More adverts in the nation’s favourite TV shows on the way?
TV viewers watching primetime programming could soon expect to be hit with more advertising following an EU rules change which has been designed to help traditional broadcasters compete with streaming services such as Netflix and Amazon Prime Video.
Advertising is currently capped at 12 minutes per hour, or 20% of minutes; usually equating to 4 x 3min breaks. Under the new regime, this would remain at 20%, however change to a daily limit between 7am and 11pm, giving stations greater flexibility and opportunity to increase advertising minutes during their most in-demand programming.
In the UK, advertising restrictions are even more onerous for ITV1, Channel 4 and Channel 5, who are forced to limit advertising to an average of seven minutes per hour across the day, with 12 minutes in any given hour being the upper maximum. These laws are designed to give broadcasters more flexibility to maximise revenue and to ensure continued investment into producing new shows. Additionally, the EU is also looking to introduce a quota for at least 20% of EU online streaming programming to have been made locally.
All Response Media Viewpoint
This is only an option to give stations more flexibility, and will not necessarily lead to any significant changes. Additional advertising minutes during peak programming could prove counterproductive if it leads to viewers getting frustrated and impacts falling. ITV seemingly understands: “What is important to us…is striking the right balance, ensuring that our viewers are not exposed to excessive amounts of advertising and that the quality of their viewing experience is maintained.” Australia, introduced a maximum of 20 minutes per hour in 2014 which coincided with a -4% fall in impacts, the same year UK TV impacts fell -2.9%. It is likely any changes will be slow and cautious, if at all.
From an advertiser’s point of view, this poses both an opportunity and a threat. In theory, stations will reduce commercial minutes in programmes with lower (or zero) ratings, which will naturally be in daytime, and increase minutes in programming with higher ratings, predominately in peak, meaning there will be more impacts available in the market as a result.
TV pricing is based on a basic supply and demand model; therefore in the event of lower daytime impacts being available, this would result in increased daytime CPTs (cost per thousand impacts) due to lower supply and stable demand. However, on the opposite side of the CPT spectrum, increased availability in peak would result in lower peak CPTs.
For response focused advertisers, daytime TV represents the core element of their TV activity due to both cheaper CPTs delivering more efficient reach, and lower engagement programming delivering responsive behaviour. Consequently, any reduction in availability reduces flexibility to make changes, which along with increases to CPTs, so this could bring challenges.
However, this would provide an opportunity to access peak activity at a lower cost. With increased supply, but demand not increasing at the same levels, CPTs could decrease, providing advertisers with potential to efficiently expand into peak. This coupled with the fact that dual-screening has made peak more responsive means that it could help direct response (DR) advertisers to access audiences it has previously struggled to reach at a much more efficient price point.