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What is the real impact of market changes on advertisers?

At the end of 2017 public broadcaster, NPO shocked the Dutch market with the announcement that they would no longer be offering pricing based on spend and agency deals would cease to exist. It was a forward-thinking change that considered the way the TV landscape has evolved over the decades, with it no longer being a medium just for the Unilevers and Cokes of the world. Dotcom businesses, in particular, were ready to spend on TV to take their business to the next level but found entry costs prohibitive and didn’t want to commit to annual deals to improve pricing as they are focused on performance.

Whilst we welcomed the change on NPO, network agencies broiled, no agency deals meant no kick-backs which is where many network agencies get their income from. This meant that networks stopped spending with NPO despite it having the largest audience share in the country.

Then this year it was our turn to be disappointed when it was announced that performance-focused and low-cost network Brand Deli would be joining the high-cost RTL. Great news for the network agencies who could consolidate spend from two sales houses into one and get even better kick-backs, bad news for performance advertisers using the Brand Deli stations as core efficiency drivers. It was, however, a shrewd move by RTL, having seen the success of the Brand Deli stations with performance advertisers over the last five years, buying them attracts the new advertisers. 

What has been the actual impact of these changes?

In the first year of NPO’s change, they saw a drop of 56% in revenue however the number of advertisers increased by 4%. This is to be expected as they lost the business of the big-spending brands but gained smaller advertisers. In 2019 they have seen income start to creep back up with a 1% increase, and a further 1% increase in advertisers. So, whilst the financial hit in the first year was big, it is something they would have expected, and the objective of growing new advertisers is being fulfilled.

The main victor in the market changes has been Brand Deli, they profited from big advertisers moving spend out of NPO in 2018 with an 18% increase in spending, and they profited again from joining forces with RTL and the combining of annual contracts with a further 23% increase in spending in 2019. RTL, on the other hand, has seen a 15% spend decrease in 2019 and a 6% decrease in advertisers, so it is possible that Brand Deli has taken spend out of the RTL main stations and reinforces the purchase of Brand Deli as a very smart move. The overall figures for RTL and Brand Deli show an increase in spending of 5% in 2019 and a 3% increase in advertisers and combined they have 61% of the spend in 2019.

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All Response Media viewpoint
NPO took a brave decision abandoning their agency deals, and it has had an impact on revenue and even though it is cultivating growth, the spends are lower. They are maintaining the pricing structure for 2020 although with a slight increase, however they also have the rights to major events such as The Olympics and the European Championships, so we would expect to see them continue to grow from where they ended 2018. RTL on the other hand have cleverly positioned themselves market leaders not just for traditional brands, but also performance marketers and so can also expect to continue to grow. The real question is whether greed will get the better of them and they price themselves out of the performance sector. Overall both RTL and NPO have tried to adapt to a changing TV market, however by abandoning agency deals, whilst getting the moral victory it does seem like NPO may have picked the losing strategy. 

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