12 September 2024

The changing TV landscape

In summary

• The state of television and on-demand video consumption is changing in the Australian market, with increased fluidity and a growing number of players.
• Advertisers must be aware of legislation changes, challenges in fragmentation and measurement and trending consumer behaviour to get the most out of their media investments.
• There are opportunities that lie in this changing landscape for advertisers to ensure more efficient media buying and optimisation practices.

Shifting ad dollars and viewing habits

Traditional TV players have been forced to shift the commercial focus away from their traditional free to air model and embrace digital broadcast models (broadcast video on demand, BVOD) as technology evolves and users embrace on-demand viewing options to consume TV content.

Linear TV is the traditional viewing model where you can watch TV as its programmed as opposed to on demand TV where you select what you want to watch on your own schedule. Think turning on your TV to watch Channel 7’s free to air service vs the on demand service 7Plus.

As linear TV continues to decline from a usage and investment perspective, on-demand video options, BVOD and SVOD (subscription video-on-demand), continue to grow as advertising dollars shift inline with consumer viewing habits.

In addition to this shift in consumer behaviour, Australian Broadcasters are bracing for the imminent arrival of a host of streaming services that will add huge competition to an already fragile market.

Big tech and the thirst for more

Despite the decline in linear TV, the channel continues to be associated with nationwide, mass viewing events. Australia broke records during the first week of the 2024 Paris Olympics. Broadcasted by Nine, it was television’s highest weekly reach in VOZ history hitting 17.5 million viewers.

Looking internationally, big tech is actively investing more heavily in streaming rights for live sports, creating a threat to major broadcasters and fostering an environment where viewing sports becomes somewhat of a privilege as it shifts behind paywalls.

A prime example is Optus Sport purchasing the Australian streaming rights for the English Premier League and 2024 Eurocup, alongside Amazon’s deal with the ICC.

Whilst the focus currently exists on international events, Australian sporting events currently sitting with major broadcasters are at risk and may follow suit not too far off into the future (‘State of Digital’, Luma 2024).

Advantageously for the linear TV space, updates to anti-siphoning laws regulates that major sporting events are broadcasted free to Australians, but is currently only applicable to consumption via linear broadcast. Users who wish to consume the same sporting content digitally will not necessarily be able to watch freely, particularly in scenarios where digital streaming rights for sporting events are owned by (potentially network partnered) subscription services (i.e. Foxtel), and thus moved behind a paywall.

Increasing competition and legislation changes

Competition continues to increase in the BVOD and SVOD space as a result of widespread connected TV (CTV) adoption, which has been forecasted to grow by 30.8% in 2024 global ad spend (Dentsu, 2023).

This has created opportunities for TV manufactures and VOD providers to sway consumer viewing habits via CTV preferential app placements. In a bid to grab viewer attention, competition has now emerged within the TV manufacturing space between content providers to bid for the most prominent placements - igniting a debate between Free TV Australia (FTA - representing major broadcast networks i.e. Seven, Nine, Ten), and the Consumer Electronics Suppliers Association (CESA - representing TV manufacturers i.e. Samsung, Sony and more).

In summary,

• the FTA lobbied for a prominence framework that would regulate prominent positioning for local free-to-air networks, focusing on limitations drawn from broadcaster reliance on advertising revenue and the importance of local services to be readily available for users who consume content digitally

• the CESA argued against regulated curation of digital apps, referencing commissioned research demonstrating the majority of Australians wanting control over the order and layout of apps on their TV, followed by a secondary preference in placing control with manufacturers and service providers.

• The most recent legal update shows the passing of the Communications Legislation Amendment (Prominence) Act 2024, officially regulating CTV prominent positioning for free-to-air services, however only for devices made and supplied 18 months into the future, rather than those currently existing within Australian homes. Hence opportunities to sway consumers towards specific streaming providers will evidently continue.

VOD trends and what this means for marketers today

The shift to digital platforms for video on demand (VOD) increases the ability to target audiences in an environment with similar reach and brand building capabilities as linear TV. The fluidity in consumer viewing behaviour allows advertisers to take advantage of the changing landscape through consolidated video buying practices, enabling increased reach, frequency, and optimisations across a range of channels and services.

