Commentary
Live TV Viewing Is Dying By A Thousand Paper Cuts
- by Maarten Albarda , Featured Contributor, July 13, 2015
In the 1980s, I worked as media director at Leo Burnett in Amsterdam, and commercial TV was at long last introduced in The Netherlands. To prepare my team and myself, I traveled to our Chicago headquarters to “learn” commercial TV trading. This was followed by a week in our London office to learn even more.
The whole marketing communications world revolved around the 30-second spot then. Campaign planning was TV first, then the other stuff like radio, outdoor, magazines and newspapers. It’s hard to believe the media world was that simple not that long ago.
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Fast-forward to today. Pivotal Research’s senior research analyst and frequent MediaPost contributor Brian Wieser recently shared a bunch of numbers on the evolution of U.S. screen time from 2008 to the first quarter of 2015. And it makes for fascinating reading, if you are into Excel spreadsheets…
For instance, between 2008 and 2010, live TV viewing increased a tiny bit. But from 2010, the numbers start to go down. They are not falling off a cliff, but they are decreasing every year. And each year it seems the decrease is going a little faster.
At the same time, every other form of screen viewing — e.g., time-shifted, desktop, tablet, smartphone and multi-media devices like Xbox — is increasing. The only other decrease is for DVD viewing.
There is also data for person-hours of PC online, smartphone and tablet activity, meaning all the time people spend with these devices, including video viewing and everything else. This data shows the staggering overall increase in usage for all devices. It may be that the desktop has reached its maximum usage, but then again the desktop computer has been around the longest. Tablet and smartphone usage will double when compared to 2013. Yes, 2013!
Having said all that, if you look at the data in percentages, live TV is still King with a capital K, commanding 83% of video viewing. But in 2008, that was 93%, and 2013, 87%. See what I mean by death by a thousand paper cuts?
Although not contained in Wieser’s data, I saw recent U.K. numbers that showed how the age group 15-25 was spending their time. It won’t surprise you that this group had already moved far beyond the averages as shown in other data. And when I say “moved far beyond,” I mean of course away from live TV.
I recently shared the fact that my family and I have moved. When we were putting together my son’s room, we promoted him from a children’s room to a teenager’s room. When asked, he said he did want a TV — but only so he could hook up his Xbox. He was not even remotely interested in a cable connection.
I think that the paper cuts are going to be deeper and more numerous very quickly. It won’t be pretty.
While I agree that live TV is declining, I think it is a bold assumption that this decline will be in some linear-like fashion. It is more likely to resemble some form of inverted ogive where the rate of decline accelerates (current phase), then slows, the flattens. We see this in all sorts of media and indeed any form of human consumption that involves consumer choice. Clearly TV is not exempt. In fact I am willing to wager that online will some decades in the future be similarly challenged.
But as for "death by a thousand paper cuts" I just checked with the Department of Health and while they record numerous instances of paper cuts being reported every year, they are yet to record a death.
@John Grono: I disagree...The live/linear TV business is now afflicted by as many structural disadvantages as print journalism was on the eve of its destruction in 2000. The death of newspapers, at the hands of the Internet, was predicted annually for almost a decade before 2000...But every year, newspaper circulation & print revenues continued to climb. And every year pundits would say that digital was overhyped, and a long way off, and that newspapers would adapt in any case...until it wasn't a long way off...and they could not adapt...
It will be just as hard to predict when exactly the cliff will come for live/linear TV...but it will be a cliff...It is not a perfect mataphor of course: Some TV networks & content producers will likely benefit from the death of live TV...Nonetheless, it will be a bloodbath for huge pieces of that industry...and I think we will see an article like this one much sooner than the traditional TV industry would like:
http://www.slate.com/blogs/moneybox/2014/04/28/decline_of_newspapers_hits_a_milestone_print_revenue_is_lowest_since_1950.html
Sorry for my delayed reply Luke - I was down at the newsagents buying the paper and some magazines, and then I came home and watched the news and some telly.
I'm afraid we'll have to agree to disagree. Or as Samuel Clemens said - 'the reports of my death have been greatly exaggerated'.
