The Swedish commercial broadcaster, TV4 Group, is demonstrating how ‘traditional’ channel owners can succeed in the digital domain and how their online services can help boost the health of the entire business. Speaking at Future TV Advertising Forum last month, Mathias Berg, COO of TV4 Group and Head of Business Unit Advertising for Bonnier Broadcasting, admitted that 2016 was a low-point for its share of the AVOD (advertising-funded VOD) market, with Netflix taking eyeballs from the company, but this has been followed by continual market share growth.
Digital efforts have been generating “significant money” for a couple of years but in 2017 the growth rate accelerated, hitting close to 70% over the previous year, with a 99% growth figure (year-on-year) for October suggesting the trajectory is still upwards. The whole business is benefiting. “2017 will be our highest turnover and will deliver the highest profit margin, and one of the main reasons is digital,” Berg told the London audience. “Our digital revenue is pushing both our top-line and our profitability.”
The digital transformation at TV4, spearheaded by the 4Play online/multiscreen service, is a one-way street. Berg made it clear that online/OTT is the future for the broadcaster. “Sweden is seeing a rapid downturn in linear viewing and one-third of what we like to call TV consumption is OTT, whether that is on our service or with Netflix or YouTube. In a matter of years, OTT will be the primary means of distribution for TV.”
He admitted that this used to make TV4 Group nervous but now Berg cannot wait to get more viewers and advertising into the digital domain. “We will move as much of our inventory as possible from linear into digital, as soon as possible,” he revealed. “But we are going to treat it as one inventory.”
This means there will be no distinction between viewers who are watching on classic linear TV and those who are watching the same content online, when selling audiences to advertisers. They will be treated as the same audience. “We are platform agnostic. I am sure that in future we will only be trading a total inventory,” he asserted. TV4 has already stopped thinking in terms of classic television on the one hand, and online activities on the other. “We have stopped dividing ourselves internally between TV and digital. That is history.”
Berg shared the strategy that is driving the successful digital transformation at TV4. The first part is to trust in your own content. A good story is still a good story, whatever the platform, was his advice. Secondly, ensure consumers watch your content at your owned-and-operated locations, even if you engage with them elsewhere. “This is for the sake of the user and for advertisers,” he said.
There is another motive for bringing consumers to 4Play, rather than licensing digital assets to companies like YouTube. As he pointed out later, in the context of ad sales: “When we look at the market and all the exciting digital developments, you realise that what they [born-online media companies] are really going for is our TV money.”
This is an important choice that every broadcaster must make. “You either go to their playing field and put your TV into a cool video environment or you say to people, ‘If you want our TV, then welcome to our home’.”
The next part of the strategy is to gather first-party data on your viewers. “Our content is free, in AVOD, but if you want it you have to give us some information, with a log-in. That means we can give users a much more personalised experience than in the linear [broadcast] world.”
TV4 has nearly 4 million registered users in a country of 4.5 million households and a population of 9 million. “We don’t have everyone, but we are not far from that,” he suggested.
“We know who our users are, and their income and lots of other things. That is gold, for us and our advertisers. Data is the core of everything we do.” TV4 combines programmatic (including real-time) and direct sales for its online inventory, ensuring advertisers can buy at volumes and prices with certainty if they want. “This combination makes sense,” Berg observed.
TV4 Group has worked closely with traditional operators as part of its transformation, building on what Berg called their long and fruitful relationship. Any TV4 content viewed online through an operator platform is made available on the basis that people log-in to TV4 and the broadcaster controls the advertising inventory.
When it comes to monetizing digital content with advertising, Berg is adamant that broadcasters can bring the best of what traditional TV offered, in terms of trading transparency and audience transparency, and marry that with modern advertising and data technology to fight off competition from born-online media companies.
He observed how an opaque digital ecosystem can swallow as much as 40-50% of an original advertising budget, with only the remainder buying you actual ‘space’ on/within media. “In TV we work with transparent deals; our price is always transparent to you. If you are buying digital with us, you get the price we are getting. You can see what you get for your money.”
This transparency stretches to audience verification. Sweden’s measurement body, MMS, already offered online TV measurement but last autumn introduced ‘total TV measurement’, giving the ability to report on reach and frequency across all platforms.
“We are measured by an independent body so advertisers know they get what they pay for. Measurement in the [classic] TV world is not perfect but it is fully transparent, and we apply that to the digital world. If anyone else is taking money from us, they need to put their data out there as well.”
Berg is sure that viewability and completion rates on TV4 will not be beaten by non-TV digital media distributors. The confidence that TV4 Group has in its competitive capabilities in the digital domain will only be boosted by the increasing concerns among some advertisers about not only transparency and brand-safety when using born-online digital, but also about the performance and value-for-money they get from non-broadcaster digital spend. You can read what two major brands have been saying about that below.
Photo: Mathias Berg speaking at Future TV Advertising Forum. Watch presentation back:
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