Consumer giant cuts TV advertising by one-fifth
Saturday, 17 September 2005
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Unilever disclosed yesterday that its global expenditure on traditional television advertisements had dropped by one-fifth over the past three years and was set to plummet further.
The news came at the biennial Royal Television Society conference in Cambridge, which also heard from the consultants Spectrum Strategy which forecast that conventional real-time viewing could drop to just 50 per cent of the time spent watching television in this country by 2012.
Most of the remainder would be accounted for by time-shifted viewing via "personal video recorders" (PVRs) and on-demand viewing, technologies that allow consumers to fast forward or skip ads.
Alan Rutherford, the vice-president of global media at Unilever, one of the world's largest advertisers, said the value of television advertising was dropping in the face of audience fragmentation and the proliferation of new channels. He told the conference that advertisers have to spend 10 per cent more in the US to achieve the same "weight" of impact available five years ago. "Advertisers cannot continue to fund that [traditional] type of television," he said, pointing to new platforms available to advertisers and their ability to create their own content. "The advertiser-dependent model can not survive. Those broadcasters who cannot resolve this will die."
Mr Rutherford said Unilever would look at product placement in television programmes - currently constrained by regulations - or branding shows. He gave the example of Unilever's Dove soap and beauty range as a product that could be incorporated into storylines. "Advertisers are rethinking the mix and that's where the danger comes for traditional TV." John Pluthero, the chief executive of Energis, told the conference: "It's about time TV came up with some ideas or it will keep going down 20 per cent. "
The biggest terrestrial television losers from Mr Rutherford's doomsday scenario would be ITV, Channel 4 and five, which are dependent on advertising for most of their revenues. Sky aims to have PVRs in 25 per cent of its subscribers' homes - 2.5 million households - by 2010. The Spectrum research suggested television advertising revenues would fall by one-third by 2012 if on-demand viewing and PVRs take off.