BVOD and SVOD together show promise with a combined estimated increase of 12.3% CAGR from 2023-2028 [PWC, 2024]. It’s growth outlook is driven by key benefits of the two formats listed below:

• BVOD: Potential to tap into established audience trust across major television networks providing a reliable (and brand safe) environment pushed further by audience addressability capabilities

• SVOD: Provides ad supported tiering opportunities that allow users to actively choose to receive ads for the benefits of lower subscription pricing

Both offer strong media investment opportunities, especially when according to an Australian study conducted by The Trade Desk, consumers are embracing on demand video options with open arms, holding an approximate 2.7 paid TV subscriptions each (SVOD and paid TV).

Two thirds of paid subscribers, however, are also open to signing up for other platforms. This indicates a trend towards fluidity between on-demand options based on large scale factors such as cost of living and the need for cost-efficiency, alongside growing choice in free content and ad supported video on demand options (AVOD). Additionally, subscriptions to not only SVOD content, but paid content as a whole, have started to plateau with associated costs cited as the most common cause. 

In a growing landscape where more and more on-demand options are consistently becoming available for consumers, advertisers can reap the benefits of the competitive nature with reports of CPMs lowering across platforms such as Binge and Netflix. This coincides with the entry of Paramount +, Amazon’s Prime ad inventory in the Australian market and upcoming, and Disney+.

The increased competition and popularity of streaming is only pushed by the rise in CTV viewership, which has been driven by heightened adoption of streaming devices and smart TVs across the Australian consumer base. A better viewing experience, higher screen definition and more content variety have been cited as the most popular reasons behind this rise (‘Marketing Report & IAB Australia’, Nielsen 2023 ).

Growing challenges in fragmentation & measurement

A challenge that has arisen within the tv landscape is the fragmented nature of audience behaviour and measurement solutions. With the number of streaming vendors entering the market on the rise, siloed buying and measurement has never existed as a more evident issue for advertisers.

Audience attention is split across various offerings as a result, creating difficulty in keeping up with consumers across different on-demand environments, particularly when many of the largest providers operate within walled (or at the very least hedged) gardens. Walled gardens are primarily characterised by advertisers needing to utilise bidding platforms owned by the media company in order to take advantage of its inventories’ full capabilities, in this case, utilising various DSPs to target different (mainly subscription video) on-demand offerings. Such difficulties may result in inefficiencies with campaign reach and media budgets.

Furthering the digital fractal landscape, advertisers are also recognising the importance of converging linear measurement with digital, though are faced with the challenge of replicating such measurement when DSPs seem to fall short of offering relevant insights that connect the two environments together. This need for convergence across linear and digital has given path for alternative solutions such as panel based and predictive modelling to take the lead and assist in cross-media measurement.

Opportunities and solutions in unified buying

In the absence of such measurement solutions, it was announced recently that a total tv trading currency, VOZ (Virtual Australia) would be released at the end of 2024, driven by OzTam, Nielsen and Australian TV networks. This will allow TV audiences (across linear and digital) to be measured and traded on a singular system, resulting in benefits across reach and frequency, deduplication, and media spend optimisation efforts.

Despite the aim of buyers not having to worry about navigating different systems, talks of competition within the space in the form of an alternative currency have already arisen creating room for further fragmentation and thus complexity in the tv measurement space. 

Although challenges with the fractal landscape continue to persist, the future of on-demand services remains positive. A key benefit of on-demand video exists in its cross-device reach capabilities across CTV, tablets, desktops and smartphones, all providing different touchpoints for advertisers to reach their key audiences through. With the growth in CTV and video on-demand services has come various advancements within GMP in CTV measurement and capabilities. These include CTV QR code overlays, announcements of integrations with SVOD exchanges i.e. DRAX, CTV cross device conversion attribution (U.S.), Cross Media Reach insights across CTV (U.S.) and more!

Opportunities for buying BVOD across top suppliers are available within Google’s DSP, with inventory accessible via guaranteed deals and PMPs. This can be taken advantage of for brand positioning and alignment purposes. Importantly, the growth of BVOD within the Australian market has opened up room for advertisers to take advantage of consolidated buying practices across BVOD, YouTube (available only via Google’s DV360) and other online video formats allowing for full funnel targeting capabilities.

Such practices have resulted in optimisation benefits and produced strong results in incremental reach via holistic frequency capping practices, thus also reducing impression wastage and improving campaign efficiency. 

Need help with a unified buying approach?

Though traditional TV was known to bring with it scale in audience and spend, brand safety and reliability, similar benefits and more are quickly being realised in on-demand channels.

To take advantage of BVOD and SVOD capabilities in your media buying, get in touch with Louder for guidance on your strategy or sign up to our newsletter to receive the latest industry updates in your inbox.