Nielsen reports 2008 US Advertising Spend Figures: Broadcast TV, Internet, Overall Down; Cable TV Up

Nielsen reports figures for US advertising market in 2008, almost all measures show downward trend from 2007 figures

• total US ad spend down 2.6% – from $140.5 billion to $136.8 billion
• Broadcast network tv down 3.5%
• Spot TV top 100 down 0.3%
• Internet down 6.4%
• Cable TV up 7.8%
• Hispanic cable tv up 9.6%

TV is still the dominant advertising medium, with 60% of total ad spend.

Top ten advertisers total spend was down 15% to $15.5 billion.  Biggest falls registered by car manufacturers (as a sector, down by 15.5%), pharmaceuticals (down 18.4%) and motion pictures (down 11.4%).

Among media and communications companies in the top 10, Time Warner down almost 24%, Verizon Communications down 1.3%, AT&T down 7.2%.

The only product categories registering rises in total ad spend in 2008 were “Quick serve restaurants” and “Direct response products”.

Nielsen reports US TV viewing at all time high in Q4 2008 – due to timeshifting; UK reports similar rise in viewing

As reported here in Variety, Nielsen is reporting record levels of TV viewing in the US for the fourth quarter of 2008. Apparently the average American over the age of 2 watched 151 hours of TV per month (that’s c.5 hours per day), up from 146 hours in same period 2007. The article notes

More watching of recorded TV explained some of the increase: that was up to 7 hours from 5 hours the year before. That included digital video recorders like the TiVo and “Start Over” features offered by some cable companies.

Among those who watch video on the Internet and on cell phones, the time spent viewing increased from the third quarter, but at much lower levels. The average user of Internet video spent two hours and 53 minutes on that per month, Nielsen said

In a separate report out Monday, Leichtman Research Group said only 1 percent of adults view recent TV shows online daily, and they’re no more likely to consider disconnecting their TV subscriptions.

Leichtman’s findings were based on a survey of 1,250 households last year.

The Leichtman study is summarised in a press release from the company here.

Meanwhile on February 10, the peak advertising industry body in the UK, the Institute of Practitioners in Advertising, released its Q4 2008 Trends in Television report. The report notes average daily viewing in UK is almost 4 hours, the highest for Q4 since 2004.  Digital reception is at 86%, with ‘non-terrestrial channels’ gaining 40% viewing share. The full report is available to IPA subscribers.

New Report on Online Video in Asia

Mike Walsh, trendspotter, digital futurist and researcher, has just posted on his blog a summary and videos relating to a research project he’s just completed for CASBAA, the Cable and Satellite Broadcasting Association of Asia, on online video in Asia.  It makes fascinating reading (and watching). The emphasis is on the power of audiences; the second video ends with the statement that “Audiences not media moguls will reinvent the experience of television”.

The videos are worth watching, so I’ve embedded them here for ease of access.  Below the videos is Mike’s summary of the highlights of his findings.

My take-aways from this were:

• much lower % of UGC viewed and created in China, Korea and Japan than in US, Australia, UK
• free is the norm, but “dealing with free will be the biggest challenge”. Online video sites and content producers getting around this in various ways. Tudou which claims to be the largest video sharing site in China, is ad supported “we introduced our video advertising system in 2007, where we show full screen pre-roll ads while the actual video loads as well as full screen wallpaper ads around the video during playback”, but they are negotiating licences with content producers.
• average time spent on an online video site is c.1 hour, (according to one of Tudou founders) compared with c.7-12 mins for YouTube.
• most people (in China) find out about online videos through Instant Messaging from friends (email is much less widely used than in the west)
• a recent Chinese movie, Red Cliff, was released through all the online video download sites in China on a unique format that forces users to watch ads before the movie. That is, it was ad-supported

Part One

Part Two

Here are a few of the insights from the report:

1. The Internet has become a primary entertainment destination.
For young Asian consumers, the Internet is entertainment – particularly in China. A survey by the China Youth Daily and Sina in January 2008 indicated that more than 80% of young Chinese placed the Web as their primary source of entertainment compared to TV, at 66%.

2. Social discovery drives the popularity of content rather than traditional programming or marketing campaigns.
When it comes to the discovery of content – blogs, referrals through instant messaging clients, BBS boards, and top ten lists on video sharing sites have the most influence. In China, according to the CNNIC 63.7%, of video content is discovered through social connections, 94.1% of this sharing taking pace instant message tools such as QQ and MSN.

