UK regulator to review TV trading

18 March 2011

LONDON: The contours of the UK's television advertising sector are set to be reviewed by media regulator Ofcom, which plans to scrutinise the current "opaque" and "complex" trading system.

Speaking at the annual ISBA conference, Ed Richards, ceo of Ofcom, said the existing model might restrict competition in certain circumstances.

For Ofcom, the "time is right" for a review, with TV adspend having returned to growth following the recession.

Richards said: "If we find there is a cause for concern about the trading mechanism ... it will then be a matter for the Competition Commission to carry out a more formal review of competition in the TV advertising market as part of a market investigation."

In his speech, Richards also mounted a staunch defence of TV as an advertising medium, referencing data from Ofcom's own studies which show 82% of the typical Briton's total video consumption is scheduled TV content.

While this proportion is lower for 16–24 year olds, it still reaches 70%.

"Far from dying, television remains remarkably robust and strikingly central in people's media consumption habits," Richards added.

In a separate presentation, Mike Darcey, chief operating officer of BSkyB, said that the pay-TV broadcaster's move into 3D TV was proving successful.

Darcey revealed Sky's recently-launched 3D channel has attracted over a dozen advertisers, with brands including Guinness and Phillips running three-dimensional ads.

More generally, Darcey said that the firm was transitioning away from linear TV and towards catch-up and online services.

He reported that just 20% of total Sky viewers of the premiere episode of US drama Boardwalk Empire, broadcast earlier this year on Sky Atlantic, watched the show live on TV.

The remainder viewed a repeat, used a VOD service or accessed an online video player.

"We see this trend developing across must-see drama or movies in particular," Darcey added.

"The currency of the overnight ratings is becoming so devalued that we need to think about audience engagement in a new way."

BSkyB's ad revenues rose 31% in 2010, reaching £408m ($659m; €469m). This is 6% of the firm's total revenues.

A full Warc report from this event, including further insights from Yahoo, DDB UK and Accenture, will be available to subscribers soon.

Data sourced from Warc