I think that it is very misleading to compare the plight of newspapers to "live TV". The newspapers lost out, first to TV news, then to the Internet, when these media usurped the newspapers' basic functions----supplying daily news and the classifieds. TV ( broadcast and cable ) is not at all in danger of having its many programming functions usurped, though the advent of competition is nibbling away at the "live" manner of viewing----mainly in primetime.
We also have to consider the extent of theses "defections" and who is being affected. The DVRs have been around for 15 years and half of the population----not 100%---has them. Why not 100%? And why is only 20% of the average DVR owner's viewing done on a delayed basis? Why not 100%. The answer is that a lot of viewing is not to primetime entertainment shows but to news, sports, game shows, reruns, documentaries, cooking shows, etc. etc. which most viewers watch when they encounter them---"live".
As regards, Netflix and other SVOD services, yes, they are capturing about 20% of an average subscriber's total viewing time----but not, neccesarily, in primetime, directly against the big entertainment shows. Is it realistic to see them growing from the current level of 45% to 100% penetration with each subscriber watching for 5 hours a day--every day? Nope----not enough, or the right mix of content.
It all boils down to the amount and type of program content the platform, in all dayparts and genres, that the contending platforms can put out and, secondly, the demographics. There is no doubt that "live TV" will tilt increasingly towards middle aged and older audiences, but let's not forget that these represent the vast majority of the adult population and are important to 90% of all advertisers. Millennials are not---repeat, not-----the be all and end all of product sales. And even if they were, it is quite a leap to assume that they will reduce their "live" viewing to zero. That doesn't make sense.
The real reason we are hearing all of these pronouncements about "live TV" being "dead' or "dying" is all too obvious. If that were to happen---which it aint----then TV advertisers would be confronted with commercial "zapping" rates of 50% or greater by delayed audiences, which, of course, would drive them into the arms of digital media--- that's the underlying thinking---and hope. But, digital can't even get half of its ads on the users' screens and of those that make it, only half are there long enough to make a worthwhile impression. What's more, digital CPMs aren't a lot lower than TV. In fact, they are higher. So why is a massive flight to digital---assuming that TV suddenly "dies"---such a good thi
Completing the last word, above, it's ----thing?.
If a media company like CBS decides to deliver a new series only via their online service, would that be another "paper cut?" I don't think so. Don't confuse the content with the delivery vehicle - it'll still be TV. Sure, the ads may be more addressable with one vehicle versus another, but that's not really a TV-vs-digital thing (STB VOD can be just as addressable, without the fraud and viewability issues). The only real question worth talking about is when will we have a useful and well-regarded cross-screen measurement source to use as currency.
Just today these two "papercuts" were added:
http://www.mediapost.com/publications/article/253832/cable-nets-ad-revs-dip-in-q2.html
http://www.mediapost.com/publications/article/253963/nielsen-records-lower-people-using-tv-levels.html
Live TV PUT levels, which represent the percent of the Nielsen measure People Using TV, continues to drift lower.
In June, prime-time live TV PUTs witnessed a 6% decline versus a year ago to a 22.9% PUT level, according to MoffettNathanson Research analysis from Nielsen data.
Core 18-49 viewership in Nielsen C3 ratings -- the average commercial ratings plus three days of time shifting -- dropped 8% for national TV networks, according to MoffettNathanson Research.
Cable networks took an unexpected steeper-than-unusual decline in C3 versus broadcast TV -- down 9% to 17.8 million viewers versus broadcast 4% drop to 7.1 million.
Yes, live TV is declining. Total TV viewing seems to be holding up.
Yet a 22.9% prime-time PUT level still means that, on average, just under one in four people in the US are watching live TV during prime time.
Name me any other medium that comes anywhere near that.
John, we do forecasts on this and other relevant subjects in our annual, "TV Dimensions 2015" and it's true that there is an erosion in "live" viweing during the primetime hours, which will probably continue----up to a point. What's important to remember is the fact that primetime accounts for only 25% of an average TV home's total TV tune in time. Since the number of viewers-per-home is higher in prime than the all-daypart norm, this means thjat a typical adult probably spends about 30-33% of his/her viewing time with primetime fare while the rest is done in daytime, early/late fringe and weekend time slots where "live" still dominates and is not declining by anything like the primetime rate. Also, as non-prime TV has more commercials per hour, this means that something like 75% of TV's GRPs are concentrated in time periods which are less vulnerable to erosion.
