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Joseph said “The crisis is locking in the advantages of the largest players in the market.”
He added “Advertiser budgets are retreating from any kind of long-term investment in their brands. The only campaigns that are surviving are those that contribute to cash flow today. That is where Google and Facebook are best in class.”
Claire estimated that betting companies spent roughly £200m on TV advertising in 2019. This compares with roughly £1bn spent online, an arena largely untouched by regulators.
“This shows how advertising spend drifts towards less regulated media." She warned that stopping traditional media advertising would naturally push companies to increase marketing online.
Francois argued that broadcasters face a “massive loss of subscribers” due to the weeks-long sports blackout. This has created huge losses that may make television companies reluctant to pay big sums in future media rights deals.
In response to COVID-19 and the associated lockdown and economic crash, advertisers have slashed budgets. Online budgets are not immune.
This has clarified features of the online ad market: it is demand-driven, relies heavily on SMEs and startups, and is built on direct response campaigns.
We expect online advertising to outperform other media, and for platforms to further gain share. But with a very few exceptions, this health and economic disaster is good for nobody.
COVID-19 has inspired an industry to collaborate with a nationwide Government advertising campaign across the national, regional and local press.
This approach lands meaningful revenue for an industry experiencing advertising decline of more than 50%, but avoids fears journalism could fall into the hands of Government.
An industry life raft is essential to minimise casualties in the near and medium term, a period when local and national media are reinforcing their value in communities up and down the country.
Douglas predicts that, without subsidies, as many as one in three journalists working for print titles could lose their jobs — 5,000 across the country. “It is a terrifying picture,” he said.
Gill said that thanks to the lockdown, consumers — especially younger viewers who had cut the cord of “normal” television in favour of Netflix and other streamers — were “reconnecting with ‘the box’. They are realising TV is more than just drama and comedy. It’s about national culture. The challenge for terrestrial broadcasters now is to exploit this shift.”
When we look back at consumer expenditure on pay-TV and alternative entertainment options during past economic downturns across major countries, we find a broad confirmation of the industry’s comparative resilience.
Also found are variations between services sold through annual contracts and cancel-anytime rivals, a negative impact on big-ticket products, and opportunities for substitutional services.
Unique features in the current crisis include the suspension of sport broadcasts and an SVOD-rich offering which widens consumer options. If hardship persists, incumbents like Sky could face tougher times than during the financial crisis.
COVID-19 has sent online news surging, with publishers experiencing massive traffic uplift, as trusted news sources become increasingly important.
But the industry is still heavily reliant on print revenues, and we are seeing supply chains come under extreme pressure as core readers self-isolate and retail giants close or de-prioritise news media. Advertising—including categories like retail and travel—has collapsed.
In face of existential threats to the sector, we have written to DCMS to mobilise Government funding to sustain news provision and journalism.
