TV advertising

“Focus on user experience is essential to extend the lifecycle of traditional TV”

Playing field

The television advertising market continued to be dominated by public broadcasters, administered by the Nederlandse Publieke Omroep (NPO), and commercial broadcasters RTL Netherlands, SBS Broadcasting and BrandDeli. TV advertising revenue in the Netherlands has shown steady growth year on year since 2014. Sustained economic growth in recent years has restored business confidence and total TV advertising revenue has responded, rising by 2.8% in 2016 to reach € 992 million. Further growth of 0.5% CAGR is forecast over the next five years, which is lower than GDP.

Growth in even years is slightly higher due to important sporting events (in football and the Olympics), in the past broadcast mainly by the NPO. This seasonality is expected to continue. Online TV advertising has now been added to our spot calculations. Online TV advertising includes TV viewed on other devices, but excludes revenue from YouTube or other platforms.


According to industry body Stichting Kijk Onderzoek (SKO), average daily TV viewing has fallen from 200 minutes in 2014 to 183 minutes in 2016. Year-to-date reports indicate that this trend will continue in 2017. In particular, the desirable 13-34 age demographic is moving away from TV to online alternatives. This is primarily due to a rise in online video and time-shifted content viewing on connected devices and smartphones, but also to increased time spent on gaming and social media. According to Screenforce, the Dutch spend an average of 39 minutes per month viewing online video, a figure that we expect to rise in the coming years.

The increasing range of online content available on OTT platforms and social media is giving advertisers new opportunities to target niche segments or to increase engagement with multiplatform advertising. This emphasises the growing need for a multiplatform approach from advertisers, and broadcasters should anticipate that trend.

 

 

Television advertising market (€ millions)
Netherlands Historical data Forecast data CAGR %
  2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 17-21
Spot 846 832 850 854 863 819 831 835 847 851 -0.3%
y-o-y growth   -1.7% 2.2% 0.5% 1.1% -5.1% 1.5% 0.5% 1.4% 0.5%  
     Online TV advertising revenue 6 8 11 13 15 17 19 22 23 25 11.1%
y-o-y growth   31.5% 27.0% 22.0% 17.0% 14.8% 13.2% 10.3% 9.1% 8.2%  
Non-spot 116 101 114 111 129 134 144 149 160 165 5.1%
y-o-y growth   -12.9% 12.9% -2.6% 16.2% 3.7% 7.5% 3.4% 7.6% 3.2%  
Total TV advertising 962 933 964 965 992 953 975 984 1,007 1,016 0.5%
y-o-y growth   -3.0% 3.3% 0.1% 2.8% -4.0% 2.3% 0.9% 2.3% 0.9%  

Source: http://screenforce.nl/tv-reclamemarkt-groeit-naar-e-991-miljoen-2016/ . Note: Totals may not sum to 100%, because of rounding off.

What’s new

There were fears that the Netherlands’ absence from the 2016 European Football Championships might harm TV advertising revenue, but in fact it has shown a healthy rise of 2.8% year-on-year. Matches still proved appealing and the event accounted for five of the six most-viewed programmes last year. Another international competition, the Eurovision Song Contest, was the most-viewed programme last year.

The rise in advertising revenue in the first half year of 2016 was followed by a drop in the second half. This was attributed to numerous factors, including budget being moved from Western companies to the Far East, and a trend in Fast Moving Consumer Goods that uses sales promotions instead of media spend. This, together with the decline in viewing time and time-shifted content viewing through other devices (incl. smart TV), is expected to result in a decrease in spot TV advertising revenue in 2017 of about 5.1%, partly compensated by an expected increase in non-spot of about 3.7%.

Outlook

Parties in the TV industry are exploring ways to mitigate the impact of declining TV viewing. One example is non-spot advertising, which is better positioned for a multiplatform approach. The growing appetite of programme makers for brand partnerships, best exemplified by Vodafone’s successful association with The Voice, is also integral to the rise in non-spot advertising.

We expect that the downward trend in viewing time and the fact that advertisers are evaluating the best way to spend their budgets will result in a decline in spot TV advertising revenue in 2017. After 2017, spot TV advertising revenue will be fairly stable, with a slight increase in even years due to sporting events. This will result in a growth of -0.3% CAGR to reach €851 million in revenue in 2021.

Online TV advertising revenue is expected to grow at 11.1% CAGR to reach €25 million in 2021. New innovations, like addressable TV and direct-shopping apps (for example, book a test drive directly while viewing the car commercial, or buy the same shirt that an anchor man is wearing), will be launched in the coming years, which would again attract advertisers to spend budget on TV advertising. We therefore expect the significant decrease in 2017 to be short-lived, and the change to total video to generate opportunities for the wider TV advertising market.

An important underlying assumption in this Outlook is that Netflix will stick to its ad-free business model. A change towards a free, ad-based model by Netflix or one of its major competitors in the Dutch market could have a major impact on total TV advertising budgets, as well as on the allocation of the total budget over the various players.

Contact us

Steven Pattheeuws

Partner Strategy&, PwC Netherlands

Tel: +31 (0)88 792 29 36

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