The television advertising market encompasses all advertising spending via broadcast or online television within, before and after TV programmes. Broadcast advertising comprises revenues generated by free-to-air networks (terrestrial), cable, satellite, Internet Protocol TV (IPTV) and other distribution services.
For the current year, online and mobile TV advertising consists of linear in-stream adverts only (combining pre-roll, mid-roll and post-roll revenues). Not included are the following components: Non-linear adverts (such as overlay ads, where advertisers use a video overlay layer to deliver an ad unit) and In-page ads, as these are already included in the Internet Advertising segment.
Within linear in-stream adverts, only revenues from broadcast TV viewed on TV websites and OTT-platforms (such as Zattoo, Wilmaa, Teleboy) are taken into account. The type of device is irrelevant. Video content consumed via platforms such as YouTube are not covered. These revenue streams are part of Internet Advertising.
All TV Advertising figures are shown as net revenues, excluding agency commissions and discounts.
The Swiss TV Advertising Market
Switzerland’s broadcast TV advertising revenues were reported by 51 channels in 2015. In total, those broadcasters have reported revenues of CHF 749 million, a decrease from CHF 772 million in 2014. This indicates a decline of -3.0 per cent, a significant slump after 3.1 per cent growth in 2014 and 3.2 per cent in 2013. Public TV channels contributed 48.6 per cent, the largest share, to total TV advertising revenues. They were followed by foreign channels with 42.2 per cent and private channels with 9.23 per cent revenue shares. Foreign channels increased their market share to 3.94.2 % at the expense of Public TV and private TV market shares.
The Swiss television advertising market is divided into two sectors: broadcast TV and online TV, which also includes mobile TV. In the broadcast sector, advertising revenues are generated by offering advertising slots either for a certain programme or focused on a specific target group. This sector includes the Swiss TV channels in all regions, as well as TV companies from abroad with dedicated Swiss advertising windows. In online and mobile TV, there are certain online or over-the-top (OTT) providers such as Zattoo, Wilmaa and Teleboy, as well as traditional broadcast channels that feed video content to laptops or mobile devices by means of open Internet networks. They sell advertisement slots to finance their business.
Within the forecast period, we expect moderate but stable growth in the broadcast advertising and sponsoring market. In 2015, TV broadcast advertising revenues declined by 2.7 per cent to CHF 699 million. A drop was also recorded in the TV sponsoring market, where total spending declined by 6.5 per cent after growth in 2013 and 2014. This can be explained on the one hand with the annual variations due to large sporting events such as football or the Olympics, on the other hand the SRG SSR received less advertising revenues because of the Swiss franc exchange-rate shock in 2015.
TV providers are challenged by new players that take advantage of lower barriers to entry and changes in the way viewers watch TV. The trend for time-shifted viewing across a range of devices like smartphones, tablets, laptops and connected devices such as Apple TV or Chromecast has fragmented audiences with game-changing implications for advertisers. While the traditionally high viewing figures for the major networks are in decline, niche channels provide opportunities to target more specific audiences and demographics.
Meanwhile, Pay-TV operators roll out new technology that will facilitate targeted advertising on their platforms - more personalised for on-demand programming. This is possible with advanced services delivered to computers, tablets and mobiles, as well as connected TV sets. Through the use of second screen devices and links to social media to encourage discussion, further views and even links to e-commerce sites where viewers can purchase items, advertisers have the possibility to offer more personalised, targeted and interactive advertising formats.
Crucial for success is the right Cross-Media-Mix and the optimal matching of content and channels. Particularly promising is a coordinated combination of TV-and-Online- promotion, by which the effect of TV promotion can be increased. As marketers buy programmatic ads across multiple platforms – including Mobile TV, Smart-TV and IPTV - it is becoming more and more important for advertisers to engage with their customers across multiple channels as individual people, not as anonymous collections of interests or user devices. Advertisers are leveraging Facebook Custom Audience, Twitter Tailored Audiences, and now Google Customer Match to align advertising to the CRM-based data they already use to guide the customer journey.
