Introduction
Advertising is a vital aspect in any business and thus firms choose to incur the costs associated with it because through it, they establish links with their customers and consequently capture their share of the market. Huge sums of money are spent on advertisement as firms endeavor to reach out to consumers.
With the advent of globalization and the ongoing fast-paced technological advancements, it is imperative for firms to ensure that their advertisement campaigns are effective. This assertion holds as the contemporary consumers are exposed to a plethora of products and services from all over the world. As such, only the best or most appealing form of advertisement can win the consumers’ hearts.
Consequently, firms carry out their advertisement campaigns via a myriad of media platforms including radio, TV, the Internet, and print media such as newspapers and magazines among others. The Internet, which is a relatively new technological development, is rapidly emerging as a major medium through which firms can advertise and reach large numbers of consumers effectively.
Global Internet usage statistics keep on growing. As of 2011, two billion people regularly used the Internet globally (Global Editor Par.5). This percentage represents about 30% of the total global population. However, it should be noted that some parts of the world are more advanced in the Internet usage as compared to others. For instance, Europe is one of the world’s most established Internet markets.
By the year 2009, already over 50% of European households had access to the Internet (Internet Advertising Bureau 2). This aspect means that the number of individuals who access the Internet on a daily basis transcends half the population of Europe as individuals from non-connected households may still access the Internet at the workplace or via connected devices such as smartphones and tablets among others.
In effect, advertisers are increasingly paying attention to the Internet as a potent advertisement medium. According to Digital Europe, online advertising has done much to alter the marketing landscape in Europe (2). From the onset of the new millennium, the Internet is emerging as a major consumer media channel albeit with notable disparities between countries across the continent (Digital Europe 2).
In the UK, statistics indicate that the amount of money spent on online advertising surpassed the amount spent on TV advertising in 2009 (Sweney 45). In the light of this background, this paper seeks to respond to a fundamental question, which Europe’s TV industry needs to pay close attention to, viz. is TV advertising, as a medium of reaching the masses, dying on the European continent?
In an effort to address this question, the paper examines literature that shows the dynamics of TV advertisement over the past several years alongside a similar examination of the growth of Internet advertising. Such an approach is anticipated to give a clear picture of the increase in popularity of the Internet advertising and its entrenchment in the field of marketing.
At the same time, it will show how TV advertising has fared on since the emergence of the Internet as a mainstream media channel.
The paper will serve to disambiguate the confusion that exists concerning the dynamics of TV and the Internet advertising because currently, some reports propagate the idea that despite the exponential rise in the popularity of the Internet as an advertisement medium, it has not affected TV advertisement.
Proponents of this line of argument include Gervet and de Chanville who assert, “Contrary to the fears of many, the Internet hasn’t yet cannibalized TV advertising” (4). According to such proponents, the Internet may be enhancing the TV experience.
TV Advertisement versus Online Advertisement in Europe
TV advertising has been a dominant medium of advertising in Europe for many years and it remains a favorite to date. It was the leading channel through which marketers sought to reach consumers until 2011 when it was surpassed by online advertising (which includes Internet based advertising accessible through both computers and mobile phones) in terms of the money spent on advertising (WSI 4).
Therefore, the UK became the first major economy in which money spent on online advertisement surpassed that spent on TV advertisement ($6.4 billion against $5.3 billion respectively) (WSI 4). This development marked a watershed in the UK’s advertisement landscape.
Although the figures belong to the UK, most other European countries are moving towards a similar phenomenon insofar as TV versus online advertising is concerned, but Denmark and the Czech Republic have already posted that online advertising expenditure exceeds that of TV advertising (WSI 34).
These three countries are pioneers in this transition, but it should be noted that countries such as Germany, France, the Netherlands, and Spain are almost making the transition as well. Probably by the end of 2014, all of them will have made the transition for online advertising closely trails or is at par with TV advertising in almost all of them (WSI 33).
