TV impacts across most demographics are increasing rapidly as the UK faces lockdown. However many categories that would ordinarily advertise at this time have been forced to withhold spend. So which categories could fill the void? And what are the long term implications if they can’t?
We are now almost at the end of the first week of UK “lockdown”, and unsurprisingly this has had a positive impact on a whole host of media channels, not least TV. Viewing by Housekeepers with Children (HKCH) for example increased by 21% on Monday 23rd March (compared to the 4 weeks previous), and 20% versus the average for Mondays in March 2019. And let’s not forget the kids, where impacts at lunchtime (12:00) on Tuesday were up a phenomenal 395% vs. the previous 4 weeks.
Under normal circumstances, this produces a dream scenario for advertisers as it produces deflationary pressure on cost. However in these unprecedented times, advertisers are not flocking to take advantage of this as would be expected. Uncertainty over availability of stock or retail distribution has led to many categories being more cautious with their ad spend. Others have had to retreat entirely for obvious concerns. So what impact has this had on the revenue taken by the major suppliers; ITV, Channel 4 and Sky Media?
Latest estimates compiled by Sky Media indicated that in total, Broadcast TV media spend will decline by 11.2% across Q2 (compared to 1.6% in Q1), with Channel 4 being the most heavily impacted at -15.4% (ITV and Sky Media at -6.6% and -11.8% respectively). Interesting, when you consider the hit Sky Media will already be suffering following the restrictions placed on Gambling advertising. These figures however were produced in the week prior to Boris Johnson announcing a full lockdown for the UK, which in turn is likely to have created further negativity.
Let’s put this into context by focusing on some sectors most affected by the developing situation. Travel agents are traditionally in the top 10 spending categories on TV during Q2 (based on 2019 Nielsen Addynamix data), contributing over £27m. However travel restrictions across the globe will likely almost reduce this spend in its entirety. Looking closer to home however, social activity has been hugely restricted which has a negative impact on spend from two key sectors. The Restaurants & Bars sector is worth more to Broadcast TV than the Travel Agents with a reported £31m spent in Q2 2019 (#7 in 2019). Those without online and delivery capabilities will have to postpone any spend. And what of Cinema Film Releases – with venues forced to shut their doors it is unlikely the Broadcast TV market will receive anywhere near the £19m spent in Q2 2019.
At this stage it’s important to note the flexibility being shown by the broadcasters when it comes to postponements and cancellations. Led by ITV, the traditionally stringent measures and penalties imposed on advertisers amending TV bookings have been significantly relaxed to help advertisers and agencies in the short term. Thinking longer term however, could this be a start of a more flexible offering from the broadcasters to create a more advertiser friendly approach, especially now they are in direct competition with the Online Duopoly of Google and Facebook where flexibility is taken for granted.
Perhaps, but let’s not forget that economic implications for Broadcasters the longer this goes on. Loss of ad revenue means reduced budgets for content production and acquisition. At the top of the market, it is likely that suppliers have the funds to combat this long term. But what of those smaller suppliers reliant on advertiser income. This unfortunately has the potential to bankrupt them leading to the closure of smaller TV stations.
So is there a silver lining? Potentially. Not all categories will be negatively impacted by COVID-19. In fact, some will likely thrive. Take streaming services for example. In an already competitive market bolstered by the arrival of Disney+, fighting for market share has never been more important and a captive audience on Broadcast TV provides the perfect platform. Disney+ had invested impressive budgets into TV prior to the pandemic, and evidence suggests this has been successful with Captify reporting that Disney+ has a 59% Share of Voice when it comes to online searches for streaming services ( a category that has seen search volume increase by 49%). And streaming services are not alone. Markets predicted to respond positively to the current economic environment include food delivery services (whilst they ae allowed to operate), e-commerce platforms, personal healthcare and wellbeing, insurance, office equipment and even board games. This all of course is dependent on whether or not stock is available as distributors close their channels to non-essential items.
It’s unlikely that these sectors will be able to fill the void by other sectors retreating from all forms of advertising currently, but they offer optimism for a market undergoing huge flux. They also offer a positive template for marketers to adopt and adapt, even if there is no immediate link to a stay at home economy. Inventory availability is high, meaning pricing is low, and buying share of mind and brand awareness has arguably never been more cost effective. Of course this is all reliant on the message, so later this week we will look at how to adapt your messaging to reflect the needs of the current consumer.
Source: Sky Media NAR/Nielsen Addynamix/Captify