Online brands have become the dominant advertisers in Britain’s £5bn-a-year TV ad market in the last three years. 2016 was a watershed year when this new generation of digital-native, challenger, disruptive brands became the top spenders on TV in the UK for the first time, according to Nielsen data.
Ecommerce and digital brands have increased their lead as a category since then as established advertisers in consumer goods have struggled with technological disruption and higher commodity costs, following sterling’s decline in the wake of the Brexit referendum.
This is not just a UK phenomenon because disruptor brands such as Amazon and Google are now among the world’s largest companies. Amazon hiked its global marketing spend to £6bn, including a large element of TV advertising, last year, and it now rivals Procter & Gamble and Unilever as the world’s biggest advertiser.
UK broadcasters are seeing a significant shift in their client base. ITV told shareholders at its investor day last year how digital disruptors have picked up the sponsorship of all its flagship entertainment shows since 2016. Just Eat sponsors X Factor, Uswitch backs Britain’s Got Talent, Giffgaff has The Voice, Webuyanycar supports Dancing On Ice and Uber Eats has signed up for Love Island. Channel 4 and Sky have seen similar trends.
TV, spanning spot to sponsorship, helps build our brand and has been transformational in the growth in our business
Ben Carter UK Marketing Director, Just Eat
Digital and ecommerce businesses say TV drives long-term brand-building and short-term sales performance. “TV, spanning spot to sponsorship, helps build our brand and has been transformational in the growth in our business,” Ben Carter, UK marketing director of Just Eat, says. “It builds top-of-mind awareness amongst a mass audience and it drives engagement and orders for our business by attracting new customers and getting our existing customers to order again. TV has helped us shape and grow the market.”
Online start-ups typically grow their businesses through search and social media, ecommerce and data during their early years, but this activity tends to work best at the bottom of the marketing funnel. Investing in established, mass media helps to raise awareness at the top of the funnel, build stature and even generate brand love.
“TV drives fame,” Colin Gottlieb, EMEA chief executive of Omnicom Media Group, which counts Uber and Airbnb as clients, says. “As the ecommerce players and fast-growth businesses optimise at the middle and bottom end of the funnel, they move to the most powerful brand-building medium, which is TV.”
The ability of TV to deliver to mass, simultaneous reach and tell emotional stories in a brand-safe, regulated environment is vital for disruptor companies looking for “cut-through” and credibility in a fragmented, media marketplace.
Linear, broadcast viewing is in gentle decline but commercial TV still reaches 97% of Britons a month, thanks in part to catch-up and video on demand, and new investors such as Netflix have improved the quality of programming.
TV provides three things: It’s effective, accountable and it imbues trust on the brands that use it.
Richard Morris UK chief executive, Initiative
Richard Morris, UK chief executive of Initiative, whose clients include Amazon and FairFX, says: “TV provides three things: It’s effective, accountable and it imbues trust on the brands that use it. ‘As seen on TV’ remains a powerful and enduring reason to use the medium and integration with mobile is further enhancing its value to clients.”
Zoe Harris, chief marketing officer of GoCompare, says the communal nature of TV viewing is also important. “We’re big believers in shared viewing,” she declares, citing shows such as Channel 4’s Gogglebox. “TV programmes remain excellent conversation-starters and are a strong form of social currency.”
Gottlieb says the challenge for brand-building in the smartphone age has been that it “takes longer” and is “harder to measure in the short term” when companies expect instant results. However, TV has been able to show it can drive short-term direct response for digital businesses as well as building long-term brand value. Just Eat sold 500,000 meals during the final of X Factor.
Cheryl Calverley, chief marketing officer of Eve Sleep, says: “What’s happened with smartphones is my ability to turn TV into a ‘direct response’ medium is much greater. At every moment, you have a shop in your hands.” As for getting the balance right between brand and performance, she says: “There’s no TV that doesn’t do something for your brand or to your brand or doesn’t sell. It’s more about how you balance story-telling and short, sharp response messaging.”
Online brands own large amounts of first-party customer data and aren’t just interested in mass reach. They increasingly want to target ads through broadcaster video on demand (BVOD) and online video channels.
“We have a sophisticated TV buying strategy,” Carter says, explaining how Just Eat has been looking at “spot length, day parting and channel mix” to drive return on investment as viewing changes. “The emergence of BVOD and VOD enables us to appeal to a broader audience – and grow our reach.”
Start-ups must weigh carefully when to invest in advertising, ensuring that they have sufficient scale and a robust supply chain in place to cope with demand. Carter says the “key inflexion point” for Just Eat came when it had built a network of restaurant partners across the UK. “This meant we could run effective TV nationally and laid the foundations for our always-on TV strategy,” he says.
Just Eat launched in the UK in 2006 when smartphone and ecommerce adoption was in its infancy and it took time before investing in TV. Newer online brands have moved faster as they have the confidence of knowing TV advertising is a proven route to growth.
Without doubt consumer perceptions of telly being for big, proper, trusted businesses is helping us build the brand much more quickly than using digital media alone
Zoe Harris Chief Marketing officer, GoCompare
GoCompare launched a new energy-switching brand, weflip, in October 2018 and ran its first TV campaign in January 2019, which generated “remarkable awareness and brand metric growth”, according to Harris. “Without doubt consumer perceptions of telly being for big, proper, trusted businesses is helping us build the brand much more quickly than using digital media alone,” she says.
Broadcasters have been encouraging this new generation of disruptors onto TV. Channel 4 launched a commercial growth fund in 2015 that offers advertising air-time to start-ups in return for a shareholding.
Eve Sleep, one of Channel 4’s “media for equity” investments, went on to float on the stock market just three years after it was founded and it now claims to be the UK's fifth, best-known mattress brand.
“TV has been absolutely key,” Calverley says. “We set out to build a brand, not just flog a lot of mattresses. If all we were about was flogging mattresses, it’s a dogfight to see who can do it marginally cheaper, and that’s a zero sum game, with no benefit for the customer. We needed to build brand equity so we could grow our product range, and grow our customer offering and repeat rate. It took many months and did not only involve TV but it is paying off, according to Calverley. “That’s why we have 10% brand awareness versus our competitors at 5%,” she says.
There is a long way for the ecommerce revolution to run, which means new and existing players are likely to keep investing in TV. As Carter says: “We have to continue to invest in our brands, ensuring that they're not only on top of mind, but they cut through because this marketplace is getting increasingly dynamic and noisy.”