Ad budgets are flowing from Facebook back into TV in the U.K. But the inversion isn’t solely due to how fed up brands are with the social network; it’s also down to the emergence of an addressable alternative on TV.
Spending on Facebook has wobbled recently. The amount brands spent on the platform rose 27.9 percent to £2.88 billion ($3.8 billion) in the U.K. in 2018, per eMarketer. The research firm predicts that the growth rate will slow to 23.5 percent in 2019, with ad spend on Facebook expected to reach £3.47 billion ($4.5 billion). On the flip side, TV ad revenues remain solid. Despite the economic uncertainty of Brexit and terminal decline of linear advertising, the amount spent is expected to grow 1 percent this year to £4.4 billion ($5.7 billion), per GroupM.
While Facebook is still winning some share of TV budgets, advertisers are taking more care in how they use the platform — and that’s influencing investment decisions. This is compounded by the fact that TV advertising itself is becoming more data-driven as sellers give advertisers better targeting options, according to ad buyers.
“TV advertisers are moving away from Facebook in relatively big numbers,” said a senior agency executive at a holding group. “They’re putting that money back into TV because it’s more regulated and is starting to establish a proposition around targeted ads. TV viewing as a whole isn’t down, but the way we watch it live is and that’s something broadcasters are still figuring out how to monetize.”
Duracell spent some of 2018 investigating where to spend Facebook budgets across Europe after it discovered that a large portion of the video ads it bought on the social network in the U.K. weren’t being viewed. “People aren’t bothered about video on Facebook,” said a marketer at the CPG business, who was not authorized to speak to Digiday. Rather than try to focus on more expensive, but viewable impressions, Duracell decided to divert the money it had spent back to TV, a large portion of which went toward on-demand content.
Some advertisers are realizing how tricky it is to measure online media as they come to terms with how much money they have invested in those areas and not seen the sales uplift, brand recall or purchase intent they expected. Broadcasters have pounced on those struggles and are offering incentives to advertisers. Similar to how Google and Facebook offer free analytics tools to their advertisers, Sky and ITV are sharing analytics and measurement solutions with their own advertisers. Sky, for example, recently introduced Moat verification across all its video on demand platforms. It’s the first time advertisers will be able to get independent verification of a set-top box impression.
Thus, TV is starting to look more attractive to those advertisers.
Part of the attraction could also be motivated by prices. Effective CPMs are high on Facebook as view-through rates are small, making buys on the social network potentially more expensive compared to TV, said one media agency executive on condition anonymity. The rationale is focused on the context and more importantly the return on investment rather than the perceived CPM. Facebook’s response has arguably been to continue positioning its video ads as complementary to TV, with many advertisers using the social network’s brand studies to measure the effectiveness of those ads.
Around 80 percent of Channel 4’s total digital revenues come from the addressable ads it sells on its All 4 video on demand service, per the broadcaster. Programmatic will be how Channel 4 scales those addressable VOD audiences further. Its programmatic marketplace accounts for over a third (35 percent) of total digital revenues. In 2017, the broadcaster’s digital revenues hit £124 million ($162 million).
As a microcosm for the wider commercial market, Channel 4’s revenue from addressable ads shows clear demand for a commercial business that hasn’t scaled as quickly as many observers anticipated.
But scale is coming to addressable TV, with broadcasters pushing to woo eyeballs to their VOD services. There were some hard negotiations between content providers and pay-TV platforms over catch-up catalogs last year, which led to a blackout of UKTV channels on Virgin TV services mid-2018. Meanwhile, Channel 4 secured a deal with Sky for the rights to broadcast the first series of drama series “Tin Man” during primetime and on All 4 in exchange for limited Formula One rights.
It’s not just Facebook budgets from larger advertisers fueling the addressable market.
A significant amount of the budgets handled by media agency The Specialist Works are new investments from DTC advertisers, many of which have hit a ceiling in online advertising and are struggling to grow their brands on those channels alone. With the spread of TV attribution businesses such as Adalyser and TVSquared, DTC brands are looking to replicate their digital buys as much as possible, in terms of both the flexibility of approach and qualifying TV’s contribution.
“We have seen significant growth in AV spend, which represents how people consume content across linear TV, broadcaster VOD and online video from DTC advertisers over the course of the last few years,” said Grant Crymble, head of broadcast at The Specialist Works. “The thirst to reduce wastage to an absolute minimum, control frequency around stores and overlay CRM data is a massively powerful thing in the TV-sphere. It’s driving this focus, and performance will only improve as a result.”