Denmark’s online advertising industry was the first to overtake TV advertising followed by the UK, but since it is not one of the major European economies, the UK received more attention as the first major economy to make the transition (Sweney 45). These patterns show that although TV is still one of the favorite channels of advertisement for marketers in the European context, it is fast being overtaken by online advertising.
In the year 2005, total European online advertising expenditure stood at €4.5 (Digital Europe 1). This figure was close to 5% of the total money spent on advertising in Europe. At individual country levels, some countries spent up to 8% of their advertising money online (Digital Europe 2).
Either way, both percentages are above 2%, which is considered the threshold at which online advertising starts being considered as a mainstream advertising media. Many European countries, by the year 2005, had gone beyond the threshold level of 2% in terms of money spent on online advertisement.
These countries include Finland, Denmark, Belgium, the Netherlands, Germany, France, and the UK (Digital Europe 2). In essence, Europe as a continent reached this level earlier than 2005 because on average, its total spending on online advertising was about 5%, as noted above. Considering the fast-paced nature of Internet access expansion in Europe, almost one decade later much has changed.
The UK, Germany, and France are Europe’s digital giants. In effect, they accounted for over 85% of the money spent on online advertising in Europe in 2005. The UK alone is reported to have accounted for about 42% of Europe’s online ad expenditure the same year.
Over the years, tremendous growth has been realized in the European online advertising industry and as noted earlier; Denmark, Czech Republic, and the UK have already recorded online advertising budgets that are larger than TV advertising budgets. Clearly, there is a very strong growth towards preference of online advertising over TV advertising across the European continent.
Recent studies indicate that in the UK, which is considered the pioneer economy to make the transition towards the dominance of online advertising over TV advertising, online advertising currently accounts for about 23.5% of the total advertising money. This figure in comparison to the 21.9% of money spent on TV advertising shows a disparity of over 1.5%.
However, considering the rapid growth of online advertising and the view that TV advertising has exhibited a 17% decline on a year-by-year basis, within a short duration of time, the disparity is likely to grow exponentially (Sweney 45).
The UK only spent £19.4 million on online advertising in the year 1998, but currently the figure stands at £1.75 billion (Sweney 45). This aspect shows a clear-cut trend of strong growth that is increasingly pitching the Internet as the future medium of advertising.
The emergence of the Internet as the dominant channel of advertisement has not been an overnight development. Rather it took many years for the Internet to entrench itself as a mainstream medium that can substitute some of the roles that were exclusively played by traditional media such as radio and TV.
This steady growth shows that even though there may still be confusion about which form of advertising is dominant (because in some countries TV advertising is still dominant over online advertising while in others online advertising has overtaken TV advertising), the confusion will not last long. Internet advertisement will eventually emerge at the top in countries where it is still trailing TV advertisement.
Meanwhile, there is a reason for the TV advertising industry to worry because clearly, the growth of online advertising is not guaranteed to stop once it overtakes TV advertising, as indicators show that it is bound to continue growing (Henningsen et al. 194).
Its current growth patterns are very strong and are likely to stay so for many years to come. If these growth patterns persist, TV advertising is likely to continue ceding ground for online advertising.
According WSI, on average, most European countries have Internet usage statistics of about 70% of the total population (2). Even so, the figures are still steadily growing and within a short time, they are likely to reach over 80%. The same case applies to mobile connectivity.
On average, over 50% of the European people own smartphones, which enable them to access online adverts. These figures show that there is a room for growth in the online advertising industry because as more people are connected to the Internet, a larger share of the advertising pie continues to be targeted at them.
Drivers of the Transition
These trends evoke an important question on whether the Internet has become more enticing or whether people simply do not watch TV across Europe anymore. In an attempt to answer this question, several arguments have been advanced. One of such arguments is that linear TV audiences have massively declined in the last decade (IBM 1).
This observation does not imply that fewer people watch TV today than ten years ago; rather, it means that over the years, the entertainment landscape has transformed tremendously (IBM 2). Technological advancement has placed numerous options at the disposal of TV viewers such that today, an individual only watches what he/she wants and how he/she wants it.