In short, we have to look at commercial TV in its totallity, not just primetime, which is where the effects of delayed viewing----mainly for broadcast TV---and SVOD services seems to be having the greatest impact.
Peeps: my point is not to declare TV dead as a medium, nor to belittle its (still) lofty perch and share of both viewing as well as ad dollars. My point is that a slow but steady shift is occuring which is noteworthy. And that shift is going to have significant implications.
The TV industry can only offset the losses by increasing prices for so long. And the slow decline in live viewership should really be a wakeup call to work harder at reinventing the commercial offering beyond spots, sponsorship and product placement, and to discuss the merits of TV advertising on CPM's and "big reach" alone, because we've have had those since the 1950's.
We need to stop talking about TV on the old TV merits and re-think what the merits are and/or could be in a new world where there is more competition, distraction, distribution and content than ever before. TV should stop thinking of being TV, and start thinking about what it should be going forward in this rapidly evolving world.
@ Martin, of course, I agree and I'm not accusing you of claiming that TV is dead, but there's an ongoing campaign by digital advocates to create that impression---with everyone chanting the same slogans over and over as if they were true-----that I and others are challenging. As for the ways the broadcast TV networks and, to a lesser extent, the cable channels are reacting, it is clear that they are aware of the audience erosion problem in general and its impact on ad revenues. So they have been heavily involved in product placement deals, digital program or episode sponsorships, etc. and are now beginning to offer their own SVOD services. Also, they are reaping many millions of dollars in retransmission fees and their incomes as "partners" with independent program producers in the syndication aftermarket are also becoming cash cows. All told, such non-ad incomes probably account for 50% of a TV network's revenue---or this will shortly be the case. Finally, the cable channels and TV stations the network's own make huge profits. So, as corporate entities, including their parent companies, the broadcast networks aren't in bad shape at all. Which is not to say that they couldn't do better, especially on the programming front.
The other side of the coin is the way advertisers use TV. Here, there is even more room for improvement not only on the time buying end but also in the ways that TV ad campaigns are evaluated--or "copy tested". In the latter case, most of the systems now in place were developed 30-40 years ago and there is great reluctance to go with new approaches as there are few guideposts in the form of normative data to help in interpreting the data. The separation between the "creative" and media functions----which they still deny exists-- is also a great hinderence as both working in tandem could really open up some closed minds at the marketing director and brand manager level.
Maarten, at issue is the headline that uses the word "dying". Yes you have not "claimed that TV is dead". But it is akin to the priest adminstering the last rites just before the doctor declaring the time of death.
It reminds me of the stories that cinema and radio would be killed by TV. Didn't happen. And neither will TV die. Yes TV will be hugely affected by online, but it will survive in some highly modified form. Online as a collective will exceed TV, but in the entertainment sector I think it will still rule the roost whilever online continues to act as a distribution channel for entertainment rather than as a creator of the content.
OK, I will say it: Live/Linear TV is DEAD: The trend lines for viewership and ad revenue will never, ever turn back up.
Right now it is a slow death. I am one of the 'digital advocates' who believes that it will soon accelerate into a speedy one. Does "soon" mean 3 years? 5? 7?
Many TV broadcast and cable networks will survive it, but only in as much as they produce awesome content. The considerable profit and leverage that networks derive today from the scarcity of distribution and ad sales they control, will fall off the cliff...along with the transactional aspects of TV ad sales, and the networks who do not produce awesome content...
It is reasonable to suggest that the companies who comprise the industry today be a source of innovation in it: That they can obviously see what we see, and so they will use the considerable clout they still command to adapt to it, and own it in the end, albeit in a different form....
I am saying they will not: These are organizations that are incapable of change. I have seen this up close, and it is startling to witness how resistant they are to even TINY changes at the margins, never mind revolutionary ones...
