TV’s greatest selling point for advertisers is arguably its mass market reach, but a new report warns that rising costs and declining audiences among key demographics in the UK could severely hit the medium’s return-on-investment (ROI) advantage.
According to Ebiquity, the marketing and media consultancy, broadcasters in the UK face a “tipping point” over the next three to five years as more viewers switch to subscription streaming services, such as Netflix and Amazon Prime.
Netflix already has more users in the UK than Sky satellite TV subscribers (10m versus 9.6m) and Ebiquity has observed a marked decline in the number of 16- to 34-year-olds who tuned into traditional TV over the past six years.
This trend is expected to continue and Ebiquity’s analysis suggests that the market is soon approaching an inflection point so that there will be a 15% to 20% decline in TV ad viewing among all adults by 2022.
While this shift in viewing habits is being driven by younger consumers aged under 34, Ebiquity found evidence that it is also affecting other key demographics.
“As younger viewers age and become more economically powerful, they take viewing habits with them,” the report said. “As a result of these changes in viewing behaviour, it will become harder and harder – and prohibitively expensive – to reach mass audiences at scale using TV.”
Specifically, the report forecast that the volume of TV ads seen by 16- to 34-year-olds will fall by 45% by 2022, and by as much as 30% among the demographic known as “housewives with children” over the same period. TV ad viewing among ABC1 adult audiences is also expected to decline, by 15%.
This is turn is expected to trigger effective ad price rises of 90%, 50% and 20% respectively for these three key demographics.
“TV has been the go-to media channel for advertisers seeking mass reach,” said Christian Polman, chief strategy officer at Ebiquity.
“We are saying that unless action is taken by advertisers and broadcasters, that by 2022 TV will no longer hold the crown as having the highest return on investment on a media plan. Advertisers will need to re-evaluate their media plans and investment.”
The findings chime with those in WARC's December Global Ad Trends report, which states TV is at a crossroads, with linear viewing down and cost-per-thousand (CPM) increasing in all key markets.
Sourced from Ebiquity; additional content by WARC staff