Local television networks are joining forces to fight back against the increasing dominance of online advertising. As Mark Jennings writes, the networks have tried similar tactics on advertisers before, but this time it’s more serious.
The Media world has had plenty of shocks and surprises recently.
Carol Hirschfeld’s dramatic resignation from RNZ tops the list but John Fellet’s decision to step down as CEO of Sky and then news that his company is not the “preferred bidder” for the Rugby World Cup rights received plenty of attention.
So too, did the Privacy Commissioner, John Edwards’ lashing of Facebook.
Amidst all this, an event that the country’s TV bosses were hoping would make a splash hardly created a ripple.
The launch of Think TV was a lavish affair at Auckland’s Q theatre and was described by the TV companies as a “momentous occasion.”
While that description is pretentious, the coming together of TVNZ, MediaWorks and SKY is not insignificant.
The three have never really trusted each other and attempts by various CEO’s from each broadcaster to find common ground inevitably got overwhelmed by competitive pressures.
The local TV networks established Think TV in 2010 with former TV3 boss, Canadian Rick Friesen as executive director – it was gone by 2012.
Its reincarnation comes as internet advertising has gone from serious competitor to insatiable monster.
Think TV’s job is to “change the narrative” being pushed by the likes of Facebook and Google that online advertising is more effective than old school TV advertising.
TVNZ CEO Kevin Kenrick told the crowd of about 400 mainly advertising agency types that “we’ve (TV industry) done a poor job telling our story. We’ve allowed the narrative to be dominated by the big online players.”
The figures tell their own story.
Back in 2007 TV revenue reached $654 million but by 2016 it had dropped to $559 million.
The industry says revenue has now stabilised but in the meantime online advertising has roared past it to hit $891 million it 2016, up 34 percent on the previous year.
PWC says it expects internet advertising to continue growing strongly in the next five years. Mobile, alone had 54 percent growth in 2016.
The TV networks here and globally are taking only a tiny share of the digital dollar. In New Zealand, it was just $21 million in 2016.
It is this predicament that has brought the “big three” to the point of sharing the stage at the Q theatre.
Sky CEO Fellet joked about their past battles.
Just recently the two free to air networks settled legal action with Sky over their use (overuse) of sports video highlights.
Fellet dryly observed, “we do get together but it is usually over a law suit in a courtroom”.
Kenrick and Michael Anderson (MediaWorks CEO) managed rueful smiles.
This time round the networks have called in the Australians to help.
The head of Think TV Australia was the key speaker at the launch.
In a slick 30-minute presentation, Kim Portrate told us that 90 percent of kiwi’s still watch live TV every week and the average viewing time is 4 hours a day.
“The growth of the internet has not equalled the death of TV. We are not dinosaurs taking our last breath.”
She said advertisers who used television were putting their brands into a “safe, trusted, uncluttered environment” whereas the internet was “marketing’s answer to carb loading.”
Portrate claimed the networks move into video on demand (VOD) platforms was proving highly successful, “TV is not dying, its having babies. Watching TV on other screens is growing like crazy.”
The problem is that while viewing may still be strong, revenue is, at best, anaemic. Global Giant’s Unilever and Proctor and Gamble have indicated they plan to spend more on TV and less on the internet but it’s hard to tell if this marks start of a turnaround.
Portrate says Think TV’s Australian operation is “here to help our Kiwi cousins,” by providing the local networks with the latest research that proves viewers really “do watch the ads “.
Some of the more experienced advertising executives at the launch doubted that networks could sustain the cooperative approach and that the mark 2 version of Think TV would go the same way as its predecessor.
Paul Maher, TVNZ’s commercial director, thinks it will. Maher is known as a tough, aggressive competitor but says the networks are aware of their past mistakes.
“I think it will hold together, I don’t think you will see TVNZ try and be a dominant player. We’ve shown with Kpex that we can work together. “
Kpex is an automated trading platform jointly owned by MediaWorks, TVNZ, NZME and Stuff. Advertisers bid for inventory allocated to the platform by the big media companies.
The Networks here will also be encouraged by the success of the Australians. The commercial networks across the Tasman have been working together and TV revenue is on the rise again.
If the coalition of the willing doesn’t hold up in New Zealand the individual companies have a lot to lose. The US giants won’t be taking prisoners.
