RTVG flushes money into the TV advertising market
Media Research: Prognos expects the Swiss TV advertising market to generate more than 140 million Swiss francs in additional revenue following the revision of the RTVG.
Media research Prognos anticipates more than CHF 140 million in additional revenue for the Swiss TV advertising market following the revision of the RTVA If the total revision of the Radio and Television Act (RTVA) does not have to lose any hair in the debate in the National Council, the Swiss TV advertising market can rejoice. At least that is the view of the latest Prognos study entitled "Data and facts on the Swiss advertising market - a contribution to the discussion on the new RTVA", authored by Josef Trappel and Daniel Hürst (project manager). The study, commissioned by IP Multimedia (Switzerland), Sat 1 (Switzerland) and SevenOne Media (Switzerland), offers a precise overview of the history of the Swiss TV advertising market from 1993 to 2002 as well as a worthwhile outlook. Prognos has calculated how many additional millions of Swiss francs could be flushed into the Swiss TV advertising market for some sub-sectors - as soon as interruption and alcohol advertising are permitted for private TV providers.
The additional revenue that advertising for light alcoholic beverages could generate is difficult to predict. Although Prognos does not provide any concrete figures, it compares the situation with neighboring countries, where up to five percent of TV revenue comes from alcohol advertising. However, these amounts are unlikely to be excessive in Switzerland, especially as the high-reach SRG channels are not included.
Eliminated spill effects
More interesting are the scenarios that could result from the disappearance of the "in-spill" effect. This is the advertising that runs on foreign channels and is also seen by the Swiss public. The liberalization of interstitial advertising will enable advertising windows to reduce such inspill effects by allowing further advertising islands to be overlaid with Swiss advertising. Due to the restrictive regulation of interstitial advertising in our country - to which advertising windows must also adhere - this has not been permitted to date.
As Prognos has calculated, the value of advertising entering our country via Inspill adds up to an impressive gross amount of around CHF 1.5 billion. However, this is a purely theoretical figure, of which only a fraction is really relevant. This is because, among other things, the target groups in Switzerland are not reached on a one-to-one basis and because viewer behavior and usage intensity in Switzerland differ from neighboring countries. In addition, the majority of advertising in foreign programs relates to products that are not available in Switzerland. And last but not least, the existing partial overlay of original advertising with Swiss advertising windows has already eliminated part of the potential advertising spill.
Indispensable SRG channels
After deducting all these restrictions, Prognos still calculates a relevant advertising pressure of around CHF 140 million resulting from the Inspill effects. This is the amount that the economy would have to spend on additional TV advertising in Switzerland if the loss of inspill were to be compensated for by additional advertising pressure. However, it has to be assumed that not all of the resulting inspill effects will be replaced by additional advertising investments by the affected companies in Switzerland, Prognos assumes. This is simply because companies' marketing budgets cannot be expanded at will in view of the general cost pressure. The study also points to a major imponderable, because SRG and private broadcasters will have to live with different advertising rules. For example, alcohol advertising is to remain prohibited on SRG stations, while at the same time the previously permitted interstitial advertising for long feature films is to be abolished. This asymmetry is a double-edged sword. After all, TV advertising is only attractive to the economy if it has a wide reach and sufficient booking and combination options in media planning. The futurologists suspect that companies could therefore do without TV advertising if they lack the reach of SRG programs.
Another problem mentioned by the authors of the study is the dispute over the "level playing field" between domestic and foreign private TV broadcasters. This discussion is unlikely to end even after the revision of the RTVA. According to Trappel and Hürst, there is a risk that the new RTVA will already be outdated by the time it comes into force. The result would be that the Swiss private television scene would once again be worse off than providers in neighboring countries. This is because the complete abolition of quantitative advertising restrictions and a further relaxation of the provisions for interstitial advertising are already being discussed there.
Narrow Swiss TV share of the advertising pie.
158 percent moreThe introduction of the RTL advertising window in 1993 brought movement to the Swiss TV advertising market. The effect was more lasting than that of the domestic private stations, which entered the TV market from 1994 in the regional area and from 1998 with regional language offerings (Tele 24 and TV 3).
