small change, big impact
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Small Change, Big Impact
Jeremy Pounder, Mindshare
5th November 2010, European TV Symposium
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
Linear TV will be more resilient than many anticipate
75% of TV viewing in the UK will still be
linear in
2020
Around
1. Choice is very hard to manage
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
2) The enduring allure of New!
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
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)
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
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
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…
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)
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
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%
Linear spot advertising
Content
Addressable advertising
Linear spot advertising
Content
Addressable advertising
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
Trading innovation & relaxation of regulation will help maintain spot revenues
Minutage flexibility
Fixed peak pricing
Auction based pricing
Help maintain yield & Total Revenue
Linear spot advertising
Content
Addressable advertising
Content funding will grow but within limits
Challenges
Transaction costs
Suitability (genre / advertiser)
Risk for advertiser
Demonstration of ROI
Linear spot advertising
Content
Addressable advertising
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
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
But some fundamental challenges lie along the way
Creative
Data AnalysisTrading
Linear spot advertising
Content
Addressable advertising
Plus ça change…