Curated by Stuart Fogarty stuart@admaticallycom for AFAO'Meara Advertising, Streamabout The Video Agency and Admatic Ireland.
All comments will be posted - promise!
Investors this week are re-assessing the value of TV. The TV business is in trouble on two fronts - Firstly from disruptive technology that's ad-free (Netflix) and therefore, declining audiences (bringing less Advertising) and now, from the markets. A perfect storm. Shares in Viacom, Time Warner, CBS, Fox were all hit last week, greater than the general market declines. Viacom for example, was -25% down, having reported declines in revenue, profit and income. Disney, who are very diversified with blockbuster movies, even took a hit because of their dependence on TV. Time Warner took a hit because of its loss of subscribers/viewers. Yet, Netflix audiences surge to nearly 50 million in the US. The problem with traditional TV continues, as viewers have now more (and better) options. Whether that's online broadcasting (Netflix, Amazon) or Apps (snapchat, vine) or spending time on Social Media (Twitter, Facebook) or Second screen viewing whilst watching TV - they're simply watching less. That means in turn, less advertising (because advertising money follows audience) and less subscribers (I use it less so why should I pay for it). Audience ratings of prime shows (which you'll see peppered in this blog) are in steep decline with Nielsen reporting that 25 of the top 35 channels attracted lower audiences in 2015. Shows are in decline too. That's despite the TV industry trying to convince us otherwise through spurious data analysis. According to The FT, "Wall Street has belatedly realised that the television world has changed. It is unlikely that the latest media meltdown will be the last" and indeed, that reporting will also be self-prophecy. Of course too, TV is being replaced. By online digital video, something which Streamabout knows so well.
New Nielsen data as published by Ad Age shows Americans still watch 5 hours of traditional TV a day (149 hours a month in fact). However, that's a reduction of -6 hours a month over the last year.... So what are they doing instead? Watching more online video. In fact in the last quarter of 2014, online video was up +3 hours a month year-on-year. A +38% increase. And they're watching more time shifted TV (recorded) than before, possibly skipping those Ad breaks. And the switch to online is more noticeable in those lucrative 18-24's and you'll see from the above chart. TV is losing audience, losing market share and consequently, must lose Advertising dollars. Story and charts here http://adage.com/article/digital/video-revolution/297996/?utm_source=daily_email&utm_medium=newsletter&utm_campaign=adage&ttl=1429493873
Interesting data from Cable Company Time Warner (CNN, TNT, Cartoon Network, TBS) in the US for Q4 2014 just out, giving it a not too optimistic view for 2015. They're really suffering from the decline in traditional TV viewing as viewers switch to other devices and how that's starting to affect advertising spends. Netflix, Amazon, Hulu are starting to make inroads both into audiences and therefore, into Ad dollars. Time Warner Revenues were down in the last quarter meaning an uplift of only +3% for the year. But it's revenue is 27.4 Billion usd so that's still very strong. Operating profit was down nearly -6% on the year. 21st Century Fox has also reduced advertising expectations because of the slow advertising TV market and Nielsen reported live TV viewing down nearly 13% and Ad spends are down reflecting that. Time Warner are now focused on bundling more their digital assets with traditional TV buys and have recognised the shift. It's the first full and clear indication that TV audiences decline and as they do, so will advertising income. Nothing surer. Advertising money chases audiences as sure as night follows day. And when audiences shift, so too will advertising spends - just surprising that it has taken so long.
Just when TV thought thought recent reports went unnoticed about their demise....along comes another Car crash. Following my blog on Monday (which is below this) which highlighted those recent shocking data reports about the demise of TV - through a collapse in ratings, a collapse in subscribers and bizarrely, rising Ad costs - another credible piece of research worsens TV's pain. Both are based on facts and that's what's causing all the trouble. Facts. This time it might be terminal. Credible research, because it's current (November 2013) but completely credible because it's from Nielsen - as I often say, the doyenne of TV research. This to be fair is brave by Nielsen because in effect, they are shooting themselves in the foot. But the truth will out. Facebook AND Googleactive monthly users, are both going to take over from TV in total reach. That means, more people use Google and Facebook, than TV. 435 million as against 294 million. That's a HUGE difference. It is the death of TV, nothing less. Google and Facebookcombined, both already have a much larger audience than TV, but of course, there will be duplication between Google and Facebook users. And yet, time and time again I've said it, Media buyers are spending significantly more of their budgets on TV. Over 55% goes on TV. Why oh why? Laziness? Sweetheart back end margin deals? What can be the reason for these supposed data-driven buyers? How can the dominant continued use of TV on a Media schedule, to the detriment of online, be justifiable? And I do understand how it works, having recently owned the biggest media buying Agency in Ireland. But I cannot for the life of me, understand why it's still going on? Perhaps old habits die hard....but it is now, indefensible. A UK TV Station (UTV) has recently announced plans to start broadcasting in Ireland with all the expense that goes with it. With these results now, they might be better off, opening a Facebook page.