In the last ten years, gross expenditure on Swiss TV advertising has grown by 158%. During this time, television has increased its share of total gross advertising expenditure from 10% to 17%. The number of companies advertising on TV and the number of products advertised has almost doubled since 1993. The growth in TV advertising expenditure has mainly benefited advertising windows, which currently account for almost 42% of TV spending in German-speaking Switzerland. (dse)
Country comparison of advertising markets 2001Basis: Gross advertising expenditure
Shares in % Switzerland Germany Austria
Daily newspapers* 43.0 21.1 38.1
Consumer magazines 18.4 24.2 18.7
Trade journals 6.1 2.3 2.9
Television 18.1 44.2 24.8
Radio 3,4 5,5 8,7
Poster 10.9 2.7 6.7
* in Austria incl. regional weekly newspapers
Conversion rate: 1 EUR = 1.51 CHF Sources: Media Focus, ACNielsen, Focus Media Reserach
Daniel Schifferle
The additional revenue that advertising for light alcoholic beverages could generate is difficult to predict. Although Prognos does not provide any concrete figures, it compares the situation with neighboring countries, where up to five percent of TV revenue comes from alcohol advertising. However, these amounts are unlikely to be excessive in Switzerland, especially as the high-reach SRG channels are not included.
Eliminated spill effects
More interesting are the scenarios that could result from the disappearance of the "in-spill" effect. This is the advertising that runs on foreign channels and is also seen by the Swiss public. The liberalization of interstitial advertising will enable advertising windows to reduce such inspill effects by allowing further advertising islands to be overlaid with Swiss advertising. Due to the restrictive regulation of interstitial advertising in our country - to which advertising windows must also adhere - this has not been permitted to date.
As Prognos has calculated, the value of advertising entering our country via Inspill adds up to an impressive gross amount of around CHF 1.5 billion. However, this is a purely theoretical figure, of which only a fraction is really relevant. This is because, among other things, the target groups in Switzerland are not reached on a one-to-one basis and because viewer behavior and usage intensity in Switzerland differ from neighboring countries. In addition, the majority of advertising in foreign programs relates to products that are not available in Switzerland. And last but not least, the existing partial overlay of original advertising with Swiss advertising windows has already eliminated part of the potential advertising spill.
Indispensable SRG channels
After deducting all these restrictions, Prognos still calculates a relevant advertising pressure of around CHF 140 million resulting from the Inspill effects. This is the amount that the economy would have to spend on additional TV advertising in Switzerland if the loss of inspill were to be compensated for by additional advertising pressure. However, it has to be assumed that not all of the resulting inspill effects will be replaced by additional advertising investments by the affected companies in Switzerland, Prognos assumes. This is simply because companies' marketing budgets cannot be expanded at will in view of the general cost pressure. The study also points to a major imponderable, because SRG and private broadcasters will have to live with different advertising rules. For example, alcohol advertising is to remain prohibited on SRG stations, while at the same time the previously permitted interstitial advertising for long feature films is to be abolished. This asymmetry is a double-edged sword. After all, TV advertising is only attractive to the economy if it has a wide reach and sufficient booking and combination options in media planning. The futurologists suspect that companies could therefore do without TV advertising if they lack the reach of SRG programs.
Another problem mentioned by the authors of the study is the dispute over the "level playing field" between domestic and foreign private TV broadcasters. This discussion is unlikely to end even after the revision of the RTVA. According to Trappel and Hürst, there is a risk that the new RTVA will already be outdated by the time it comes into force. The result would be that the Swiss private television scene would once again be worse off than providers in neighboring countries. This is because the complete abolition of quantitative advertising restrictions and a further relaxation of the provisions for interstitial advertising are already being discussed there.
Narrow Swiss TV share of the advertising pie.
158 percent moreThe introduction of the RTL advertising window in 1993 brought movement to the Swiss TV advertising market. The effect was more lasting than that of the domestic private stations, which entered the TV market from 1994 in the regional area and from 1998 with regional language offerings (Tele 24 and TV 3).
In the last ten years, gross expenditure on Swiss TV advertising has grown by 158%. During this time, television has increased its share of total gross advertising expenditure from 10% to 17%. The number of companies advertising on TV and the number of products advertised has almost doubled since 1993. The growth in TV advertising expenditure has mainly benefited advertising windows, which currently account for almost 42% of TV spending in German-speaking Switzerland. (dse)
Country comparison of advertising markets 2001Basis: Gross advertising expenditure
Shares in % Switzerland Germany Austria
Daily newspapers* 43.0 21.1 38.1
Consumer magazines 18.4 24.2 18.7
Trade journals 6.1 2.3 2.9
Television 18.1 44.2 24.8
Radio 3,4 5,5 8,7
Poster 10.9 2.7 6.7
* in Austria incl. regional weekly newspapers
Conversion rate: 1 EUR = 1.51 CHF Sources: Media Focus, ACNielsen, Focus Media Reserach
Daniel Schifferle
