Following the latest AA/WARC expenditure forecast data showing stagnation in TV spend, Be Addressable’s Charlie Makin, lays out the lessons the industry needs to learn from the US - fast.
I found the latest AA/WARC expenditure forecast data somewhat depressing; it should concern people who care about the quality of the media and advertising in the UK. Advertising spend is growing, but mainly because of continued growth in search and online display. TV spend isn’t growing, nor is radio, press, or cinema. This is backed by significant declines noted by the IPA Bellwether report in Q4 2024 in ‘main’ media budgets.
These are the media that actually create content and quality journalism but only attract 15% of advertising expenditure. Most digital channels repurpose content from other channels or rely on user-generated content while taking the other 85%. Shockingly, 90% of 16-24-year-olds use online and social media as their main source of news. In a world where disinformation creates political instability, this is deeply concerning.
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The AA/WARC forecasts that TV spend will decline by 0.1% due to reduced spend on linear channels. Similarly, the IPA Bellwether showed ‘video’ budgets down by 10.7% in the ‘golden’ quarter among their panelists.
Video isn’t losing its audience.
BARB data shows that average daily in-home video viewing is nearly 4½ hours; we are still a nation of screen addicts. The issue lies in planning. Only 20% of the valuable 25–44-year-old cohort’s viewing is to linear or live TV, 23% is on video-sharing platforms, and a staggering 34% is VOD in its many disguises.
The problem is that the majority of TV ad spend is still directed toward ‘live’ channels, chasing an ever-declining audience. The justification seems to be that research shows broadcast TV has historically been great at building mass fame and awareness, which ignores the fundamental changes in viewer behavior and technology.
Advertisers are increasingly under pressure to deliver demonstrable, short-term results and likely aren’t seeing them from TV. The consequences are serious. We are seeing a decline in UK program production; total revenues earned by UK production companies fell by £392m in 2023, and the amount spent on commissioning shrunk by over 10%. This decline is primarily from commissions by UK broadcasters rather than streamers. The resulting lack of ‘quality’ programming will only exacerbate the decline in linear viewing.
It’s not all doom and gloom. Broadcasters and the wider industry in the USA are effectively addressing the same issue.
Linear spend is declining in the USA too, but overall TV expenditure is growing, largely because brands are shifting spend to connected or addressable platforms. According to eMarketer, ‘TV ad spend will grow every year between 2024 and 2027, with Connected TV accounting for all of the growth. Connected TV ad revenues will grow from $24.6bn to $42.44bn, while TV ad spend will drop from $60.38bn in 2023 to $54.75bn in 2027.’
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Connected TV means that a television is connected to the internet, which is a more developed market in the USA. The opportunity with Connected TV is that advertising becomes addressable, flexible, and performance-based. Entry costs are lower, and advertisers can use their own data to execute plans. It’s turning TV into a media buy that demonstrates higher levels of performance.
The ‘supply side’ of the US TV industry is deliberately aiming to make advertising on TV as simple, flexible, and accountable as spending on a programmatic digital platform. By doing so, they are attracting newer, digital-first brands to TV at scale.
Five years ago, media owners like Comcast and other companies in the TV supply chain realized they needed to drive innovation and help advertisers change strategy as consumer behavior evolved. They set up Go Addressable, a supply-side trade body promoting the benefits and opportunities of addressable or connected TV. They directly challenged digital display channels and demonstrated how CTV can enhance existing digital investment. Their efforts include case studies, an annual conference well attended by agencies and clients, and extensive client research on the benefits of addressable advertising.
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Comcast, which owns Sky in the UK, also recently announced Universal Ads, a new cross-industry ad solution aimed at allowing advertisers—big and small—to buy against premium video “as easily as they buy from social media platforms.”
The US TV industry is directly challenging the dominance of digital giants. They are not looking backward; they understand why brands spend on digital display and aim to make it easier and more accountable to trade TV on the same basis.
Could we do this in the UK?
There are structural barriers to overcome, but if they managed it in the USA, why not here?
As Comcast Advertising president James Rooke said, we need to make planning and trading TV as simple as programmatic trading.
The issue has been identified.
Kelly Williams, MD of ITV Commercial, stated, “It’s finding those brands that have probably been built on social media and paid search but are ready to scale. We’re spending a lot of our time as a television industry focused on that cohort at the fat end of the long tail and bringing in tons and tons of new advertisers.”
To achieve this, the industry needs to evolve. TV airtime is broadly traded the same way it was thirty years ago—prioritizing scale of budgets and share rather than incentivizing new brands and innovation.
Measurement initiatives like Origin and Lantern are a good start for better assessment, but there is a long way to go. If you want to advertise in April, you’ve already missed ITV’s advanced booking deadline on February 4—something that doesn’t exist with Alphabet and Meta.
In the UK, CTV and VoD are priced at significant premiums over linear TV, but these rates bear little relation to performance. There is little variable pricing by advertising category, and performance insights are complicated due to a lack of consistency and collaboration between platforms, especially regarding data matching.
Compared to the USA, the UK advertising industry may be accused of complacency. We should be embracing connected TV, encouraging brands to use TV as a performance channel, and making it easier and more accountable for new advertisers to switch to addressable TV. I genuinely believe this inertia is costing the industry half a billion pounds in lost revenue—surely enough of an incentive to change.