This seems like a reasonable summary of what is already happening, and what will continue to be the story of live TV going forward:
Ratings will decline at an accelerating rate...Networks will increase pricing to offset declines... advertisers will perceive less and less value in their TV buys... more and more networks will offer "online" sub packages for their channels: That list already includes most of what broadcast networks offer, ESPN, HBO, Showtime and a number of smaller channels in various forms.
These are version 1 products that are less than a year old, and yet they are already better than their TV counterparts. In some ways they are still confusing, and inconsistent, but they will get much better, very fast...
At the same time, "Live TV" will not get any better, at all...Your cable TV Guide will continue to suck...TV set top hardware will increasingly compete directly with Apple hardware on the basis of "usability and service..." Your TV service's on-demand offerings will continue to be unusable...
And then, at some point "soon," there will be an inflection point: Probably when one or more NFL licensees makes a substantial package of games available online...at the same time that Apple succeeds in making iTunes + Netflix + HBO Go + Showtime + Sling look and act like a single, seamless service on all of your TV's and mobile devices...Hello CLIFF!
Luke: I could not have put it better. One additional element where I see no apparent capability to innovate is to re-imagine the ad sales side. As I have said a few times: we are using the 1950's model of TV ad sales in a 2015 world. Those that are smart will find new ad revenue streams and sources. Those that are not... as my friend Joseph Jaffe often says: "how do you kill a dinosaur? You don't; evolution does."
And John: the headline says "Live TV is dying..." Which is exactly what I talk about in the article. Smart TV operators will survive and I bet thrive. Linear/live only operators will die.
I know that Maarten. And by logical extension something that "is dying" will die. The 'advocates' of the time said cinema would die. They also said radio would die. Neither did.
The advocates are saying Live TV will die. Just like cinema and radio, TV will adapt. Just like cinema and radio, TV will be 'smaller' (unless we include streamed content in the TV definition in which case it will be larger), but it won't die.
Luke, actually I tend to agree with some of what you have to say---especially regarding the outlook of the TV networks. However we must take note of the fact that a lot of Americans are not urban sophisticates who crave "better" programming and will go anywhere to find it. Actually there are a lot of people who are just fine with TV the way it is---not you or I, perhaps, and probably not many other posters on this site, or the editors and columnists---but lots of people just love to sit there in front of their TVs and take in the sappy reality shows, simplistic and redundent newscasts, the talk shows, game shows, reruns of TV's golden oldies, etc. So let's not assume that "we" are the majority---as we certainly are not.
Another point. Leaving out the huge and often wasteful spenders, a typical brand's TV campaign calls for a monthly reach of about 60-70% with an average frequency of 4-5. In other words, all that such a brand wants is to have a viewer spend 30 seconds with one of its commercials about once every 10 days. And if the brand flights its campaign, due to budget constraints, the amount of time it wants from the viewer is stretched to one exposure every 15 0r 20 days.
My point is that even if "live" TV viewing declines from 4 hours per day per viewer to 2 hours----which I doubt will be the case----and we factor in those times when delayed viewers dont zap commercials ( about 40% of the tme ), there will be plenty of commercial exposure time available to satisfy many marketers....even at much higher CPMs. As for the rest, they will have to spend more---a lot more---on digital ,which has all sorts of low reach and viewability issues as well as high CPMs. If these very difficult problems can be rsolved, fine. If not, and "live TV" really "dies", a great many advertisers are in big trouble.
Ed, thanks for defining and quantifying what "dead" will look like for Live TV in your last paragraph.
On another point, is the typical campaign in the US measured against monthly KPIs?
In Australia we tend to focus on weekly pods at a lower GRP weight, with lower reach and average frequency goals, which are reported on individually, and then 'rolled-up' into a campaign which is reported on as well. So a campaign may be four weeks of week-on, week-off (over 8 weeks) with each week 85 GRPs, with a 1+ reach goal of 35% at an average frequency of 2.4. We then judge each week of the buy (and adjust if need be). After the fourth on-air week we'd need 340 GRPs, with a 1+ reach of (say) 70% and average frequency of 4.9. There would also be a 3+ reach goal of something like 50% to ensure the buy was effectively spread.