3. Long form professional content is the most popular format
Although the West is just now getting a taste of long form video on the web, in Asia it has been the most popular format for a while. 86.3% of the online video watched by Chinese netizens is either studio created films or TV shows. In Korea, 47% of users had illegally downloaded at least 55 movies a year, or more than one a week.

4. Audiences actively participate in content experiences
In Japan, the most popular video sharing site is Nico Nico Douga (Smiley Smiley Video) attracts almost a billion page views a month. The most distinctive feature of the site is an on-screen commenting function, where user messages scroll as commentaries across the video while playing like a form of visual karaoke.

5. Consumption is communal
Asian teenagers enjoy being online together. China has about 113,000 licensed Cyber Cafes, with many more operating illegally while in Korea, despite strong home broadband connections, most youth prefer to socialise in one of the 26,000 PC Baangs.

6. User anonymity is important
One of the major differences between Western and Eastern online users is the importance of privacy and anonymity. Most Japanese online users prefer to use imaginary names and cartoon avatars rather than photos to represent themselves while in China, much of the attraction of bulletin board systems is the ability to post comments without revealing your actual identity. YouTube in Japan after attempting to encourage greater amounts of user generated content is now focused on the more culturally acceptable practice of uploading cute pet videos.

7. Local brands dominate the online video landscape
For both cultural and technical reasons, local video sharing sites in Asia have generally been more successful than foreign players such as YouTube. In Japan, Nico Nico Douga is very popular, in Korea the dominant site is PandoraTV while in China, the top two sites are Youku and Todou.

13% Decline in TV Advertising Revenue in 2008 Contributes to CBS Loss of US$11.8 billion

Broadcasting and Cable’s Claire Atkinson reports today on CBS Corp’s announcement of $11.8 billion loss for 2008, and 52% fall in net income.

Not all of the loss is due to downturn in TV advertising revenue, although all ad-supported areas of the Corp’s business are down: outdoor by 75% and radio by 56% in the fourth quarter of 2008. According to B&C, two thirds of CBS’s revenue is derived from advertising.

Hurt by local advertiser pull backs in radio and outdoor and a challenged national TV ad market, CBS Corp. said operating income at the television segment was down 40% in the fourth quarter, at $272.2 million down from $450.5 million in the year previous and for the full year down 14% to $1.5 billion in 2008. CBS had broadcast the Super Bowl in the year previous. TV segment revenue was down 8% for the fourth quarter at $2.2 billion and down one percent for the full year at $8.99 billion.

There may be further bad news ahead for the TV network, despite good ratings for TV shows

Ironically, CBS ratings success may be something of a burden. CBS doesn’t have make-goods and its high ratings give its sales team many more ratings points to sell than its competitors. In some instances scarcity of ad inventory creates higher pricing. Analysts have noted that the network may have difficulty selling all those additional eyeballs in a down ad market. Also, CBS traditionally holds back more inventory for the year round scatter market, rather than selling it upfront, banking on its strong programming slate to bring in usually higher scatter pricing.

But one bright light on the horizon is… ONLINE VIDEO and INTERACTIVE SERVICES!

[CBS Corp CEO Leslie] Moonves praised TV.com [CBS's online video portal] and said it had added thousands of videos and was delivering five times the number of a streams as last year. “TV.com is clearly going to be a very, very big play in what is clearly a fast growing market.” The CBS Interactive unit saw a jump in revenue for the fourth quarter to $186 million reflecting the acquisition of CNET along with higher mobile revenue and higher ad sales.

Although TV.com/CBS are currently in dispute with NBC and News Corp owned Hulu.com, with the latter removing programming from the former.

Hulu, which launched in beta in October 2007 and publicly in March 2008, has been a runaway success for its backers, even garnering some high profile Super Bowl promotion. But TV.com, relaunched by CBS in January, is also growing and offering up some increased competition for viewers that wish to stream their favorite shows online. According to a Mediapost story today, TV.com recorded a 1,261% increase in streams for January and a 263% increase in unique viewers in January, according to Nielsen VideoCensus data.

Do you feel “gamed” by online advertising?

…..its getting harder and harder, now that the Internet is becoming almost a living, breathing thing that watches what we do, to know whether its genuine recommendation that’s coming through from someone, or whether it’s a testimonial from an agency hidden as a blogger recommendation.”

