Cost, value and how we should plan today’s TV

The cost of TV advertising has become a talking point. This is because the cost of reaching some TV audiences via linear TV has increased, particularly younger audiences, because they are watching less linear TV.

But TV is changing, and in a recent article for Mediatel, Matt Hill (Research & Planning Director at Thinkbox) explored how TV viewing has affected the price of advertising, what this means, and how advertisers now need to approach planning TV.   

TV’s digital transformation

TV has seen more change in the last 10 years than the previous 50
Subscription VOD (SVOD) viewing gone from 0% penetration in 2010 to 58% in 2019 (it’s around 10% of all video viewing)
Connected TVs now in over 70% households
Broadcaster VOD (BVOD) services have soared (e.g. ITV Hub now has over 30 million registered users)

The re-distribution of TV

Some linear viewing has moved to SVOD services like Netflix and broadcasters’ own VOD services
Consequently, younger audiences are seeing fewer linear TV ads
But, older (and richer) audiences are watching pretty much the same number of TV ads as they were 10 years ago

Some TV audiences are cheaper now

Audiences like Adults and ABC1 Adults have seen price deflation since 2010

Some TV audiences cost more

With young audiences migrating to VOD at a faster rate than 35+ audiences, linear TV prices have increased for 16-34s

Most of the viewing that has been lost from TV has moved to non-commercial, less viewed or less effective advertising environments.

Total video advertising time is declining

However, TV still accounts for 85% of 16-34s video advertising time

How advertisers should target young audiences

Almost 50% of 16-34s see 50 or more linear TV ads in a week
For the half who see fewer than 50 linear TV ads a week, BVOD is where they’re more easily reached

Total TV planning

Advertisers need to plan across both linear and BVOD for cost effective reach
£1m planned 80/20, linear TV/BVOD will deliver 60% 1+ 16-34s coverage today (65% 5 years ago)

For 16-34s, BVOD advertising is now cheaper than linear TV advertising

Let’s not focus solely on the youth

ABC1 Adults hold a majority of disposable income
The average CPT across all audiences is £13, down from £16 in 2010
The younger half of ABC1 Adults has seen some shift to BVOD, whilst the older half’s linear viewing has increased; planning across both linear and BVOD is therefore essential

Proving BVOD’s effectiveness

The optimum linear TV / BVOD split differs by category
The Demand Generator tool uses econometrics to help advertisers understand the optimum media mix for their category and budget

A final thought: balancing cost and value

TV’s value, even with a higher price tag in places, is unquestionable.
TV generates 71% of total profit generated by advertising on 54% of the budget, and it does this at the greatest efficiency (a profit ROI of £4.20), and for the least risk.

Edited from Cost, value and how we should plan today’s TV by Matt Hill, Research and Planning Director of Thinkbox, as published by Mediatel.  Full article and slides available to download here.