Is TV still attractive?
Broadcasters are failing to meet their ratings forecasts, and ad-block ratings and net reach are declining. At the same time, the price-performance ratio is improving. Advertisers are getting less and less value for their money. Is TV still attractive?
Let’s take a brief look back at the past year: With a few exceptions—such as SRF1 and RTSun—broadcasters and media agencies projected ad-block ratings for their respective pricing target groups in the second half of 2021 that were higher than the figures achieved in the previous year. These forecasts were based, among other things, on assumptions regarding a positive trend in viewing time. Due to the pandemic, viewing time had increased in 2020, bucking the long-term trend. This one-time effect no longer held true in 2021. Due to the normalization of the situation and the continued growth in time-shifted viewing, television usage developed as expected: it declined.
«Advertisers are considering whether they should continue to invest the same amount of their budget in TV as they have in the past.»
This trend had a particularly devastating impact on the ratings forecasts, especially for the channels marketed by Goldbach Media. In the fourth quarter, during primetime in the 15- to 49-year-old target demographic, only 68 to 71% of the projected performance was achieved, depending on the channel group. Only 4plus and RTL9 exceeded the forecast during this period. Here, the actual advertising block ratings achieved during primetime were 5% and 23%, respectively, above the forecast figures. Larger networks such as RTL and Pro7 achieved only 61% and 66%, respectively, of the forecasted values. TV24 and C8 fared even worse, achieving 40% and 43%, respectively, of the forecasted performance. Outside of primetime, forecast accuracy was somewhat better in some cases. However, since the majority of the advertising budget is often allocated to primetime, this only offset a portion of the loss.
The SRG’s leading broadcast networks performed better. On the one hand, the forecasts were more conservative; on the other hand, the SRG networks benefit from their target audience—people aged 15 to 59. This demographic is generally more «TV-friendly» than the target audience for the channels marketed by Goldbach. Nevertheless, even these channels fell slightly short of their projected primetime figures for the fourth quarter of 2021, though they posted significantly smaller losses than the competition: SRF1 reached 96% of the forecast figures, and RTSun 90%. The second-tier networks, on the other hand, fell short of the forecast by well over 20% in individual months. The channels TF1 and TMC, also marketed by Admeira, fell significantly short of the forecast only in December, whereas TFX fell short for the entire quarter. The channel achieved only 66% of the forecast ratings.
Trends in Viewing Time in Minutes, German-Speaking Switzerland
Trend in Viewing Time (in Minutes), Western Switzerland
What conclusions have broadcasters and marketers drawn from these developments for the current year? Apparently, they’ve relied on the «principle of hope.» But those hopes have not been fulfilled. Initial analyses for 2022 show that viewing time in the first weeks of the year is also significantly below the previous year’s figures, meaning that the ratings forecasts were set too high. As a result of these developments, some broadcasters have announced adjustments to their forecasts. Depending on the broadcaster, these adjustments will take effect as early as March 1, 2022. However, as far as is known at this time (as of the end of February 2022), block rates will not be reduced to the same extent. This means nothing less than that the price-performance ratio will become significantly more expensive once again. Depending on the broadcaster, this will result in inflation rates in the double digits.
So is TV still appealing? The answer is: «Yes, but!»
Television continues to offer advantages over other moving-image channels (screen size, viewing context, strong reach depending on the target audience, and a controllable environment). Furthermore, performance declines are at least partially offset by the performance guarantees provided by media buyers. However, due to the sharp price increases, many advertisers will consider whether to continue investing the same amount of their budget in TV as before or whether it would be better to reduce their TV budgets and allocate more funds to online media. And in doing so, they will not necessarily consider Swiss online offerings. That would then be a double loss for Swiss media and advertisers.