Very, very, interesting article from BusinessInsider entitled 'The Death of TV. TV is dying and here are the stats that prove it'. It follows from research by 'Citi Research' and this is a landmark, elaborate, piece of work. You'll get the whole story here http://www.businessinsider.com/cord-cutters-and-the-death-of-tv-2013-11 US Pay TV (cable) is having its worst year ever. This links with another blog I wrote on November 8th (which follows in my posts), where Nielsen reports that tablets and mobile will be more advertising important than TV in 2016. It also follows which all of us in the business already know.....TV is dying on its feet (Streamabout is active in online video so we understand the TV market). Audience ratings "have collapsed" and with all the major TV providers losing subscribers (about 5 million subscribers cancelling). The number of cable subscribers will drop below 40 million for the first time ever. It's something a lot of us knew, but didn't have the data to support it. Time Warner Cable lost 306,000 cable subs and 24,000 Internet users. The CEO of a cable company, Charter Comms, expressed surprise that a staggering "1.3m of his 5.5m customers (a quarter) didn't want TV", they wanted broadband only packages - meaning they're switching online alright, but not to watch TV. Even ratings for major sporting events are in decline. Like Baseball...
Like Basketball..
So this is a real example of the shift to Internet where consumers are watching video and not, TV. They're watching shows and movies notably on mobile and probably as part of a broadband/Wifi 'deal' from a Telco. Or from the proliferation of free Wifi at a variety of stores or indeed, from city hotspots. But they're not watching traditional TV programmes, as they air live.
The other fundamental, is that more and more households, now have less "TV's" as we know them but rather, connected boxes like Apple TV or even via their Xbox or an internet set-top box. They want fast Internet access speeds with online content. Nielsen, the doyenne of TV research, are even reporting this decline.
So if people have less "TV's", they'll watch less TV as it's aired. They now have a global choice of frankly, better content. Mobile video is on the other hand, booming, with about 40% of all YouTube videos being watched on mobile. Staggering. And again, as you'll know, YouTube video is not TV programming in the main. Tablets too, are being viewed more during the key TV primetime, so each device has its moment across the day. But if tablets are being used during primetime, advertising effectiveness is diluting.
Of course too, as I've blogged about so many times, Advertising money is not following this shift. Yet. Old habits die hard - the US TV Ad revenue is 64 Billion Dollars whilst mobile is a mere 3.4 Billion. It certainly raises questions about TV Agency buyers who are supposed to buy on the basis of data, rather than cosy "back margin" volume deals. Most US Advertising money goes on traditional TV by a mile. Yet TV prices are increasing reports Morgan Stanley....as indeed, bizarrely, are cable subscriptions!! Questions should be asked.
The former Time Warner boss, Glenn Britt, nailed it I think, when he said that "the cable business had spent too many years complacently dismissing the competition" and that is such a well worn lesson. They have also been actively producing spurious data in vain attempts to try to keep convincing clients that TV is ploughing ahead, when it's not. It happened in the music business, it happened in the retail video rental business, it happened in the bookseller business and now it's in the TV business. For me, this is the crux of the matter leading to this downfall. Rather than dismissing online, they should be embracing it. Slowly, but surely, the game is up.
Stunning, possibly earthquaking, report today from Nielsen, the general bastion of all things TV. A survey undertaken in July/August of this year amongst key advertising buyers, is really causing a stir of seismic proportions. Especially because it comes from such a trusted source - Nielsen. What they're forecasting is that Tablets and Phones will be more important than TV for Advertising. More important in only 3 years. That's being wrapped in a concluding notion that consequently, 'multi screens' advertising has, and will, become more important for advertisers. Which in some ways is a half-way house and promoting way of doing both - for now. What's causing the stir, is that the survey was conducted with The Associationof National Advertisers (ANA), with almost 99% (a score as high I've never seen) of wait for it, clients, media sellers and Agencies, reporting that Tablets/Phones will be more important than TV in 2016. Indeed, most of those surveyed (86%) rank the mobile phone as more important for advertising than TV today. That's advertising importance and yet still, advertisers spend more on traditional TV by miles. 64 billion Dollars goes on traditional TV advertising in the US and mobile only gets 3.4 billion. So decisions are still being made, badly. You'll get all the charts here http://www.marketingcharts.com/wp/online/tablets-and-mobile-phones-not-tv-forecast-to-be-most-important-screens-for-advertising-37906/
The Nielsen link is here http://nielsen.com/us/en/press-room/2013/ana-and-nielsen-study-reveals-multi-screen-advertising-to-rise.html And what we've got here is the start of a dramatic shift. Traditional media companies, advertisers and agencies recognising the importance of digital advertising in a comparable way to TV advertising. That hasn't happened before in officialdom. And the credibility of the survey, must now be without question unlike perhaps, others that have gone before. Or so it has been argued but not any more. This could change everything.
