Investment in digital advertising will surpass TV in five more countries, yet TV is still king with advertisers it seems.
Informed by 'experts from WPP' and its partners, the network’s Interaction 2017 report assesses digital advertising worldwide and makes forecasts on tech developments, media marketplace trends and evolving consumer behaviours in 46 markets.
Amazon, ESPN, Facebook, Google, IBM, LinkedIn, NBCU, Pandora, Pinterest, The New York Times, Snapchat, Turner, Twitter, Vox Media and YouTube are just some of the companies that took part in the study.
One finding says that while digital investment has already surpassed TV in the 10 markets - Australia, Canada, China, Denmark, Finland, the Netherlands, New Zealand, Norway, Sweden, United Kingdom - another five will cross this bar in 2017. They are France, Germany, Ireland, Hong Kong and Taiwan.
The report also says linear TV demographics continued shifting in 2016, with the loss of the 16-24 year-old demographic remaining one of its biggest challenges.
Though the global population of 16-24 year-olds only decreased by 0.5 percentage points between 2014-2016, the average “tonnage” of the 16-24 linear TV audience shrank by 16%, with some markets reaching numbers closer to 30%.
GroupM clarifies that some of this loss is exacerbated by TV’s other big challenge – the “inadequate measurement of TV’s total audience across platforms”.
“GroupM continues to advocate measurement improvements to better evaluate television across all devices in markets across the globe,” the report says.
“The absence of close substitutes means that for now, those advertisers seeking this young adult TV audience can be willing to bear price inflation in proportion to its rising scarcity.”
Linear TV’s 'gravest problem'
The reason GroupM chose to focus on 16-24s is that this is TV’s scarcest age group, which means one of them seeing your ad is more likely to add to your total campaign reach than anyone 25+. This does not mean TV is necessarily the wisest choice for reaching this audience. As GroupM’s chairman Irwin Gotlieb put it, “people who don’t watch TV shouldn’t be chased on TV.”
It says the loss of younger viewers is, however, linear TV’s gravest problem. This is why it is urgent that broadcasters/channels/networks improve their measurement of their digital diaspora – adding “if it isn’t measured, it isn’t monetised”.
Despite the stats, GroupM’s data shows that, for now, "TV is still king with advertisers” when global data is aggregated.
TV’s share of global advertising investment was largely stable at 42% in 2016 and GroupM predicts the share will only decline to 41% in 2017. TV rode a five-year peak share at 44% from 2010-2014, with only minimal share shedding since then.
It argues that despite challenges around standards, measurement and supply chain integrity, digital advertising continues to grow rapidly as marketers follow consumers to the media destinations where they spend their time and, increasingly, transact for goods and services.
The report goes onto say that reach is TV’s most valuable asset so it should mine this wherever it can.
“More comprehensive cross-platform measurement is one answer, and so is addressable TV. Meanwhile, we might wonder why online a/v 16-24s can be so abundant, yet not dilute the price advertisers are willing to pay for impressions on linear TV,” the report said.
“The problem is not quantity. The answer must lie in other matters like quality, saliency and transparency.”
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Who has the lion's share?
In the report, GroupM also examines the economic value among six global companies who hold the lion’s share of digital advertising, with Google and Facebook at the forefront.
GroupM says these companies have very different business models than the owners of linear TV, and they also attract different advertisers.
It says advertisers accounting for 90% of TV advertising revenue represent between 30% and 40% of the revenue earned by the digital giants. The other 70% of their revenue comes from a combination of small and local businesses, often ones that trade in digital products or services.
“This bifurcation among classes of advertisers is subject to change as television becomes more data-fueled and targeted (more like digital) and as video content on digital platforms continues to be enhanced with greater quality (more like TV),” the report says.
It adds that in 2017, the industry will be “watching closely” to see how Snapchat or Amazon may creep into Facebook and Google’s value chain, and if the stronghold that ‘BAT’ (Baidu, Alibaba, Tencent) has in China can expand to international markets.
GroupM global chief digital officer Rob Norman says to help shape its thinking and speculation in this year’s Interaction, it invited more than 20 partners to discuss AI, augmented and virtual reality, video competition, advanced and data-driven TV, streaming and on-demand audio, the Google/Facebook digital duopoly, live video, e-commerce, marketplace integrity and fake news.
“Last year, we were cautious in our estimation of the rate of change, but this year we are less so in the face of developments in hardware and software technologies that are advancing us from the information age to the intelligence age,” Norman said.
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