Worries with jumpers

Unlike print advertising, television advertising has so far survived digitalization unscathed. Now two important trends from the digital world are attacking the reach of traditional TV advertising: Smart TV, i.e. the integration of the Internet into TV sets (Werbewoche reported on this in the last issue), and catch-up TV, time-shifted television without the need to program recordings. This corresponds to a modern lifestyle of time- and location-independent television consumption, but the general suspicion applies to TV advertising: those who watch programs time-shifted skip the commercial breaks. If this trend increases, the reach of advertising will suffer. There are still hardly any solid facts on this, but the evidence is mounting (see "Clear evidence").

If need be, take a detour

Because Mediapulse's current TV measurement panel does not include time-shifted viewing, there are no precise facts on this. Nico Gurtner, Head of Communications at Publicadata, refers to a collective pool that also includes other television consumption behavior that has nothing to do with time-shifted use, whereby a clear separation of these elements is not possible. Nevertheless, he can provide some "indicative values" based on the data from the Mediapulse television panel:

- In German- and Italian-speaking Switzerland, time-shifted television consumption is likely to account for significantly less than 10% of total TV usage. This figure is higher in French-speaking Switzerland, but is unlikely to have reached the 10% threshold yet.
- In digital households, around one in five people are likely to make use of the time-shift option at least once a day, albeit for a short time.
- Looking at the figures from 2010 onwards, there has been a steady increase in the use of the time-shifted television consumption option from semester to semester.

In Switzerland, time-shifted television has apparently already become more established than in other foreign markets. According to Goldbach Media, an average of one to five percent of viewers in Europe watch time-shifted television every day. The specific figures in Austria are 0.5 percent, in France 2.8 percent, in the Netherlands 3.1 percent and in Germany less than 5 percent.

From next year, it will also be possible to survey time-shifted usage in Switzerland using a new panel. However, it will not be possible to answer the question of the extent to which advertising is skipped. However, according to Gurtner, it "cannot be ruled out" that "something in this direction can be explored in a roundabout way".

Jumpers are almost impossible to record reliably

In the near future, the advertising industry will therefore have to find a generally accepted way of dealing with jumpers when measuring reach. At first glance, a universal solution along the lines of "if you watch TV programs with a time delay, you skip the advertising" seems obvious. As a survey of media agencies conducted by Werbewoche shows, there are various arguments for a more differentiated approach. Says Axel Beckmann, CEO at MediaCom: "Young target groups who watch less linear TV will use this option more than older target groups." Karen Wilbrand, Director TV at Mediabrands, points out: "As a decidedly lean-back medium, consumers will continue to devote themselves to real TV consumption and forego this option on one occasion or another." And Sandro Prezzi, Managing Director at MEC, says: "At the moment, I would use the 'zapping rate' as a guide: Those who zap today will probably also jump."

As long as there are no reliable, technically collected values, we will try to make do with additional surveys. Cheap, superficial studies are more likely to cause confusion than provide clarity. For example, a study from the UK in 2010 claims to have found that 86% of viewers who watch time-shifted television skip the advertising. Meanwhile, a survey conducted in New Zealand at the beginning of this year put this figure at 50 percent. This suggests that reliable figures on skipping behavior will only be available at a high price. Because as long as habitual jumping is not a mass phenomenon, large surveys will be needed to capture enough jumpers. And the willingness to jump will vary depending on the program and target group and will presumably become increasingly widespread over time.

As there are no hard facts on jumping behavior in sight, it is foreseeable that price negotiations in the future will increasingly be based on the argument of coverage losses due to skips. In the Werbewoche survey, some agencies confirmed that such discussions are already taking place. Brigitte Gubser, CEO of ZenithOptimedia, speaks plainly: "Pricing that includes time-shifted usage without providing proof that the service was provided in return (i.e. advertising blocks were not skipped) is unacceptable and cannot be enforced with customers." Marketers play it down, pointing to the minimal impact on reach so far and refusing to talk about pressure on prices. Markus Hollenstein, Head of Marketing at Publisuisse, argues: "However, advertising prices are not solely dependent on ratings. In addition to the number of viewers, demand is an important factor. Advertising opportunities with a large effective reach are in high demand and will continue to justify correspondingly higher prices in the future."

Legal disputes and investment pressure

Catchup TV is not without its obstacles. There are major disputes over legal issues, as broadcasters and content producers see this as an additional use of their works and demand compensation. The GT 12 (Gemeinsamer Tarif 12, remuneration for the transfer of use of set-top boxes with memory and vPVR) of the collecting society Suiss-image exists for this purpose, which expires at the end of the year and is currently being renegotiated. The fact that an appeal against the current tariff is pending before the Federal Administrative Court shows that the negotiations are tough. So it is not an unsatisfactory tariff per se that is putting a damper on business, but the uncertainty about the fees to be paid.

In the technical field, there are repeated calls for technical measures to prevent advertising skipping. According to Markus Hollenstein from Publisuisse, this is hardly a realistic solution, at least in this country: "It may be possible to achieve something in the short term, but we don't believe that blocking a viewer need is effective. We are also not making any efforts in this direction." And Swisscom media spokesperson Olaf Schulze states: "There is currently no technical solution for this."

