The global TV advertising market is something close to $300 billion. The online part of this is about 8%, the rest (ridiculously) going to traditional TV Stations. Although online video advertising surged +44% last year.
Younger audiences, a key demographic, are now more online with digital video, than watching TV. Almost in every country.
So online broadcasters want a cut of that spend, as they develop and as their audiences switch away from traditional TV.
You'll see my other blogs following - about the decline of TV, decline of Cable (pay) TV and how broadcasters such as ITV/Comcast are investing fortunes into content creation for online.
The decline of Cable TV is in fact, a direct switch by consumers towards online broadcasters.
It's a massive wave.
It's also massive that these online shows are being watched on multi devices in the home. They're watching something in the region of 15 hours a week (versus 33 hours watching TV).
Netflix's 'House of cards' and 'Orange is the new black' and others, are showing advertisers the way. Of course too, as I often say, ad money follows audience, so the real task here is to drive viewers and it is happening.
Indeed, online broadcasters are using traditional media (notably Outdoor) to promote their shows.
However, online ad rates remain high but are decreasing. And of course, sponsorship on online programmes is working.
Fundamentally too, digital advertising generates direct measurable response which traditional TV cannot do. You cannot click a TV Commercial.
But as online broadcasters get better and better at producing online digital video content, the eyeballs will follow and so too, the advertising.
The time lag is really down to agency media planners who are moving slowly and older marketing managers who haven't got to grips with the way it's changing so fast.
Content is still....king.
ITV, is a traditional TV broadcaster that's showing growth?
Why?
Because of the resurgence of advertising in the UK but largely because, it has moved to become less dependent on advertising (!) and more into content creation. It understands that the traditional TV model is diminishing so it's now more of a content creator.
It sells programmes to other broadcasters (including BBC) but also to new buyers like Netflix, Hulu and Xbox.
The production side, ITV studios, showed a +24% 2013 profit increase (£133m) on turnover of £857m. They now have 60 shows on US channels (more than 50% of their revenue is overseas) such as 'Hell's Kitchen' on Fox and Mr. Selfridge is in 150 countries (including being streamed on Amazon Prime).
Last year they spent £66m on buying independent content producers and yet acquisitions added £97m to ITV's revenue. Good result. More funding for acquisitions is planned too, possibly nearly £200m as a war-chest in order to develop more content to sell.
There's little doubt that ITV are learning the online lessons and looking at it as an opportunity to become programme makers rather than seeing it as a threat. Online in essence, has opened up a market of content purchasers.
In other words, whilst the likes of Netflix are very techy, they're not programme makers (although they are getting there now) whereas ITV have a long history of making strong programmes. So you match one against the other.
And you start seeing TV Ad revenue as not being the driver anymore.
Looks to me, that ITV have got it.
The problems with 'cord cutters' and the collapsing of pay TV (cable TV) has not gone unnoticed at BSKYB according to The Telegraph.
They are preparing a major overhaul of their service and their set-top boxes to allow customers access to any programme on any device. They are also looking at Sky+, using the cloud (rather than the local box drive) to store programmes allowing greater accessibility.
The multi-screen technology will also allow greater advertising opportunities possibly targeting customers by post code. Direct selling.
They also plan to introduce 4K (very high definition programming) and a 'film to own' service.
Of course, Sky aren't the only ones bringing Television across many devices with Google and Amazon already in the market and Netflix is signing deals. Traditional TV will become just a part of their subscription service (funny how it used to be the other way around!). Apple of course, are there too.
But good to see traditional TV broadcasting embracing digital and getting into the space rather than usually, running from it. Sky, at least, are responding.
The only downside to the story is that it's "a year or two away" which is a long time in politics as they say - but a generational time in digital. They'll need to move faster, but at least, they're moving.
