other platforms when they drive results for us.”

In the meantime, for another marketer still spending a lot on TV in all its forms and who remains convinced of its effectiveness despite mounting challenges, “we still can’t buy across screens. So that’s my number one issue.”

Collaborate or bust?

Local TV networks have a chequered history on collaboration but one of the marketers suggested it is now their best bet given the incoming wave of ad-funded streamers.

“I think Australians, particularly because of the cost of living, would prefer things for free," they said.

“What I’d like to see is the monthly active users for the BVOD services similar to the [audience bases] of the others [i.e. global video platforms and streamers]. If you look at the numbers they are [individually] quite small. I think the yield and the ad dollars are going to BVOD a bit disproportionately based on [those] numbers … I think you have a unique opportunity to [collectively] make up an offering for Australians that we as an Australian brand would love to follow,” they added.

“But I think it is time now … to pull together to provide a free commercial offering that is a screen offering.” Do that, per the marketer, and “I honestly think your share of our multichannel plans can go up – because Australians still have so much trust in your networks, in your shows, in local content and stuff that happens live with the people that they live with every day.

“There is an opportunity there but you have got to sell it differently to the market and come across differently to the market.”

The three main commercial networks are still working on a combined BVOD project, VOZ Streaming. that will use the OzTam identifier to enable cross-network frequency capped, targeted buys across Seven, Nine and Ten.

They have previously indicated it will be in market this year. If so, it would go some way to answering the marketers' ask.

As things stand, per another marketer asked if Australia could sustain four locally commercial free TV networks, an exit is likely – though many have been saying that for years.

“The unfortunate reality is I don't think this market can sustain four locally-owned television businesses. The core $4bn [FTA revenue], or whatever that number now is, is moving to other places. The model … I don’t think is sustainable in that downward spiral,” they said.

“I feel this is structural change and we are in the middle of it. It was cyclical before Covid and then we had a false sense of security during that [pandemic] time. Now we're unfortunately facing a cyclical downturn in the economy and we're going to face a structural change in the landscape … We all have to navigate that together.”