For advertisers, it is absolutely essential that data analytics are available in order to understand consumer behaviour and specific needs. Advertising investments are reviewed closely, because technical innovations (ad blocking, fast forwarding of recorded content) are reducing broadcasters’ control over when or if ads are viewed by consumers. As a consequence, media services are trying to provide better data, in order to optimise targeted communication on their online-platforms. In 2013, Mediapulse replaced the Telecontrol television audience software with an electronic measuring system that measures time-shifted viewing of households as well as TV use on computers. It would be helpful, if the previously not measurable TV consumption, for instance via Tablets and Smartphones, could be integrated into TV-research.
The move to more sophisticated broadcast infrastructure is both a major opportunity and a challenge to TV Advertising. The proliferation of set-top boxes is increasing and will continue over the forecast period. Time-shifted TV use with its options to fast-forward through or skip advertisements is a general trend. Time-shifted TV-use increased in Switzerland to over 11 percent in the second half of 2015. In the 15-20-year-old viewer group, the share tops 20 percent.
As the numbers using replay and time-shifting increase, advertisers will have to become creative to prevent advert skipping. This could include programme sponsorship, product placement and more interactive experiences. Discussions have started about compensation from TV providers to TV-channels when providing replay-functions. The rise of ad skipping on set-top boxes will make it more difficult to regain the previously achieved commercial block rating.
The dynamics of TV Advertising market remain high, so it is difficult to forecast. Nevertheless, for the next five years we expect a 1.8 per cent annual increase in total TV advertising and sponsoring revenues, with cyclical boosts driven by major sporting events. The Swiss economy is forecast to continue expanding in the coming years, which will underpin advertising growth. At the same time, the industry remains exposed to the risk of an economic downturn, as it is strongly correlated to the general economic trend.
In 2015, Swiss broadcast advertising decreased by 3 per cent, more than anticipated. The fall was mainly driven by sponsoring revenues, which declined by 6.5 per cent. However, advertisers were able to leverage new audience measurement metrics to attract broadcast advertisements and absorb losses in the market.
We anticipate TV advertising and sponsoring revenues to grow at an average annual growth rate of 1.3 and 1.2 per cent, respectively, through 2020. Online and mobile television advertising is expected to grow at a CAGR of 12.8 per cent, thanks to improved functions and qualities of online TV providers; however, its market share should remain below 5 per cent during the forecast period. Drivers for growth are new inventory (growing channel portfolio) and innovative advertising methods. Classic advertising, such as linear broadcasting in existing channels, shows little potential for growth.
A key factor for success of Smart Data and High-End-promotional technology is efficiency. Advertisers are caught between individual responsiveness and the need to communicate in a powerful range. Programmatic TV, a technology-automated and data-driven method, helps to reduce scattering losses. This puts a layer on top of today’s TV trafficking and booking system, allowing an automated buy, minimizing the need to make bookings manually – thereby decreasing costs. Programmatic TV also uses a data-driven approach beyond standard target demographics. Instead of using a few thousand TV panel households, it leverages set-top box data of millions of households, allowing more granular targeting. This includes digital TV ads presented via the web, mobile devices, and connected TVs, as well as linear TV ads served via set-top boxes.
In TV there are an increasing amount of transmitters with small market shares and a variety of offers for advertisers. However, the key players in the market are Admeira and Goldbach Media as they share almost all TV advertising bookings. Admeira, the joint marketing company of Swisscom, SRG und Ringier, has become operational in april 2016. In December 2015, the Competition Commission WEKO approved the joint venture of the Swiss broadcasting corporation SRG, the private media company Ringier and Switzerland's leading telcom provider Swisscom without requirements or conditions. Regulator UVEK then decided on the 29th February 2016 that SRG can participate in the mutual advertising platform with Ringier and Swisscom. This merger addresses the changing needs of all clients in the Swiss advertising and media market. With the partners’ complementary assets, the alliance allows joint development of new technologies and new advertising forms as crossmedia, targeted advertising and real time bidding platforms to capture more of local advertising and to provide greater competition to global players. Swisscom will contribute to the joint venture its technological expertise, customer insights and marketing rights for Swisscom TV as well as its online platforms, while Ringier and SRG will transfer their marketing rights for their convergent media.It is the declared goal of the partners to sustainably strengthen the Swiss advertising market in a globalised competition.
