Conflicting views on ad spending in first year of digital TV

Conflicting views on ad spending in first year of digital TV
Posed photo of a person holding a television remote control and watching tv.

Although combined advertising expenditure via digital terrestrial-TV channels reported by Nielsen (Thailand) shows that digital operators brought in around Bt20 billion (S$816.7 million) during the first year of broadcasting, the country's leading advertising agency, Mindshare, has said less than half of that amount was actually paid by advertisers.

Estimated ad spending via 21 of the country's 24 digital-TV channels - 3HD, MCOT HD and Channel 7 HD being the three not covered by the data - from April 2014 through end-March represents 21 per cent of the overall Bt98.96-billion in ad expenditure for the whole TV industry, according to Nielsen (Thailand).

The five traditional free-TV channels - Channel 3, TV5, Channel 7, Modernine TV and NBT (Channel 11) - accounted for Bt78.17 billion, or 79 per cent. Those figures are based on advertising rate cards provided by each free-TV broadcaster.

Phayao Thamteersoonthorn, head of TV trading at Mindshare, said last week that the figures did not however reflect the actual situation when it came to trading of TV broadcasting.

"We believe the real ad spending via digital-TV channels should be around 30 to 40 per cent of the figure reported by the media research firm. For example, in the first quarter this year, we witnessed only Bt2.5 billion was spent by advertisers, while Nielsen showed Bt8.7 billion during that period," she explained.

With discounts and special deals offered by each broadcaster, advertisers therefore spent less of their budgets with digital-TV channels than what appeared on the commercial rate cards, she said.

Moreover, all industries - including advertising business - were hit hard last year by the political crisis and economic sluggishness and, with insufficient purchasing power this year, local advertisers remain cautious about their ad spending.

Advertisers and media agencies were also concerned about the audience size of digital-TV broadcasting, while coverage of concentrated digital-TV broadcasting service was still limited and the majority of viewers relied heavily on satellite platforms to access digital TV, she added.

Given these factors, the media specialist suggested that some digital-TV broadcasters had decided to suspend their plans to invest in TV programmes last year.

However, with an improving situation this quarter, GMM Grammy - the operator of One and GMM Channel - BEC-Multimedia, which operates 3SD and 3Family, and Workpoint Entertainment, the owner of Workpoint Creative TV and Thairath TV, are planning to add more hero content to their channels to lure audiences.

Piyawadee Maleenont, chief executive officer of production house Wave TV, said her company was preparing a team to produce family programmes for the 3 Family digital channel. The new programmes will start airing in the fourth quarter.

Natakrit Wannapinyo, vice president for business development at TV Thunder, said his company was currently in talks with GMM Grammy and Thairath TV to supply new TV programmes for them in the current quarter, but he declined to disclose details.

Though Channel 3 and Channel 7 are market leaders in terms of advertising revenue, Phayao predicted that advertising spending via the duopoly would soon be eaten into by new potential players in digital-TV business.

"The advertising rates in the commercial rate card are expected to reflect reality in TV trading within the next two years," she added.

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