Small change, big impact
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Small Change, Big Impact
Jeremy Pounder, Mindshare
5th November 2010, European TV Symposium
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The ‘end of linear TV’ is a tale long foretold
‘By the year 2000, you’re going to have a very hard time telling me whether your TV set is a computer or a TV’
Nicholas Negroponte, Founder of MIT MediaLab 1989
‘Once you have Google television, you’re going to be very busy, it’s going to ruin
your evening’
Eric SchmidtGoogle CEO, 2010
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Linear TV will be more resilient than many anticipate
75% of TV viewing in the UK will still be
linear in
2020
Around
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1. Choice is very hard to manage
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TV viewers manage choice through channel brands & the schedule
Source: BARB; *top 10% by frequency
53% of viewers spend 95%+ of their viewing on<10
channels
32%of viewers change
channels <5 times in an evening
66% of heavy channel
changers* spend 95%+ of their viewing on<10
channels
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2) The enduring allure of New!
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Viewers stick to linear TV even after many years of PVR use
Sky + timeshifted viewing by years of ownership (%)
Source: SkyView
1717161615
0
10
20
30
40
50
60
70
80
90
100
5+4321
% timeshifted viewing
No Years of Ownership
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Linear will still dominate, though VOD will drive non-linear growth
Linear
PVR timeshiftVOD
2020 (f)
75%
10%
15%
2010
92%
6%2%
Estimated share of TV viewing by type (%) 2010-2020 (f)
Source: BARB / Comscore / Mindshare estimates (includes longform online video eg iplayer)
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Estimated share of viewing by age (%) 2020(f)
Source: BARB / Mindshare estimates
Timeshifted
Linear
55+
15%
85%
45-54
25%
75%
35-44
35%
65%
25-34
40%
60%
16-24
45%
55%
Adults
25%
75%
But, non-linear viewing will most likely skew young and upmarket
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Putting a disproportionate amount of ad revenue at risk
28%16-3419%
16-34
Total Viewing (%) Ad Rev (%)
Up to 15% of TV ad revenue at
risk
Source: BARB / Group M estimates
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On-demand viewing is one challenge amongst many for TV advertising
Migration of key audiences to on-demand
+
Ongoing growth of pay
Structural change (search)
Weak economic environment
‘Other’ revenue streams (eg merchandising)
Increasing pressure over next 5-10 years…
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Advertising’s share of TV revenue will be significantly smaller
100%
Subscriptions
Advertising
Public Funds (BBC)
Other
2020 (f)
17
50%
23%
17%
10%
2009
11
41%
28%
24%
6%
Source: Ofcom / Mindshare estimates
TV industry revenue £bn, nominal terms 2009 -2020 (f)
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Advertisers
Talent
Rights Holder
Content Production Channel
Device
IP Delivery Network(eg BT)
Consumer
TV Delivery Network (eg Sky)
Content Aggregator
(eg Sony, Apple)
As a result, advertisers will become increasingly involved across the value chain
Content Production Packaging Delivery Consumption
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Advertising will split into three broad types
100%
Subscriptions
Advertising
Public Funds (BBC)
Other
2020 (f)
17
50%
23%
17%
10%
2009
11
41%
28%
24%
6%
Source: Ofcom / Mindshare estimates
TV industry revenue £bn, nominal terms 2009 -2020 (f)
Addressable
Content
Spot
35%
15%
50%
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Linear spot advertising
Content
Addressable advertising
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Linear spot advertising
Content
Addressable advertising
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Linear spot advertising will increasingly become the preserve of mass market categories
3%
2010
12%
4%
10%
18%
9%
11%
26%
6%
28%
12%
2%
6%
10%
Retail 13%
2020 (est)
Misc
Finance
Ent & Media
Food & Drink
ToiletriesHousehold Stores
Motors
31%
+15%
Potential Linear Spot Advertising Share by Category 2010 – 2020 (est)
Source: NMR / Mindshare estimates
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Trading innovation & relaxation of regulation will help maintain spot revenues
Minutage flexibility
Fixed peak pricing
Auction based pricing
Help maintain yield & Total Revenue
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Linear spot advertising
Content
Addressable advertising
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Content funding will grow but within limits
Challenges
Transaction costs
Suitability (genre / advertiser)
Risk for advertiser
Demonstration of ROI
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Linear spot advertising
Content
Addressable advertising
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TV Platform Ad Server(eg Sky AdSmart)
Platform owned data
3rd Party integrated
data
Eg Experian
Eg DemographicsViewing habitsStated preferences
C4 (VOD / Linear)
Car insurance up for renewal
Home insurance up for renewal
C4 (VOD / Linear)
Pre roll / linear break
Pre roll / linear break
Price comparison site Home execution
Price comparison site Car execution
Addressable advertising is perhaps the biggest opportunity
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Heavily focused on categories with high value customers
Misc
10%
4%
9%
18%
34%
13%
Ent & Media
Retail
Household Stores
Toiletries
Food & Drink
2020 (est)
31% 27%
5%
Finance
Motors
5%2%7%
7%
2010
12%
10%
6%
+31%
Potential Advertising Share by Category 2010 – 2020 (est)
Linear Spot Advertising
Addressable Advertising
Source: NMR / Mindshare estimates
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But some fundamental challenges lie along the way
Creative
Data AnalysisTrading
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Linear spot advertising
Content
Addressable advertising
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Plus ça change…