In other words, numerous TV stations are available to viewers today and due to technological advancement, people opt for thematic TV content, which they can manipulate as they please (IBM 3). In effect, though there is a bigger audience today than a decade ago, the audience is spread across numerous TV channels, thus making it difficult to reach a substantial portion of the population as easily as was the case ten years back.
For instance, in 1977, a marketer in the UK only needed 3 spots on a major television channel to reach up to 80% of the population, but today, up to 65 spots are necessary to achieve the same goal (IBM 9). This realization means that it may be necessary to spread an advertisement across a larger number of channels or keep it running on a major channel for longer to increase its chances of reaching more people.
However, it is worth noting that if a marketer chooses either of the two options, it comes with huge cost implications that many may decide to shy away. The cost of running an advert on TV as compared to placing a banner across a web page or incorporating a few words about a product alongside the search results on the Internet is far much higher (Digital Europe 6).
The implication of this aspect on TV advertisement is that it is likely to cause TV advertisement to decline because as the Internet usage increases, marketers become more confident of reaching larger numbers of people.
The UK, whose Internet usage and online advertisement statistics are well documented, is among the European countries that have already reported a larger portion of advertisement funds going to online advertisement rather than TV advertisement. This trend is not without a substantial reason behind it.
Statistics show that Internet usage in the UK is extrapolated to rise to about 80% of the population by 2016 from its current 75.7% (WSI 3).
Based on these figures, it becomes apparent that advertising on the Internet is far much affordable and has the potential of reaching many more people than advertising on a major TV channel today. This assertion underscores the impression of why the European countries, which are among the most entrenched Internet users across the globe, are already exhibiting a shaky future for TV advertising.
The European countries that have not yet crossed over to the Internet advertising dominance over TV advertising are already on the verge of doing the same.
Another argument that has been advanced to respond to the concerns over the decline of TV advertising in Europe is that even for the viewers who are exposed to television, the ability of TV advertisement to influence them effectively is limited by a number of factors brought about by technological advancement. According to TAM Ireland, about 49% of households in the country have PVR (personal video recorders) (IBM 13).
These devices allow a viewer to pause or fast forward live TV while watching. In effect, about 85% of the households that own PVRs reportedly assert that they watch TV via PVR for in doing so, they can easily skip the commercial breaks that are often embedded in popular programs (IBM 4). The implication of this state of affairs is that over three quarters of Irish homes with PVRs are likely to be unexposed to TV advertising.
The element of uncertainty in the preceding sentence is contributed to by the view that about 75% of those who reported that they fast-forward through commercial breaks occasionally stop the fast forwarding when something in the advertisements captures their attention (IBM 13). Therefore, they are partially unexposed to TV advertisement.
However, going by the percentages, it becomes apparent that TV advertisements are increasingly reaching a shrinking audience across Europe. Marketers who use TV advertisement may not be aware of this scenario because conventionally, they base their choices on the TV usage statistics.
Yet such statistics fail to capture the actual behavior of TV viewers who for example, fast forward through commercial breaks because technology has made it possible. The actual effectiveness of TV advertising can then be determined through the return on investment (ROI).
This aspect means that marketers can determine the effectiveness of a TV advertisement campaign based on the results in terms of the sales realized due to the influence of a particular advertisement campaign. Unfortunately, Gervet and De Chanville note that TV advertisement campaigns have been increasingly disappointing (9).
Reports indicate that even the most acclaimed TV adverts still register dismal results. For instance, in Australia, Carlton’s multi-award winning advertisement that was touted as the ‘biggest ad’ failed to deliver expected results in terms of sales (IBM 11).
In TV advertising, although still considered by some as among the most endearing form of advertisement that exists to date, the departure from linear TV viewing occasioned by technological advancement has done much to alter its ability to reach large audiences.
