Is DVR the Difference Between U.S. and U.K. TV Markets?
I was lucky enough to get another perspective on my post from yesterday, looking at why online ad spending is likely to outpace TV ad spending in the U.K. within a year, but will take longer for the same shift to happen in the U.S. I emailed Jeni Chapman, Executive Vice President of Brand and Communications at TNS Media, the world's largest provider of custom research and analysis. Her take is below.
BNET: Do you agree with the forecasts that online ad spend is going to surpass television in the U.K. this year?
Jeni Chapman: Yes, I agree that online advertising spend will surpass TV in the UK but not in 2008. Based on the Interactive Advertising Bureau (IAB) report done in conjunction with PricewaterhouseCoopers, this will happen in 2009.
BNET: Do you think the same trend is likely to occur in the U.S.? Why or why not?
JC: There are some key differences in the U.S. and U.K. marketplaces relative to available inventory. An IDC reports notes that by 2012, online advertising will become bigger than TV and second only to direct marketing, however, it does not look like it is likely to happen in 2008 or 2009.
BNET: What are the differences between the U.S. and U.K. advertising market?
JC: U.K. television has fewer channels and U.K. television advertising is more regulated when it comes to minutes per hour, so there are more restricted opportunities to use. And while... 2007 online advertising has increased to 15.3 percent of all advertising spending, that translates into 2.8 billion pounds -- little more than $5.6 billion dollars. In the U.S., the online advertising market represents $25.5 billion in spending today.
BNET: What are the differences between the U.S. and U.K. television market? Is is the overall size of the media market? What does the presence of the BBC do to the amount ad space costs?
JC: One of the key differences in the U.S. and U.K. is the amount of available inventory. The U.S. allows more minutes of advertising per half an hour or an hour than the U.K. does. That limits the inventory in the U.K., and increases the price. From that perspective, online advertising becomes particularly attractive in the U.K. media environment. And while there are many more channels in the U.K. than 5 or 10 years ago, the audience these channels get versus the U.S. are limited, so the cable/satellite inventory is not as attractive as the U.S. cable TV inventory.
BNET: How do these differences influence the mix of online vs. traditional that ad agencies spend in the U.S. versus the U.K.?
JC: Watching what you want when you want is appealing to any market. However, in the U.S., given the very rich offering of cable channels and the targeted programming on these channels as well as the strong Tivo and DVR presence in the U.S., we think it will take longer for the U.S. audience to switch to online for streaming video content of their favorite shows. In the U.S., the "relevant unmet need" to view what I want when I want is already being met with cable and DVR to some extent.
On the other hand, in the U.K., they don't have nearly the same variety of programming or depth of content in cable/satellite as in the U.S. So the switch to viewing TV content via the web may well be much quicker in the U.K. as they do not have the cable/DVR option that is currently available and used in the U.S.