Not only has year-on-year quarterly BARB measured Total TV viewing (i.e. how many people, on average, are watching TV at any given point in time) in the UK risen for the first time in over 3 years from 8.25 million Individuals 4+ in 2015-Q2 to 8.30 million in 2016-Q2 (+0.6%), using a broader (and thus more robust) timeframe by comparing the year (i.e. 12 months) ending Aug-2015 with the year ending Aug-2016, we find that average Total TV viewing levels for Individuals 4+ have effectively remained stable (at around 8.80 million) over the last 2 years. Needless to say this is good news for the television industry!
That being said, looking back to the peak in Total TV viewing levels during the early years of the decade, there can be little doubt that there has been a significant downward adjustment, though television has retained its position as the best medium for quickly, effectively and (by no means least) verifiably reaching a mass audience. The recent news that Facebook has significantly overestimated how much video people have watched on its platform for the last two years is certainly a rather timely validation of the fact that, despite the perennial claims that TV is dead, advertisers have rightly retained their confidence in the power of television. As long as the demand is there prices will ultimately adjust to reflect changes in supply, and the fact is that despite the declines in viewing levels, TV net advertising revenues in the UK have risen consistently from £3.5 billion in 2012 to £4.1 billion in 2015 according to Ofcom. Nevertheless, while advertisers are clearly still willing to pay for the mass audience impact of television in an increasingly fragmented media landscape, it is interesting to speculate about how the amount of advertising actually being watched on television has changed over the last 5 years.
Focusing on the broadest trading demographic (Adults 16+) and looking at the last 5 years (i.e. 12-month periods) ending August, the first thing to consider is that the BARB measured consolidated (i.e. Live + 7-day timeshifted) Total TV audience for Adults 16+ has declined significantly every year between 2012 and 2015, though it now appears to have stabilised with no further declines in the year ending Aug-2016. Nevertheless, we are still looking at an overall decline of 7.9% over the period in question. On top of this we also need to consider the fact that while in the year ending Aug-2012 live viewing accounted for 90.2% of the Adults 16+ Total TV audience, this has now dropped to 86.6% for the year ending Aug-2016. It is important to remember that BARB does not count any viewing that is fast forwarded, and as it is not unusual for 80% or more of ads to be skipped this way in timeshifted viewing streams (interested readers may wish to read my blog post on this topic), this is not good news for commercial broadcasters wishing to get more eyeballs on their ad breaks.
All this considered, one might therefore reasonably expect the total volume of Commercial Impacts (i.e. number of 30 second ad breaks viewed) for Adults 16+ to have declined significantly over the last 5 years. The actual data, however, tells a different story and despite a 7.9% drop in the consolidated Total TV audience coupled with rising timeshifted viewing levels, the number of BARB measured Adults 16+ Commercial Impacts has only declined by 1.5% over the last 5 years, less than a fifth of the decline in Total TV.
So, how can such a seemingly paradoxical feat be achieved? The simplest way would be for the BARB measured commercial channels to increase the number of minutes of advertising shown per hour, but while some tweaking might be possible, regulatory restrictions generally prevent the UK’s commercial broadcasters from doing so, with most already operating at the legally prescribed limits. More effectively scheduling to optimise the live viewing levels of key programmes could also help reduce ad-skipping, though again the overall impact (given the already highly competitive nature of the UK television market) is likely to be small. Launching more Commercial Impacts trading channels and/or improving the content of existing ones would be another option, though there would also be the risk of significant cannibalization. Ultimately, whatever the underlying causality might be, if the Total TV audience isn’t growing then the only way to get more eyeballs on adverts is for the commercial broadcasters as a group to increase their Share of Total TV viewing at the expense of the BBC and those commercial channels (like the shopping channels) that do not trade in BARB measured spot advertising. In other words, they need to increase their Share of the shrinking Total TV pie, and this is indeed what has happened. In the year ending Aug-2012, the Commercial Impacts trading channels had an Adults 16+ Total TV audience Share of 62.7, but by the year ending Aug-2016 this had risen to 65.6. This translates into 235,000 more Adults 16+ watching the Commercial Impacts trading channels in 2016 than would have been the case had their collective Share remained at the 2012 level.
As for what has ultimately driven this growth, one might reasonably point to the fact that (with the London Olympics and the Queen’s Diamond Jubilee) 2012 was a particularly good year for the BBC and some subsequent adjustments in favour of the commercial channels would always have been likely. Increases in commercial multichannel content spend (which are well documented by Ofcom) are also likely to have played a significant role, but what really stands out as the most probable primary driving force (particularly when viewed in conjunction with rising programming budgets) is that there has been a substantial proliferation in the number of Commercial Impacts trading channels over the last 5 years. In the year ending Aug-2012 there were 248 BARB measured Commercial Impacts trading channels, but by the year ending Aug-2016 this had risen to 300, a 21% increase over 5 years. It is also important to appreciate that we are not just talking about relatively minor/obscure channels, but notable brands like: Drama, ITVBe, Spike, Tru TV, TLC, BT Sport 1, 2 & 3, ITV Encore, My5, Your TV and Lifetime, and while there will inevitably have been a significant amount of cannibalization, the net result is that the Commercial Impacts trading channels as a group have benefitted from a substantial increase in their overall Share of Total TV viewing over the last 5 years.
This, more than anything else, puts the BBC’s closure of BBC 3 as a linear TV channel in February this year into perspective. It is the exact opposite of what the BBC’s commercial rivals have been doing, and while the BBC must rightly put on a brave future facing face, there can be little doubt that the closure of BBC 3 was driven by an overriding necessity to save money and not the belief that any resulting enhancement in the BBC’s online presence among younger viewers would be able to compensate for the loss of a highly successful youth orientated television channel. In fact, youth focused online brands like Vice Media are recognising the benefits of enhancing their market reach by launching linear TV channels, with Viceland UK having just launched (19/09/2016) on Sky in a relatively prominent EPG slot (channel 153).
With this in mind, it is worth ending with another compelling statistic. Among the high value Adults 16-34 trading demographic, the Share of Total TV viewing of the Commercial Impacts trading channels (for years ending August) has risen from 69.6 in 2012 to 75.8 in 2016, a collective increase that is comfortably more than twice BBC 3’s Adults 16-34 Share of 2.8 in 2015, its last full year as a linear TV channel.
Anyone interested in launching another Commercial Impacts trading channel or two?
If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: email@example.com.