However, despite these changes, Gervet and De Chanville (2) note that TV remains the favorite medium through which marketers can reach the largest number of consumers at the same time. Favorite programs such as The X Factor can place up to 10 million consumers at the disposal of advertisers at ago (Gervet and De Chanville 3).
With such numbers of consumers exposed to advertisement at the same time, TV advertising could still achieve tremendous results. Therefore, it is upon TV advertisers to ensure that the adverts they make are creative and endearing.
Traditional TV viewing where viewers had no option, but watch what was brought on their screens is a phenomenon of the past (IBM 2). The advent of digital technology has brought numerous possibilities in the realm of television broadcasting and viewing.
Digital technology has made it possible for viewers to pause or fast-forward live TV; access TV stations from the world over, and due to the rise of pay-TV, viewers increasingly have access to personalized TV programming (IBM 2). With these options at the disposal of the viewers, traditional TV stations that were mostly free-to-air have lost a big portion of their audience.
This loss is also aggravated by the rise of on-demand TV programming that is accessible through Netflix and Hulu (Gervet and De Chanville 2). Netflix has particularly grown in popularity in the US and a large part of the European continent. It is important to note that this type of TV technology is Internet supported.
In this sense, it is arguable that the Internet is supporting the TV viewing experience for audiences as noted by Gervet and De Chanville (2). On-demand TV programming not only allows viewers to access content at their own convenience, but also it offers options for accessing ad-free content.
In the light of such developments, it becomes apparent that though TV may still be viewed by many, it is becoming increasingly difficult for TV advertisers to forecast the size of the audiences they are likely to reach through advertising on TV. This assertion holds as reports indicate that like in the US, many Europeans assert that they consult a website before making a purchase (Gervet and De Chanville 4).
Conclusion
This paper sought to investigate whether TV advertising is dying among the European countries (EU) and much has been established to this effect. The confusion that existed about the medium of advertisement, which is dominant between online advertising and TV advertising, has been disambiguated. Apparently, online advertising is on the rise with very strong growth rates.
TV advertising on the other hand is on a steady decline despite the view that TV audiences may have grown due to population increases. Countries such as Denmark, Czech Republic, and the UK have already made the transition to spend more money on online advertising than TV advertising.
Denmark and the rest of the Scandinavian world have not released much information concerning their extent of digital prowess, but it was the first European country whose online advertising industry surpassed the TV advertising industry. For other European countries such as Germany, the Netherlands, Spain, and France, whose digital statistical data is available, the transition is in the vicinity.
Several other European countries are also moving towards this transition. These patterns clearly indicate that TV advertising is on a decline in Europe. A careful analysis of the TV viewing behavior across Europe supports this view by revealing several factors, which connive to aggravate the decline of TV advertising.
TV may remain a major medium of entertainment for long, but advertising through it is quickly becoming ineffective across the European continent.
Works Cited
Digital Europe. Tracking the growth of online marketing spend, London: Digital Strategy Consulting Limited, 2006. Print.
Gervet, Eric, and Matthieu De Chanville. Does Advertising still need Television? Seoul: A.T. Keaney Inc., 2012. Print.
Global Editor. Whitepaper: Outlook on European Display Advertising Trends, by Clipperton Finance. 2013. Web.
Henningsen, Sina, Rebecca Heuke, and Michel Clement. “Determinants of advertising effectiveness: The development of an international advertising elasticity database and a meta-analysis.” Business Research Journal 4. 2 (2011): 193-239. Print.
IBM. The Death of TV as we know it: A future Industry Perspective, New York: IBM Corporation, 2006. Print.
Internet Advertising Bureau. Brand advertising and digital, Karlsruhe: AIB, 2010. Print.
Sweney, Mark. “Internet overtakes television to become biggest advertising sector in the UK.” The Guardian. 2009: 45. Print.
WSI. Internet Marketing Trends Report 2013: UK & Europe. Toronto: Research and Management Corporate, 2013. Print.