John, although the so-called 'recency" theory calls for weekly reach goals and continuity scheduling, most of the media plans I see use flights and a four week time frame as before, though there are some variations like "blinking" --in two weeks, then out, then back in, etc. The effective frequency concept is now in disrepute, so we almost never see plans where the goal is to attain a certain reach at a particular frequency level anymore----in part because it is virtually impossible to control actual commercial exposure in this tight a manner and, also, because the time buyers buy mainly on tonnage, not reach/frequency patterns.
As for timely adjustments to the buy based on sales or other results, while this is often evident on a quarter by quarter basis, and is often seen for special, fast breaking promotions such as movie launches or local store sales, national "branding" advertisers tend to lock their monthly TV schedules in place and don't adjust them in-flight. As I noted, they will make longer ranging weight changes but it's more or less a delayed reaction, not a day by day or week by week one.
Thanks for the clarification Ed.
I've used recency here in Australia (well, actually propinquity) here to a client's delight.
The client had a margarine brand with a lowish budget that they spent in two two-weekly bursts annually (the make a lot of noise strategy). Our economic modelling showed that sales dropped below base line sales around 8 weeks after going off air and stayed there (this pretty much aligned to the six-week purchase cycle.
So instead of 800 GRPs being spent in 4 weeks we went to 22 weeks of 40 GRPs on a week-on-week off basis (same budget - lower CPM) and avoided holiday periods like Christmas and Easter. We were able to do this with a handful of spots and negotiated some bonus spots and often hit a 35% 1+ reach in a week.
The buys were highly unduplicated so after the second on-air week we'd have around 50% 1+ reach and 60% after the third on-air week.
Did it work? 8.7% year-on-year sales increase to record levels with reduced price and retail support.
I suppose being a smaller market we were able to craft these buys with plenty of lead-time and broadcaster buy-in.
Given the proliferation of free-to-air digital channels and large increases in cable channels it may not work as well now. But the core of the strategy was propinquity, backed with econometric modelling and a client that allowed us to lock away the whole year's buy in one go.
This is misleading: "Having said all that, if you look at the data in percentages, live TV is still King with a capital K, commanding 83% of video viewing. But in 2008, that was 93%, and 2013, 87%. See what I mean by death by a thousand paper cuts?"
Those aren't decreases in viewing (according to the most perceptive research). Rather, there's been a huge jump in viewing of video (TV, YouTube, tec...). So what you're interpreting as a "drop in TV viewing" is actually mostly an increase in non-TV viewing that gets included in the total. (There is some decrease in TV viewing - but so far it's quite small).
Doug: please note I am not refering to TV viewing as a whole, only to live TV viewing. Overall screen use is increasing asi have indicated in the article; live TV's viewing share is decreasing - slowly but at an increasing pace.
Ed and John: I agree that advertisers are in a heap of trouble because of the slow death of live TV. The alternatives are not (yet) robust enough, and/or are hampered by fraud and the ludicrous IAB viewability standards, or are not commercially available to advertisers at all (e.g. Amazon or Netflix).
We are living in a transition right now. We know what was, and kind of know what is, but what will be is anybody's guess.
Thanks for the clarification, Maarten. At this point, I'm not concerned (for example) about time shifting. When the DVR appeared, ad effectiveness increased. And as we have interviewed people I've come to the conclusion that it makes sense - DVR's make TV ads into better things. Yes, we are able to skip those that don't matter to us (which we were already doing mentally). But when one DOES matter, the DVR changes TV from pure linear advertising (which the textbooks have always noted as one of TV's challenges) to ads you can rewind to review, pause to share with other people, and save to look again later. And, yes, people do that.
Seems to me that what would continue to maintain our modern economies (because losing TV is an economic issue because I don't think digital ever CAN deliver TV's impact because of the inherent audience fragmentation and deliver vehicle problems) would be for alternate screens to continue to follow essentially the same advertising/programming models... To include ads within programming (although they'd probably have to be shorter ads).
Can that work? Heck if I know. There the industry seems to be foolishly ignoring the most obvious answer. At the same time, there are serious challenges. But I'm fascinated that there's not effort to maintain the best answer.