Commentary

Ruh-Roh: GroupM Solves Mystery Of Who Killed Television

by Joe Mandese , November 14, 2022

Following a series of negative third quarter results from major ad-supported TV companies, GroupM's business intelligence team said it is poised to downgrade its forecast for TV ad spending this year.

During their weekly "This Week Next Week" podcast, GroupM's Brian Wieser likened it to the death of the medium and said also likened himself and co-host Kate Scott-Dawkins to the cartoon sleuths of animated Hanna-Barbera series "Scooby Doo" who unmask the culprit at the end of each episode.

"Is the mystery we're uncovering of who killed television, digital?," Wieser suggested to Scott-Dawkins, adding: "When everyone is talking about the negative advertising market, I think they are missing the obvious culprit here."

Presumably, that particular culprit is television, which Wieser estimated saw ad revenues drop about 10% during the third quarter, prompting Scott-Dawkins to add, "It is a big downgrade for Q3 for television."

Wieser went on to reiterate that, overall, ad spending has not been declining, and cited a corresponding 10% increase for digital advertising revenues during the quarter.

"Our TV numbers for the full-year will come down from the forecast, for sure," Scott-Dawkins said the year-end outlook GroupM is preparing to release next month.

"I think this mystery that we've uncovered may be turned into an animated cartoon spectacular at some point," Wieser said.

Far less of a mystery was the team's discussion about where the growth in digital is coming from. It's disproportionately ad tech, not working media sellers.

Citing third quarter revenue growth figures as high as 31% for The Trade Desk, Wieser estimated the ad tech sector grew in the "high single-digits," outpacing advertiser and agency growth, to which Scott-Dawkins observed: "Middlemen taking a larger share of it."

One digital endemic player that has been taking up a lot of the industry's oxygen, but not so much of its economic conversations is Twitter.

Asked by Wieser how much Twitter has come up in GroupM's conversations about media economics in recent weeks, she said hasn't, and most of the talk continues to center on the performance of companies like Meta, Google, TikTok, Amazon and Microsoft. Wieser added that LinkedIn is a likely "beneficiary."

Scott-Dawkins cited the live Q&A Twitter owner Elon Musk had on Twitter Spaces last week and said it left her with a lot of questions.

ad spending, advertising, agency, revenue, television

5 comments about "Ruh-Roh: GroupM Solves Mystery Of Who Killed Television".

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Douglas Ferguson from College of Charleston, November 14, 2022 at 3:45 p.m.
Why did advertising ever grow into such an enormous economic force in the 20th century, when consumers mostly chose to ignore it when they could and silently suffer commercial interruptions when they could not? I think it's because print newspapers used ads to supplement subscription revenue whereby readers had no alternative but to thumb past it and broadcast stations and networks relied on ads because spots and sponsorships were the ONLY way to monetize desired content that would otherwise be freely available to an anonymous audience with limited choice. That is, over-the-air media industries could not readily charge subscriptions for shows on public airwaves.
Thus, advertising was not the BEST method to fund expensive content for listeners and viewers; it was the one and only way to cover the program costs, build a profit margin and support a marketplace for ad buyers and sellers. In this century, however, digital and broadband changed all that. Producers, distributors, and exhibitors know who their users are and where they live and what they buy, so they can survive and profit without ads at all as their primary or sole revenue stream (by relying entirely or heavily on monthly subscriptions). More change is coming, for sure, but I doubt advertising will ever again sit in the catbird seat for media economics. The only captive audience for advertising in the future might be product placement, outdoor displays along highways, and signage within sports venues.
Reply

Ed Papazian from Media Dynamics Inc, November 14, 2022 at 5:14 p.m.

And who is going to create and fund the production of all of that qulity TV content that will somehow get to consumers free of ads, Douglas?How does it get distributed?Where did you get the idea that consumers "mostly chose to ignore it"( advertising ) and that consumers "silently suffered commercial interruptions"? The surveys never indicated anything like the massive rejection of advertising that you keep claiming. And there are scads of case histories where TV advertising was the primary force in creating brands---sometimes out of nowhere---like Lestoil cleaner, for example, way back when.If what you keep saying was really true then why do all of these brands persist in lunching ad campaigns in TV and other media? If consumers ignore their ads or are enraged at being subjected to them, why do they respond by purchasing the products and, in many cases, switching brands after being exposed to a rival brand''s promotional efforts? It's all well and good to object to excess commercial clutter or some stupid commercial that you find offensive, but to lambaste an entire industry again and again as you do accomplishes little constructive.

Dan C. from MS Entertainment, November 15, 2022 at 8:16 a.m.

The headline kills me...there's no mystery. 8-9 minute ad loads per 1/2 hour, basic cable bills increasing every year with terrible programming and Nielson's perpetual reporting issues in the digital age is what killed TV...about 20 years ago. The whole purpose of watching TV is to be entertained - not sit through one long commercial interruption.

Dan C. from MS Entertainment replied, November 15, 2022 at 8:26 a.m.

@Ed Papazian - MediaPost just ran an article that states most people ignore commercials and use their mobile phones to get on social during social breaks. Before social media, people would go to the bathroom or throw a load of laundry in during commercial breaks.

Viewers have been rejecting these ridiculous ad loads for decades and thanks to YouTube, OTT platforms, and Twitch where they have much more control over what they see and can avoid commercial interruption, TVs decline was easily foreseeable.

Lots of great content out there to be entertained that doesn't require millions of dollars to be produced. Anyone with a new smartphone has a 4k production studio in their pocket.

Ed Papazian from Media Dynamics Inc, November 15, 2022 at 9:16 a.m.

Dan, I can organize a poll that shows---or seems to show---that almost nobody watches TV commercials---that's the expected outcome when you ask the question in a highly generalized manner---who is going to admit that they watch commercials?

However, the fact is that when people who watched TV shows are asked about whether they saw the commercials---specific commercials---given a reminder like ,"Did you see a commercial for a toothpaste?"---around 25- 30% of the program viewers will remember that they did see such a message and about 60% of them---or 15-20% of the program audience ----will describe the message well enough to prove that this was the case. Observational studies using "cameras" to record what happens in normal at-home viewing situations tell us that on average 35-40% of those present just before the break watch the typical message for at least two seconds and their average dwell time is about half of the message while some---about 10%---- watch the entire commercial.

These are just averages. Commercials for interesting subjects and those with highly entertaining aspects score much better while their opposite numbers fall below the norm. More important, even if an advertiser's commercials are operating at the average performance level, over time they accumulate viewers. In other words you may only get 15-20% of the audience to get your message but as the weeks pass and there are many more exposures, your ad campaign builds its reach and awareness---which is why most cmpaigns with sensible selling propositions work. There is a buildup of actual ad exposures which, in turn, generates awareness and---for some---buying motivation. And most brands would die for a one percent gain in their share of market.

Of course there are sitautions---like excessive ad clutter in breaks---where commercials underperform and stupid campaigns also fare poorly---but these situtions are only part of the story---not the norm.