Despite the growth of digital media, TV Advertising is still the place to be. Its revenue is successfully responding to the emergence of newer forms of digital media. Advertisers need to be able to rely on data that reflects their advertisements’ impact. A growing number of devices that can be used to watch TV has lead to less accurate estimations by current measurement systems. Time-shifted TV on multiple devices will force broadcasters and advertisers to embrace new audience measurement metrics, in order to track how audiences consume their content. It might be reasonable to implement a new method. At the end of April 2016 the Boards of Directors of WEMF and Mediapulse agreed to set up a joint subsidiary under the project name "Swiss Media Data Hub” for the comprehensive collection, processing and analysis of online media usage data across all genres. The aim is to tackle identification of cross-media brand reach, the complete capture of streaming services and independent research into campaign reach.
Available data will be examined more specifically (use of social Media, Web-Browsing, Online-search and direct classic questioning), to attain the relevant customer in the relevant target groups with the specific message about the product of interest through the channel used, offline or online, and always at the right time. Clients, media, promoters and agencies will increasingly join forces and form syndicates to assert themselves against OTT-Players like Google and Facebook, which are strongly data-driven.
While viewing TV, people increasingly use screens such as smartphones, tablets or laptops, sometimes to learn more about the shows and commercials they see but also to perform other tasks while the TV is on. Media companies have recognised these changes and offer extra content or experiences available exclusively on mobile devices to compliment the content on the TV – so called Second Screen advertising. Interventions in this space can range from companion app ads, to sponsored tweets or Facebook posts and are displayed at specific times in specific regions to capture the watching audience.
Goldbachmedia provides Second Screen advertising with “Goldbach TV Synch Technology Live Monitoring”, a live monitoring of linear TV and in particular the commercial breaks. This technology automatically detects by categories like senders, subjects, time, advertisers, campaigns or industries and is linked with the mobile Demand-Side platform (DSP) “Splicky” and with Google Adwords. TV Synch allows mobile campaigns parallel to the TV-campaign. The TV campaign can be expanded with additional coverage on relevant mobile apps and sites. Thus, the impact of the campaign in the relevant time slots and the branding effect of the TV campaign increases. The aim is to strengthen purchase intentions of potential customers, and to make multiple contacts with a secondary response element.
Second Screen advertising typically uses listening technology to identify when an advert has run on TV and to deliver immediate advertising messages on digital devices. In addition to improving the effectiveness of messaging, Second Screen advertising also allows brands to initiate a more in-depth dialogue with consumers. For example, an automotive advert on TV could be followed up just seconds after the commercial ends with an offer to arrange a test drive, or a story line from the advert could be continued online with a call to action delivered direct to mobiles and tablets. Global automaker Hyundai is using this technology today.
Comparison to Western Europe
Television Advertising by broadcast in Europe is quite stable, as TV brings to the table both credibility and a strong bond with the audience. Longer term, linear TV's dominance is in decline and this is most evident among younger audiences. It is becoming difficult to attract younger households to the traditional pay-TV market, so operators must adapt with their "TV Everywhere", or by including stand-alone OTT apps in their bundled services.
Growth rates in the online TV Advertising vary among European countries but are generally high, mainly above 20 per cent. Europe-wide, online TV advertising will become increasingly important. The challenge ad skipping can be overcome by live programming. Sport remain the most widely televised form of live programming, and other genres are emerging, such as awards shows. Content that will gain the largest live audiences is coming at an increasing premium for broadcasters, pay-TV operators and, subsequently, advertisers.
Under the assumption that the economy will remain stable, TV Advertising should witness steady growth. In 2020, revenues generated by online TV adverts will have more than doubled their share of the total TV advertising spend in Europe, up from 3.3 per cent in 2015. In absolute numbers, Swiss TV Advertising revenues are approximately at the same level as those in Sweden.