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The magic of television: Are we overvaluing TV advertising?

By Jim Freeman, commercial director

August 12, 2015 | 4 min read

We've seen many brilliant magicians on our television screens over the years. From Paul Daniels to David Blaine they've pulled rabbits out of hats, plunged knives into beautiful assistants without spilling a drop of blood and made all kinds of objects disappear before our very eyes.

I have a suspicion that the magicians may have moved from the studios into television's commercial departments. How else do you explain why the advertising industry is spending more money in television for fewer viewers? What a fantastic trick.

Shuffle the cards any way and the statistics tell you that TV advertising continues to grow. It's up every month so far this year and most of last year. In contrast most other media is in decline or slowing down.

In a media landscape of infinite opportunity why are advertisers still placing the majority of their marketing budget – and a growing share – to a primarily terrestrial TV schedule? Could the reality be an antiquated trading model which ignores lower audiences and creative lethargy?

TV is still priced on 'Station Average Price', a simple equation that produces a Cost Per Thousand impressions figure which is based on supply and demand. The main issue with this is that TV price inflation can occur when audiences are in decline.

This has been the situation for a while in TV, but clients seem happy to spend more to get less – not something I've experienced in any other media.

We live in a world where media owner first party data means creating a dialogue with targeted individuals. We know for sure what they like, what they research and what they buy. Why then does the 400 TVR (GRPs) schedule still exist unchanged and unquestioned?

Like newspapers, TV is undoubtedly a powerful media, with a proven place on communication schedules. However, with marketing budgets under pressure and an explosion of competition from new digital outlets, TV's cost per thousand inflation is reaching +15 per cent on some audiences and estimates to grow TV revenues across 2015 by c.9 per cent (that's an extra £343m according to Group M forecasts), is there really science and strategic justification behind television's dominant and growing role?

Print media has never been better value, with a whole new raft of digital platforms now reaching the majority of the UK in a trusted and engaging way. According to the latest research Newsbrands now reach c.95 per cent and 93 per cent of 18-34 year olds and ABC1 Adults respectively and is the most effective medium at delivering hard business measures. TV comes second (source: NRS Padd/IPA Datamine).

However, the show goes on. Marketeers' money continues to be spent but not in the most cost effective way. We in the print industry can only look at the TV, fast forward the ads and wonder: how do they do that? In the distance from the commercial television offices, I hear the echoes of a Tommy Cooper guffaw – “Just Like That”.

Jim Freeman is group sales and trading director at the Telegraph Media Group

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