The Evolution of the Broadcasting Ecosystem

When it comes to broadcast television, one of the questions we’re consistently asked by clients is, “What do you think TV will look like in 3-5 years?”

For the first time in many years, we’re seeing a drastic shift in TV.  In early June, my colleague Kelly Murray (Supervisor, Client Strategy) and I attended the CTV upfront presentation. The upfronts are broadcast television’s opportunity to present advertisers with their content & strategy for the coming year and prove it is worthy of the advertiser’s investment. It’s typically a star-studded event with a variety of execs and stars from the content, both new and old, and this year was no exception.

This year’s upfront presentation by CTV provided an opportunity to see the forthcoming programming schedules and gain some insight into the broadcaster’s strategy. These updates are extremely valuable for both our organization and our clients, as they help provide high-level market awareness which ultimately drives client-level strategy for the next 6-12-months.

Stepping back from the upfront presentation, we were able to take away a few key insights which will provide some valuable perspective into the Canadian broadcast television landscape.

Audiences are in decline

You can see that the audience trends for Adults 25-54 have been declining each season in recent years and the change is significant. Viewership continues to be higher with older demographics and lower with younger demographics. As the population ages, these declines will continue because people take their media habits with them as they age. Given that TV viewership is lowest with consumers who are under 35, this downward trend will continue as that 18-35 group grows older.

To give you a sense of how significant this shift has become, the Average Minute Audience (AMA) for all TV viewing is down 20% in Canada, while conventional TV (CTV, Global & CBC) has taken the most significant brunt with a 22% decrease. Specialty is down 18%, as Canadian audiences seek more niche content.

Value misalignment is growing

The CPM (cost per thousand) rates are on the rise, despite a consistent decline in audience. In the most recent round of buying for the fall season, we saw price increases that range from +7% to +20%. Granted the CPM rates here are still more attractive than other forms of media, but a signal that we should all be watching closely and evaluating.

Supply manipulation

For the first time in Canada, we’re beginning to see what appears to be a strategy from the major broadcasters to protect ad revenue in the face of declining audiences. The approach is one we’ve been reading about in the United States, consisting of reducing the commercial airtime– essentially limiting the supply and selling inventory at an even higher premium.

It appears that CTV / Bell Media will be testing this approach to validate assumptions with their popular show, The Launch. CTV / Bell Media is planning to reduce the commercial airtime to only a few minutes per one-hour show and attempt to monetize premium placements within the show content.

Content aggregation

Another approach presented by Bell Media is the creation of a new digital platform they are calling the “CTV super-hub” which is a digital service where users can access an aggregated version of all Bell Media’s content from across all properties. The launch plans and details for this new product are still not well defined but this will be Bell Media’s attempt to compete with international players that offer over-the-top services like Netflix, Hulu, and Amazon Prime Video.

The challenge for broadcasters, or any other company entering this space, will be how to gain traction and build interest with consumers who may have already established deeply-rooted loyalty. Cracking into this crowded and fragmented marketplace won’t be easy.

This leaves us with one question: is it too little too late?

Having been in media for many years and having started my career on the broadcast side of the business I feel that for the first time ever, we are truly at a tipping point. There’s still immense value in using broadcast to get your message in front of audiences but it is in decline and that trend can’t be reversed.

Rates will continue to increase as advertisers continue to see the value and drive demand.  Although there will continue to be new platforms and ways to reach your target audience, gone are the days of delivering millions of eyeballs with a single placement.  With all these changes, there is increased importance on understanding your audience and having a strategic plan in place to know where to reach them and how to communicate and engage with them.