TV: The third golden age?
It wasn’t long ago we were predicting the end of TV and its control of the massive ad market share it commands. By 2004, online advertising was finding its sea legs after 3 years adrift. We were entering a new era of “lean forward” advertising. One clever digital guru came up with a new name for TV advertising – “passive media”. Hardly a neighbourly gesture from advertising’s new kid on the block.
The TV industry was caught off-guard by the onslaught. In hindsight, the campaign by Free TV to support TV advertising was a more effective advertisement for online. James Warburton, while only new to his role at Seven, was one of few outspoken voices that supported the sustainability of TV. I was there when he was booed off-stage at an industry lunch for his ‘outdated’ views. I think I booed once or twice, but admired his courage.
Five years is a long time when we are in the middle of a digital revolution. If you have been navigating the media landscape with your 2004 street directory, you will be lost. Far from being relegated to oblivion, TV is thriving. All major networks have had a stellar start to 2008, while MCN posts growth rates of over 25% with no sign of slowing.
Two things have changed that perhaps we didn’t see in 2004.
Firstly, technology and the way we use it has changed. Australians are currently buying 1500 HD TV’s a week, with the average TV in Australia measuring 50 inches. A set costing over $10,000 in 2004 can be purchased for around $1000 today. We are in the middle of updating the way we entertain ourselves at home and this isn’t only about the home computer or iPod.
Changes to federal law have also driven innovation within our traditional broadcasting models. In the next 18 months we could see 15 additional channels, including delivery on the promise of HD TV. Programming formats and digital extensions to programming are changing the role of the TV within the home and how we use it.
Far from declining, our TV viewing has increased. In 1999 the average household consumed 2hr 45min/day of television compared to 3hr 7min/day in 2007 (Source: Etam). While a large part of the growth comes from subscription TV, we should realise this is the result of choice. Technological innovation in 2009 continues to increase this choice and will drive household consumption accordingly. The same could be said of the likely impact of PVR (aka Tivo and iQ) penetration in the years ahead.
While there are clear and obvious technological risks to how advertising is delivered in this new digital TV landscape, the canvas is getting bigger in every way, not smaller.
The second major innovation has been to the thinking of TV executives. Let’s face it – the TV industry in 2004 was very cozy. A shakeup was sorely needed and this has resulted in better TV and true innovation in programming and advertising formats today. A better product has led to more interest from advertisers and the current good fortunes of 2008 within the TV industry as a whole.
While I don’t envy the task in front of David Gyngell, his efforts are driving a culture within the entire industry that leadership has to be earned. Innovation across Seven and Ten is only sustainable through the fierce competition of Nine and their two year drive to innovate in both technology and programming. If nothing, 2007 put an end to old beliefs that viewers were loyal to a particular network. Clearly audiences are loyal and engaged by great content and this can be challenged by any network, including subscription TV. If included in this process, advertisers will follow with their wallets.
Despite remarkable progress in 5 years, the industry has failed to deliver on a pricing model for TV advertising post 2008. Today’s pricing models are becoming redundant because of both technology and the changing role of the TV in the home. There is no clear solution in sight and no obvious champion within the industry.
TV hasn’t been this interesting in years and there is more drama to come.
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