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It’s the economy, stupid!

July 4, 2022

That three-word slogan, famously pinned to the wall in the Clinton (Bill) campaign HQ in their winning 1992 run, has been deployed in many – sometimes quite random – circumstances since.

It should be dusted down when looking around at near term prospects for the TV economy. In recent years there has been a significant shift towards DTC SVoD – the new Kings of the Hill – and away from FTA ad-supported; the new poor relations.

When major content brands took the risk of forsaking pay-TV bundles in order to ‘take back control’ and increase their margins by going direct, for a while it looked like a win-win: they would (eventually) achieve better profits, while consumers got lower retail content prices.

But as more and more SVoDs launched, carrying compelling but unaggregated content, household subscriptions piled up to the point where the saving over pay-TV disappeared. Not a problem, as long as the consumer populations felt reasonably well off. But when inflation cuts into budgets and recessions loom, SVoD subs might be some of the first things thrown over the side of the family budget balloon basket.

So, SVoDs, and others with ambitions to still enter the market, should turn to advertising – have you noticed how FAST channels are now becoming the topic de jour? And perhaps advertising will even help fund currently publicly funded PSBs as well?

Well, maybe. Certainly, Big Data and its application should, by now, be offering more effective options in terms of personalisation and measurement (though the measurement badly lacks structure and standardisation). But this mainly serves to make advertiser budgets work harder and better. It doesn’t make them bigger, arguably it will make them smaller – as will the vicious circle of declining consumer demand.

When, in the UK, we indulge our national hobby of debating the funding of the BBC, the most vociferous advocates of keeping it ad-free are the current commercial broadcasters. The advertising cake is not an ever-expanding universe. While new techniques and technologies might bring some new advertisers to TV, that will be a transfer of wealth from elsewhere, not an increase in the total of advertising spend. If the amount of global TV ad spots expand significantly, the one guaranteed consequence is the average price of spots will decline.

Categories: Advertising, Blogs, Broadcast, Business, Off Message

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