Laurel Papworth, social network strategist.

This transcript from the ABC’s Future Tense program examines the so called power of peer recommendation as a recent advertising strategy. It also raises interesting questions about who is more savvy in the online space? the advertiser? or the consumer, as they wise up to the targeting of their profiles and online habits? One wonders what forms of consumer resistance will evolve.

Oh and there’s also the emergence of embedded adds through social media sites. I guess this is like replacing the recommendation of the traditional TV presenter with the recommendation of the Youtube (or whatever) favoured personality.

see

GFC Bites TV: Canadian regulator considers one-year licence renewals

Canadian sources are reporting that the Canadian broadcasting regulator CRTC is considering issuing short-term one-year licences (rather than usual 7 year terms) when network licences come up for renewal in April. This follows release of CRTC data showing major private sector TV broadcasters profits fell by 93% in 2008. Elsewhere the union that represents many media employees is urging the regulator to protect local programming in smaller markets as broadcasters cut costs. Full story in the ChronicleHerald, with future looking even more dim for Canadian broadcasters:

The drop-off in advertising revenue for conventional broadcasters, including at CBC’s television operations, will likely accelerate due to a general slowdown in the Canadian economy.

At the same time, they face the expense of switching their systems to digital broadcasting by the end of August 2011, following the lead of American broadcasters who are to make the switch by this summer.

There is also concern about rising spend on imported vs. Canadian programming: CRTC data shows

Operating expenses increased to $2.1 billion in 2008, with the acquisition and production of programming representing 71.5% of all expenses. Investments in Canadian programming remained essentially unchanged at $619.6 million, of which $146 million was paid to independent producers. However, private broadcasters spent $775.2 million on foreign programming in 2008, up 7.4% from $721.9 million in 2007.

Canadian programming

Spending on Canadian programming included $88.3 million for drama, $90.4 million for general interest programming, $323 million for news programs, $67.2 million for other information programs, $24.7 million for musical and variety shows, $7.5 million for sports programs, and $16.6 million for game shows.

The CRTC also announced last week that it would reduce the scope of forthcoming public hearings to explore the following key issues:

• the appropriate contributions to Canadian programming (local, priority and independently-produced programming), given the current economic conditions;
• the terms of administration and delivery of the LPIF, including the method of establishing the base-level expenditures for the purpose of determining incrementality;
• whether to impose a 1:1 ratio requirement between Canadian and non-Canadian programming expenditures, both on a trial basis during a short-term licence, and on a longer-term basis; and
• consideration of the terms for the digital transition by August 2011, in light of an industry working group report being prepared for the current public process.

The one that seems to be garnering most immediate attention is the suggestion that broadcasters may be required to spend the same amount on local programming as they do on imported programming.

The financial difficulties of Canadian broadcasters may have ramifications in Australia.  The Sydney Morning Herald today reports on Channel 10’s efforts to raise $90 million through an institutional placing of 120 million new shares at 75c each. Channel 10 was placed in a trading halt yesterday, with shares trading at 93c at Monday’s close.

The fragile position of the media market and Ten’s specific situation was highlighted by the fact that the fund-raising issue was neither underwritten by a financial institution nor taken up by the Sydney-based broadcaster’s controlling shareholder, the Canadian CanWest Group.

CanWest, which is being squeezed by debt pressures in its domestic media operations and is currently selling TV operations to cut its financial exposure, will see its 56.6 per cent stake drop to around 50 per cent as a result of its decision not to put up more money.

“CanWest is supportive of the proposed capital raising but has elected not to participate,” said the group’s president and chief executive, Leonard Asper.

governments strapped for cash could tax the internet

One of our scenario writers in December 08, imagined that the government would levy “everything that moves in cyberspace”.

The Rudd government saw the Free to Air Television stations were doomed and that it should control access to what it called The Right to Distribute. So it levied all audiovisual distribution companies, including every web based business operating in Australia. Turnbull continued this policy. Even the global corporations had to pay hefty fees, based on their population (or ‘user’ ) reach, if they were running any advertising or pay-for-use services…..

This was a story for a world where protectionism and government control were primary drivers of the communication environment.