Schulze points to another technical aspect that could become a challenge for network operators in connection with catch-up TV: It leads to a "massively higher load on the IT infrastructure". In contrast to simultaneous transmission, where the signal is only distributed once, with time-shifted television it has to be transmitted individually for each customer. Network operators are therefore faced with the task of correctly estimating and providing servers and network capacity based on customer usage behavior. That costs money. Says Sunrise spokesperson Tobias Kistner: "In order to cope with the higher data volume, Sunrise will increase line capacity by expanding capacity." Meanwhile, Andreas Werz, media spokesperson at UPC Cablecom, is confident: "Our network is very broad, so there are no bottlenecks in terms of performance."

TV advertising under the premises of the Internet

The increase in time-shifted usage puts Mediapulse in a difficult situation: clients, agencies and media specialists had high expectations of the new TV panel, which was set up primarily to measure web TV and time-shifted usage. It is now becoming clear that the figures collected in this way from next year will hardly be able to achieve the status of a hard currency due to the increasingly simple jumping functions in digital TV. Mediapulse, but also the technology suppliers for media monitoring, are running behind the train of rapid technical development without any prospect of being able to influence it.

Catch-up TV, smart TV, web TV, mobile TV and the like will primarily affect established broadcasters. If there is a loss of advertising revenue, their performance will decline, as is currently the case with newspaper publishers. One important aspect is the broadcasters' media portals, where additional exploitation potential is opening up. This is because the right audience is more valuable online than on TV, and the opportunities for interaction are more diverse. Take Hulu, the video portal of various American broadcasters: users have long been able to choose which commercials they want to see in pre-roll ads. Since last fall, they have been able to stop an ad that has already started and replace it with another one. Advantage number one: ads can be played in a more targeted manner and the recall values are better. Advantage number two: Because such commercials can be sold at a higher price, there are fewer commercial breaks. Advantage number three: Hulu can take on the lucrative role of an advertising network based on the targeting data obtained.

In an age where skipping advertising is as instinctive as changing channels, advertising needs to evolve - and advertising that audiences actually want to see works best. Marketers will therefore make their messages appear more as content in the future and target them precisely to the intended audience. Anyone who previously published a customer magazine will now maintain their own online channel on portals such as YouTube, where the brand message can be optimally embedded in content.

There is not only a new audience here, but above all better usage data than with TV: Who are the viewers? Why are they here? Where do they come from and where do they go afterwards? These questions can be answered more conclusively in the online world than with Mediapulse and Nielsen. Online channels can also be linked with social media and combined with supplementary formats (so-called second screen). The future of television includes screens of all sizes. For advertisers, this means spots and programs that work on all these screens, anytime and anywhere. Christoph J. Walther

Clear circumstantial evidence

The main drivers are the digital TV services offered by telecommunications companies. For a long time, the television connection business belonged to cable television operators, primarily Cablecom. In 2006, Swisscom launched its IPTV offering, which is now marketed as Swisscom TV. When Sunrise also entered the IPTV business at the beginning of this year, it needed special unique selling points to stand a chance as a latecomer to the market. So the ComeBack TV function was launched. Without having to record the program in advance, the entire TV program (initially 40, now 80 channels) can be watched spontaneously up to 28 hours after it has been broadcast. In addition, programs can be restarted, paused, fast-forwarded and rewound. Smaller cable networks such as Quickline have been offering such features for some time, but are only active in local niches. Sunrise's entry into the market has put the two top dogs UPC Cablecom and Swisscom under pressure. At Sunrise, media spokesman Tobias Kistner is satisfied: since the launch of Sunrise TV at the beginning of this year, "several thousand" customers have already opted for it. Around 80 percent of all customers tested the ComeBack TV option in the first week after it went live, and those who have used it once "usually use it again soon".

Swisscom is currently offering the replay function as part of a market test. According to media spokesperson Olaf Schulze, interest in this is "very high" and around 100,000 Swisscom TV plus customers have now registered for it. In terms of usage, it is apparent that customers are particularly interested in programs that are already running. The company is observing the user behavior of customers and will adjust the function in terms of available channels and rewind times if necessary. "In general, there is an increased demand for time-shifted television," confirms Andreas Werz, media spokesperson at UPC Cablecom. The desire of television customers to watch more television in different places and at different times in future will be met with the introduction of the new TV platform Horizon "later this year". Since 2010, it has been possible to watch programs from Swiss television, MTV and Nickelodeon time-shifted - in the case of SRF programs free of charge for 7 days after the initial broadcast.
Web TV services also offer services for watching TV programs afterwards. When asked by Werbewoche, both Zattoo and Wilmaa reported that the use of these services still plays a small role compared to live, but is increasing. Niklas Brambring, CEO of Zattoo.com, says: "Users who have tried recording once are usually enthusiastic and stick with it." He has noticed that advertising is zapped away considerably less with the free offer than with traditional cable TV because users are shown a pre-roll advertisement again, which prevents them from zapping on quickly. Further evidence of time-shifted television use comes from the 2012 Kommtech study, in which 29.1% of respondents stated that they at least occasionally watch programs after they have been broadcast. Half of those surveyed use video recorders (either analog devices or those that record digitally onto a hard disk).

And according to data from Swissstream, the Swiss Association of Streaming Providers, its member companies paid usage-based copyright fees of CHF 46,000 for catch-up TV offerings in the first quarter of this year (excluding Swisscom). This represents a remarkable increase: last year, an average of around CHF 21,000 was billed per quarter, and in 2010 it was only CHF 15,000. cjw