The UK TV Advertising - Case Study Example

The UK TV comprises of different channels including the BBC networks, the commercial networks, the cable and the digital satellite television. Traditionally a British family spent its evenings slumped in front of the television but this has changed dramatically. Even though the TV is still on the entire evening, people are busy talking on the phone or surfing the internet, which makes the exact figures difficult to arrive at. In 2007, 16-24 year olds remained glued to their TV sets for about 150 minutes a day which is ten minutes less than five years ago (Wray, 2008). People over 65 spend five hours a day watching TV perhaps because certain channels are free for them. Most of the adults between 24 and 65 that spend time on the television, are not actually watching the programs or the ads but are doing some other work simultaneously like talking on the phone or surfing the internet. The table demonstrates how much time people spend in different activities in the UK: Source: (ONS, 2006). The three main activities that take up the day include sleeping working and watching TV and men are more likely to watch TV than women. Adults over the age of 16 spend under three hours watching the television and the 24-65 year olds fall under the same category of viewers. The following chart shows that watching television is the most common activity by most people in the UK: Source: ONS, 2008 The following table gives a comparative chart of viewership in total TV and heritage TV: According to this, 66% of the adults between 25-64 years of age watch TV regularly, while a higher percentage watches the heritage TV among the 45-64 age groups than those between 25-44 age groups. With the reduction in television viewing, naturally the advertising on television also suffers. The following chart shows the TV audiences by channel between 1985 and 2003: Source: Ofcom, 2004 With switchover to digital TV all the households will have access to multi-channel and this will affect the viewing behavior. it is expected that over the next decade multi-channel TV viewer ship will increased while the BBC and the traditional channels will decline. It is expected that the position will be thus: Source: Ofcom, 2004 UK television advertising is regulated when it comes to minutes per hour and hence the cost of advertising increases. The TV advertising market has two differentiated products - advertising on the traditional commercial channels (Channels 3, 4 and 5) and the multi-channels which includes all other commercial channels. Due to economic conditions and declining audiences, the advertising revenues have declined. There has been a shift from traditional channel viewing to commercial multi-channel viewing which has also impacted the value of TV advertising revenues. The TV has also reduced in its attractiveness as an advertising medium. Because of declining audiences the price of traditional channel advertising has received a boost which means it costs more to deliver to the same audience (PWC, 2006). The advertising budget remains the same but the impacts are fewer. At the same the trend towards watching multi channels is increasing and hence the costs become spread out. The cost of 30 seconds of television advertising now costs just '4.81 per thousand adults and this works out to 29pc cheaper than in 2000 (Mason, 2008). Digital spin-off channels are expected to increase their advertising revenue by ten percent but this will not be able to compensate for the terrestrial channel advertising like the ITYV1, channel 4 and channel 5. The most popular and traditional TV channels are ITV1, Channel 4 and Five and the cost of advertising is the highest for ITV1. Some of the most popular TV channels with the cost of advertising are: * itv1 + GMTV 48.5p * BBC ONE 35p * Channel 4 18.7p * Sat and cable 16.8p * BBC TWO 12p * five 7.7p * BBC THREE 2.5p * BBC FOUR 1.3p * S4C 0.3p Source: Glen, n.d. The television advertising revenue is expected to fall for all channels and by 6 and 7% for channels like ITV1, channel 4 and 5 which are the most popular channels for consumer advertising (PR-inside, 2008). This is the reason the rates per viewer is also high as companies want to protect their brands. This means advertisers have excellent oppurtunities in the forthcoming year as the cost of TV advertising falls to its lowest since 1992. At the same time, it is also expected that there will be switchover to cheaper mono ads with lower color revenues. This is expected across all major channels. Advertising for different products has unwritten rules and conventions that it must pride itself in. Chocolates have several different avenues or channels for advertising and the most popular is the ITV1. A company or a product or a brand usually associates the viewers in line with its product quality and hence is willing to spend more per viewer. Since chocolates are a luxury item and the brand name has to remain intact, a chocolate company would not mind spending huge amount in television advertising campaign (Independent, 2007). It is essential to scrutinize the consumer behavior and the product use should be closely studied. Nowadays advertising does not talk about the product but about the benefit that the consumer would derive from the use of product. Channel 4 is another popular channel among the young group and chocolates advertised in this channel could also reap results for the company. The cost of advertising is high which indicates that the impact is high and the viewer ship is also high. Channel 4 is very alert to rating and is very careful of its viewer ship. According to the television rating Channel 4's weekly reach is 70% which means C4 reaches 70% of all viewers weekly (Channel4, n.d.). It has also been found that adults view Channel 4 for 11% of their viewing time. During downturn a company should not push back or cut back on its advertising revenues because it adversely affects the brand. References: Channel4 n.d., 'Television ratings', retrieved online 06 December 2008, from http://www.channel4.com/culture/microsites/W/wtc4/audience/tvratings.html Glen, RG n.d., 'The True Cost', retrieved online 06 December 2008, from http://www.transdiffusion.org/emc/thirdprogramme/cost.php Independent, 2007, 'Advertising: Spot the link between a gorilla and chocolate', retrieved online 06 December 2008, from http://www.independent.co.uk/news/media/advertising-spot-the-link-between-a-gorilla-and-chocolate-448699.html Mason, R 2008, 'TV advertising now cheapest on record', retrieved online 06 December 2008, from http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/3437837/TV-advertising-now-cheapest-on-record.html Ofcom, 2004, 'Economic Analysis of the TV Advertising Market', retrieved online 06 December 2008, from http://www.ofcom.org.uk/research/tv/reports/tvadvmarket.pdf ONS, 2006, 'Time Use Survey', retrieved online 06 December 2008, from http://www.statistics.gov.uk/cci/nugget.asp'id=7 ONS, 2008, 'Lifestyles', retrieved online 06 December 2008, from http://www.statistics.gov.uk/CCI/nugget.asp'ID=1659&Pos=6&ColRank=2&Rank=224 PR-inside, 2008, 'TV advertising revenues in the UK will fall by '198m (-6%) in 2009', retrieved online 06 December 2008, from http://www.pr-inside.com/tv-advertising-revenues-in-the-uk-r906792.htm PWC, 2006, 'UK TV Advertising: Structural decline or cyclical blip'' retrieved online 06 December 2008, from http://www.pwc.com/Extweb/pwcpublications.nsf/docid/B713796EFAD5F58F8525727A0007C75E/$FILE/onmedia.pdf Wray, R 2008, 'How we watch now: tune in, log on, call up', retrieved online 06 December 2008, from http://www.guardian.co.uk/media/2008/aug/14/ofcom.digitaltvradio Read More