TV advertising

Playing field

TV advertising in the Netherlands represents a market of around €0.8bn - €0.85bn, excluding commissions*, largely shared by NPO (public broadcasters), RTL (including BrandDeli) and Talpa Networks (formerly SBS Broadcasting). TV advertising in the Netherlands shows a pattern of higher growth in even-numbered years, when major sporting events, like World Cup football and the Olympics boost revenue and low growth or even a decline in odd-numbered years. This pattern is expected to continue, although parties across the industry are trying to develop alternatives to boost revenues in uneven years, such as with FIFA’s Women’s World Cup. 

TV advertising growth is at risk due to the shift in viewing time towards paid-OTT platforms and, for example, video consumed via social media. Although total screen time has not significantly changed over recent years, the way we view TV has. Live TV viewing time has decreased, while delayed TV and (paid-)OTT viewing time have increased.

What’s new

Competitive pressure in the TV industry is forcing the main broadcasters to continuously reconsider their strategies. Besides international competition, the intentions of Minister Slob to form a cooperative video platform and to make public broadcasters free of advertising until 8pm are high on the agenda in this industry.

Public broadcaster NPO is being challenged by upcoming regulations to remove advertisements from both online and TV. The impact on contributions from the Dutch Foundation for Broadcast Advertising (Ster) revenues is estimated at €80-€90m, which represents roughly 10% of the NPO’s annual budget. The loss in revenue will be partially compensated by the minister, but NPO fears that a partial compensation will not prevent a loss in quality output. Certain niche advertisers also have expressed their concerns as NPO is an important channel for reaching their target groups. Furthermore the NPO channel 3, which historically focused on entertainment and youth, faces uncertainty and will most likely focus on regional content. 

In 2018, Ster started targeted advertising without using personal viewer data. This form of ‘no-consent advertising’ allows Ster to advertise online without subjecting visitors to profile building or retargeting. Furthermore, Ster introduced AdScan, a free research tool allowing advertisers to value their advertisements by forecasting advertisement appreciation. Besides the threat of upcoming regulations, Ster recognises increased competition in the advertising market due to the acquisition of BrandDeli by RTL and the strengthening of Talpa’s commercial position. 

After obtaining 100% of the shares in SBS Broadcasting, Talpa attracted numerous celebrities as well as relatively old TV formats as part of its strategy to engage an audience by offering typical Dutch family content. By treating Dutch citizens as a target group and the Dutch culture as an asset, Talpa plans to monetise the fact that thus far, a large part of the Dutch population still spends lots of time (on average 173 minutes) watching TV. This approach appears to be one of Talpa’s solutions to counter pressure from international OTT and pure online players and extend the life cycle of traditional broadcasting. In parallel, Talpa’s announced plans to renew and expand its own free, ad-based, online streaming service KIJK. 

RTL Nederland is executing a somewhat different strategy. In December 2018, RTL Nederland announced it had acquired BrandDeli, which gives RTL the three-year exclusive rights to sell TV advertising space for Discovery, Fox and Viacom. Furthermore, RTL and De Persgroep formed a strategic alliance. The alliance entails sharing and creating content, setting up creative branded partnerships and collaborating in the digital advertising market. Besides TV advertising, RTL is increasingly positioning itself as a cross-media advertiser, with a strong online position (e.g. Buienradar, RTL Nieuws online, and a variety of partnerships). RTL keeps investing in Videoland, which is RTL Nederland’s paid local VOD solution. According to its annual report, Videoland doubled its subscriptions in 2018, mainly by offering exclusive local content. In 2019, RTL Group will start developing and implementing plans for a joint tech platform for the Group’s VOD offerings, consisting of both a free, advertising-funded service and a paid, premium content bundle.

TV advertising market (€ millions)

Netherlands Historical data Forecast CAGR%
  2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2019-23
Spot 729 733 735 701 728 717 715 705 716 700 -0.8%
   y-o-y growth   0.5% 0.3% -4.6% 3.9% -1.5% -0.3% -1.4% 1.6% -2.2%  
Non-spot 103 99 115 96 93 93 94 95 98 99 1.3%
   y-o-y growth   -3.9% 16.2% -16.5% -3.1% 0.0% 1.1% 1.4% 2.7% 1.3%  
Online TV advertising revenue 11 13 16 18 20 23 25 26 28 30 8.2%
   y-o-y growth   22.0% 17.0% 14.8% 12.2% 10.8% 9.0% 7.3% 7.3% 6.8%  
Total TV advertising 832 832 850 797 821 810 809 800 814 799 -0.5%
   y-o-y growth   0.0% 2.2% -6.2% 3.0% -1.3% -0.2% -1.1% 1.7% -1.8%  

Source: PwC, Screenforce. Note: Because we rounded off amounts and percentages throughout this Outlook, tables may not sum to 100%.

Outlook

The relatively modest decline in TV viewing time proves once more that short-term change can be overestimated. Nonetheless, the long-term impact of new ways to distribute and consume video content will drastically change the industry. 

For the years to come, broadcasting will remain an important distribution channel for advertisers focusing on brand awareness and those who target wide audiences. For other purposes, advertisers can chose from an ever-growing range of alternatives. The TV advertising industry has to consider if and how to embrace functionalities as targeted advertising and more transaction-oriented ways of advertising. As the penetration of smart TVs grows, new contexts and opportunities to engage consumers with targeted digital advertising, across multiple touch points using innovative ad formats, are starting to emerge.

Joint forces

Currently, the relevant broadcasters are part of the joint initiative NL Ziet. However, partly due to the fact that each broadcaster also has its own platform, the joint platform has not been able to attract large numbers of viewers. Minister Slob has entered talks with the parties involved to launch a cooperative video platform. Such a platform is needed to retain market share against a growing number of international players (e.g. Netflix, Apple and Disney). Besides a joint video platform, the parties are also discussing possibilities for joint radio platforms and a joint portal for advertisers. Such a portal would allow for aggregate data collecting and analysis on consumer behaviour. The minister has promised to explore options to relax regulations that hinder cooperation. Even though talks on shared platforms have started, local, exclusive content will remain the driving force and a key differentiator in the current TV market.  

Regulation

New plans of minister Slob to make the NPO channels and websites completely advertisement free will impact the Dutch TV landscape as NPO’s advertising revenues are a substantial share of the public network’s total revenue. Ster expects to lose between €80 and €90 million in revenue if the plan of the minister is carried out. As always, the exact impact remains uncertain. However, we do expect that NPO will lose part of its income, which will only partially be captured by the other broadcasters.

Advertising

Parties in the TV advertising value chain need to work hard to protect their €0.8bn to €0.85bn revenue as Internet advertising continues to increase its share of the overall advertising mix. More and more parties are entering the video landscape (e.g. Apple, Disney and Quibi). Initiatives, such as Quibi (led by former Disney chairman Katzenberg), will focus on 15-minute, easy on-the-go programs and are being embraced by financial and strategic investors. Where Netflix commits to its promise to remain ad-free, Quibi will apply a pre-roll concept in return for lower subscription fees.

The future of TV advertising is dependent on consumer behaviour and the industry’s success to engaging consumers and continuously proving its added value in the advertising mix. Although broadcasters are moving towards a joint initiative for both streaming and advertising, new regulations and the entrance of large streaming services in the Netherlands are putting TV advertising at risk. 

*) In previous years, TV advertising revenues included commissions. We restated historical revenues in order to reconcile to Screenforce data. On average, annual commissions were €135m in the period 2012-2017.

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Contact us

Casper Scheffer

Partner, PwC Netherlands

Tel: +31 (0)88 792 65 20

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