UK broadcasters feel like they’ve done their bit to make TV advertising fit for the future, now they want advertisers and agencies to get their act together and do the same.
At least, that’s the course-grained reading of Gill Hind’s December report on the state of TV advertising.
Hind, who is the CCO and director of TV at Enders Analysis, was commissioned to write the report by Isba. She had written another paper for the society three years ago, which took stock of the TV advertising ecosystem and made recommendations for improving it, and Isba wanted to know what progress had been made since then.
In 2021, advertisers and agencies urgently wanted better measurement across linear and on-demand television, and to be fair, the broadcasters hopped to it. In March 2022, Sky, ITV and Channel 4 introduced CFlight, a measurement system — borrowed from NBCUniversal in the US — that tells advertisers the total and de-duplicated reach and frequency of their ads across all platforms and screens, regardless of whether people watched them live, time-shifted or on-demand.
Initially, CFlight only gave advertisers stats about adult impacts, but since 2024 it has been able to report on all of the most widely targeted audiences, and now that Barb is overseeing the system, there are more improvements in the pipe, like being able to measure VOD-only campaigns which, according to Hind, ‘paves the way for bringing Netflix, Amazon Prime Video, Discovery+ and Disney+ into the fold’.
In the intervening years between reports, broadcasters have also, says Hind, made more of an effort to shout about the benefits of television as an advertising medium — through ThinkBox’s Profit Ability 2 study, for example — and done what they can to reinvent themselves as digital-first channels, with new ad products and simplified buying processes.
But the broadcasters gripe that there’s only so much digital reinventing they can do while tied to legacy trading arrangements. UK TV advertising is weird because most of the big deals are still done based on share of budget rather than volume, says Hind. A big part of that is the Contract Rights Renewal (CRR) remedy that ITV entered into in 2004, to reassure the regulator that it wouldn’t abuse its market dominance. CRR requires ITV1 to deal in share of budget, which means advertisers can reduce their overall media budget from one year to the next, paying ITV proportionately less money while still enjoy the same rates.
Hind says that this not only encourages ‘money to leave TV’, but also means that ITV has to run two cost bases — a legacy and a digital trading system — ‘which is particularly unhelpful as well’.
Alas, the odds of reform are not favourable. According to a discussion paper published by Ofcom on 5 March, advertisers don’t think the trading model can change ‘until it is possible to reasonably compare viewing (and potentially outcomes) on different platforms’. Broadcasters aren’t keen on this idea, though; they argue that ‘direct comparisons of linear with online are invalid’, because of the different contexts and measurement practices.
Impasses like this one are fairly typical in the relationship between advertisers and broadcasters. According to Hind, advertisers want TV to become more like digital while still offering the same quality and control that sets it apart from other channels, and that’s one of the broadcasters’ bigger bugbears.
But it’s not the biggest.
In 2021, broadcasters wanted more than anything else to see advertisers and agencies fix their dysfunctional relationship, and according to Hind’s latest paper, they’re still waiting.
The problem, says Hind, is that advertisers still tend to hire the media agency that quotes them the lowest TV price. This can lead to all kinds of margin-rescuing practices on the part of agencies and their holding companies, such as funnelling client money to other media, or into other services provided within their network.
You might wonder why broadcasters care so much about the relationship between agencies and advertisers, but more than one person Hind interviewed said they feared the above dynamic could lead to an agency ‘having to reduce its overall TV budget in order to satisfy a wider deal [at the holdco level] with say Google or Meta.’
To some extent, declining TV budgets are inevitable, given that viewership has been in decline for 15 years or so, even when you factor in the gains from subscription services, like Netflix.
But over the past 18 months that decline has slowed, says Hind. There’s always going to be a ‘bedrock’ of TV viewers, she adds, ‘and we’re probably starting to hit that minimum among some of the demographics’.
The good news, says Hind, is that, in addition to all the progress on measurement and the shift to digital platforms, ‘the reason advertisers love telly is it’s impactful, and it still retains that impact, despite the smaller audiences.