(Our scenarios represent 4 different worlds)

Perhaps this is not such a fantasy now, as suggested in this report on existing and proposed taxes on internet downloads

Sports and the future of (free to air) television

Channel 10 announced yesterday that their HD channel would be a 24 hour sports channel, to be named ONE. Report in The Australian HERE.

It will feature “less advertising” than TEN.

TEN Head of Sport David White said “Live and exclusive will be a hallmark of the channel”.

Sports on the anti-siphoning list can only be shown on ONE AFTER or SIMULTANEOUSLY with broadcast on TEN

Ten owns rights to swimming, netball, Indian Premier League (20/20) cricket, and jointly owns AFL and Commonwealth Games. ABC reports TEN also owns rights to US NBA basketball and major league baseball matches, the US Open golf and tennis championships, the US Masters golf, and Formula One and Nascar motor racing.

Rivals are keen to say they are not concerned. John Porter (Austar) told analysts and journalists yesterday (reported in The West Australian HERE):

“I don’t consider the Ten sports initiative to have any impact on our commercial business, nor on our core business,” Mr Porter said during a telephone briefing with analysts and journalists.

“It in no way approximates the sports offering that Fox Sports delivers and ESPN, Setanta Sports and Fox Sports News – the six or seven sports channels that we offer.”

Little bit of a worry that he doesn’t know exactly how many sports channels Austar offers…

Fox Sports chief operating officer Jon Marquand was dismissive, quoted in Australian article as saying “I don’t think there’s much new there if you look at the content”. This is slightly disingenuous, given that a large proportion of the ONE content will be live or recorded live (and therefore ‘new’ in the sense of not having happened yet and never seen before).

We can expect to see a lot (more) sport on television as HD comes in.

There are currently 11 sports channels available on subscription television (Fox Sports 1,2,3 and Fox Sports News, ESPN, TVN, Sky Racing, FUEL TV, Setanta, Eurosports, National Geographic Adventure). ABC2 has started broadcasting WNBL matches live on Friday nights. ABC1 screens bowls, the WNBL and the W-League (Women’s football). On Sunday last, various kinds of motor sport were on channels 7, 10 and SBS simultaneously. Sunday afternoons on SBS is motor sport and football (the round ball game).

Given the popularity of their paralympics coverage, it wouldn’t be a surprise to see the ABC cover sports like wheelchair rugby and wheelchair basketball.

Sports are critical programming for the commercial free to air television broadcasters, one of the few guaranteed ‘audience massers’. And if stats from the AFC are anything to go by, this importance has only increased in the last five years:

(All references to FTA)

• In 2007, the top 6 programs for the year were all sports, 13 of the top 20, and 8 of the 11 drawing over 2 million viewers
• In 2006, 4 of the top 5 (including no.1), 7 of the top 10, 13 of the top 20
• In 2005, the top 9 programs for the year were all sports, 11 of the top 20
• In 2004, highest rating sports program was no.3 for the year, 3 of top 10, 4 of top 20
• In 2003, 5 of the top 10 (including no.1), 5 of the top 10, 5 of the top 20
• In 2002, highest rating sports program was no.2, 4 of top 10, 6 of top 20

Advertising spend in UK – new stats

Advertising: Internet Advertising Bureau/PWC/World Advertising Research Centre stats show internet ad spend up significantly in UK as overall ad market shrinks slightly. Search advertising is still majority (981 million pounds out of 1.68 billion total internet ad spend for Jan-June 08).

Story by Mark Sweney in The Guardian 7 October HERE

Internet advertising spend is “propping up” traditional media, according to a report, surging 21% year on year to £1.68bn in the first six months of 2008.

The resilience of internet ad spend in the downturn turned what would have been a 4.6% year-on-year decline in UK advertising spend in the first half to a slide of just 0.7%, according to the study by the Interactive Advertising Bureau and PricewaterhouseCoopers.

In this study, internet ad share of total market is 18.7% compared to TV advertising at 21.7%.

Compare with USA – see this CHART of stats for June 08 which shows TV (combined local, cable and network) taking around 60% of market, while internet at under 7%.

And compare with China where KPMG report predicts 40% growth of internet ads next year, to $5.2bn out of total ad market of $37.85bn, see Mark Sweney’s story in the Guardian 22 October 2008 HERE.

The same KPMG report sees opportunities in television content for international coproductions with Chinese producers

KPMG also forecasts that China’s huge TV market – 1.19 billion TV viewers over the age of four and one-third of the global cable TV market, which accounts for more than 60% of the country’s media spend – also presents opportunities for western companies.