Nielsen, the firm of TV ratings, have released new figures from October about second screen usage in the US. (The full report is here but you'll have to enlist, although for free http://www.nielsen.com/us/en/insights/reports-downloads/2012/state-of-the-media--cross-platform-report-q2-2012.html) That is the trend where people watch TV and at the same time, use a smartphone, tablet or laptop. Indeed. Exactly as I am doing whilst I write this blog and my missus is doing the same thing - probably updating Streamabout video actually. But both of us almost every night, are second screen users. Which of course has a dramatic affect on TV "viewing" and certainly TV advertising engagement. Basically we're, what's called, "snacking" on TV. Not good for the medium. Neilsen today says we're part of 85% of adults who do that monthly and a massive 40% who do it daily. And remember, Neilsen are the bible of TV viewing so this is very pertinent. Given that not every home has a tablet or smartphone, this is also truly astonishing. Older people use tablets, younger use smartphones the research shows. And it shows the power of online is preferred compared to TV broadcasters fare. Yet again, they should see this coming but they won't and they don't. Even if they look at Netflix usage, it averages 5 hours and 20 minutes a day! Wow indeed. TV is getting dead in the water without question. TV Advertising makes less and less sense and at one stage I was at the helm of Ireland's largest TV Advertising buyers. So it's not bias on my part, it's that the world has changed and TV broadcasters haven't. It's pure and simple. Advertising money chases Audience and with 40% of the audience using a laptop or spending 5+ hours on Netflix, clearly they're not watching TV. And yet Ad agencies haven't got around to measuring this passive audience yet - neither have TV stations because it will mean their airtime is less valuable. Although RTE, the Irish state broadcaster, is already starting to experience it. In 2011, its Ad revenue is down -40% on 2007. It actually produced a deficit of nearly 17 million euro after receiving a staggering 183 million euro from Government. So if they were to stand on their own feet, without Government subvention, they'd lose circa 200 million euro. Government subvention to a broadcaster is also a strong potential conflict and RTE have been in hot water this year about its coverage of the Presidential Election. If your company receives that kind of investment that simply keeps you "afloat", how critical would you be of the investor? so how critical are they of Government? So the threat of online and second screens, as shown by Nielsen, must put their future under further threat. And indeed, all traditional TV broadcasters. It's a sea change that isn't going to go away.
You don't think the world has changed? Have a look at the video highlights of the London games 1908. Don't you love the Ladies tennis? I know were all finished with, what was to be fair, excellent Olympic games. And this is the last time I'll mention them. However, the BBC have just released social data about how well their online business performed and it's not unreasonable to use it as a typical benchmark. It covers 2 weeks when 34 million unique users, saw BBC coverage online. 34 million online visitors. Astonishing. On their busiest day it delivered one quadrillion bytes of data (yeah, it's a lot) and that busiest day was when Brit, Bradley Wiggins (Tour de France winner and secret smoker) won gold on August 1st. After the opening and closing ceremonies, the men's 100m final was most watched (Usain Bolt) both on and offline globally. They keep referring to these Games as "the digital games" and these results show that's exactly what they were. In one 24 hour period, the online BBC traffic was higher for them than the total hours online for the 2010 World Cup! They also looked at device usage and saw it was generally, PC's during the day, Mobile usage from 6pm and then Tablets took over from circa 9pm. The other benefit of this of course, is that they introduced BBC online to a new audience whom might very well comeback. It's really a superb performance but clearly shows consumers preferring to watch/follow online. It's further proof of the domination of Social and all things digital. According to NBC (whom you might remember really messed up and if not, go here http://streamabout.blogspot.ie/2012/07/nbc-olympics-and-way-brands-can-easily.html), these games were the most watched TV event in history as well. So online got its share too or you might say, online viewers made it the most watched TV event. According to Nielsen, 219 million people watched some part of the games in the US alone (a viewer they consider as someone who watches 6 minutes or more). The Superbowl by contrast, gets circa 100 million viewers. The closing ceremony had 31m viewers. Irish broadcaster RTE, hasn't got data yet but indicated, based on data usage, it had 3,500 online at one time to watch an event. Which seems to me incredibly low? Katie Taylor? Oh sorry, that's right, their server went down just before broadcast. In Canada, each Canadian watched 21 hours on average. Of course all Press titles saw increases and generally an uplift in advertising. But all in all, this was the watershed event for online viewing and for Social Media. There's no doubt about it that it made online an intuitive place to go and almost "normal". It shows how well planned media can generate new traffic and sell more ads by using online effectively. People are prepared to go online and watch something if it's good and will do so in huge numbers. Extraordinary numbers that will pale by the time we get to Rio.