“Content generation represents a big opportunity. Chinese TV producers are increasingly likely to need to look outside China to secure appropriate content and programme formats for different channels,” Honson said.

In late September Mark Sweney wrote about the downturn in ad spend in UK and predictions of a ‘horror show’ for media companies in 2009.

This puts into perspective Sir Michael Grade’s comments about ITV giving up its public service broadcasting remit, as reported by Andy last week.

Noting the announcement this week of the review of the public broadcasters here in Australia, could it be that the relative size and importance of the ABC and SBS may grow significantly if, as some predict, there will be a decline in the commercial television advertising market which might (given James Packer’s to get out of Channel 9 this week) hasten the demise of the commercial FTA/network system?

Margaret Simons’ overview of the issues around the PSB review is HERE at a new website Inside Story, the brainchild of Peter Browne (Australian Policy Online and Creative Economy) and the Institute of Social Research at Swinburne University. Perhaps here at Inside Story is one answer to what will happen to quality journalism.

Digital Dividend: Reding proposes “fair play” “50:50″ split between broadcasters and new users

In a speech to the ComReg conference in Dublin on 1 October 2008, EU Commissioner for Information Society and Media, Viviane Reding, makes a strong case for the use of the ‘digital dividend’ – the spectrum that will be freed up by the transition to digital broadcasting, and by technological developments – to deliver wireless broadband services. There are considerable economic, social and cultural advantages of making this spectrum available for wireless broadband. As Commissioner Reding observes:

these UHF bandwidths are in the most valuable range, with very high propagation characteristics which, simply put means that the costs of rolling out new networks will be lower, the reception quality will be very, very good and we can use fewer and lower power transmitters, which is better for energy saving, lowering electro magnetic radiation and reducing unsightly radio masts.

The gains are not just in the economy. There are also many applications that will be crucial for public services. I give you an example: public safety services (such as fire or ambulance or flood prevention) are very often using fragmented bandwidths and old analogue technologies. They rarely have the bandwidth they need to set up mobile broadband services for teams facing natural disasters or terrorist threats. The communication systems are often poorly integrated between agencies especially cross-border and remember: natural disasters do not necessarily respect human made boundaries. The digital dividend provides an opportunity to build these crucial first response teams with a state-of-the-art infrastructure to meet our needs in times of crisis. Can we afford to pass up this chance?

Let me give you another example – highly relevant to Ireland. I have read with interest the Irish government’s new consultation paper on high speed broadband published yesterday. First, Ireland is well placed to benefit from the digital dividend because, as an island it faces fewer problems of interference. So there is an opportunity. And there is also a need. The report points out because Ireland has so many remote and rural communities the copper local loops on the fixed telecoms networks are longer than normal; 2.7 km on average) and in some cases up to 9km. This means that many subscribers cannot be reached by high speed internet, at least not at an economic cost. This is where wireless broadband steps in and where the digital dividend can make the difference.

This last point is of course highly relevant to Australia too. Using the UHF spectrum for wireless broadband could provide very fast services over very long distances, a great advantage for regional, rural and remote Australians. This would require some compromise with the broadcasters, and Reding is careful to acknowledge the important role they play.

But she concludes:

I have two suggestions to make:

First, let us jointly choose a political figure for the distribution of the digital dividend. I propose a “fair play” 50:50 rule. That is half the dividend for the broadcasters and half the dividend for the new users. A bold step like this will show the world that we mean business. This is the only way we will cut the knot and make real progress.

Second, let’s move ahead together. On spectrum, together Europe is strong, divided it will fail to reap the rewards of the digital dividend.

This echoes the current push in the US by the Wireless Innovation Alliance, a lobby group led by Google and Microsoft which also includes equipment manufacturers Dell, HP and Motorola, to use the “white spaces” or spectrum not used for broadcasting (the digital dividend) for wireless broadband services.  See the Alliance’s Resources page for more information from their perspective.

The Federal Communications Commission has been conducting field tests which apparently do not support the concerns voiced by broadcasters and wireless microphone manufacturers that the use of the white spaces in this way would interfere with their signals.The broadcasters position is outlined in this article from Broadcasting and Cable.

Yesterday Bill Gates called on the FCC to approve the white spaces plan at their meeting on November 4.