Opinion - Generation Media

YouTube advertising to overtake TV, but when?

Jonathan looks at UK TV advertising and whether it is set to follow trends in other territories, where its dominance has started to wane.

A decline of TV for the past five years, yet year after year it still commands the largest share of Toys and Games ad spend in the UK. This is no longer the case in the US (and some European markets such as Belgium, Netherlands and Nordics), so how long will TV’s dominance last in the UK?

Our latest report, Toys & Games AV Update H1 2021, reveals that reported total Toys & Games advertising spend for the January-June 2021 period increased by +16% year-on-year (YoY). This was driven by the expected surge in Q2, with April finishing +147% YoY. Within this, TV’s growth fell below the average at +14%, whereas Digital finished +54%.

The reasons for this are manifold, but the ongoing double-digit decline of children’s TV viewing is pivotal. Children 4-9 impacts on the key commercial channels (children’s specific) fell -22% YoY, with Boys 4-9 (-36%) migrating to other platforms far quicker than girls 4-9 (-6%).

This pattern of decline is nothing new – double digit decline has been prevalent for the past five years (in total children’s equivalent impacts have decreased by -55% over that time). However, when focusing in on the first half of the year (H1), the increased rate of growth in Digital does subvert the usual narrative. Traditionally Linear TV provides a more cost-effective means of building effective reach compared to its Digital counterparts. However, the decline in viewing to Linear TV is severely impacting reach. When analysing based purely on cost per impact, children’s TV still provided the best return on investment for toy advertisers during H1 2021. But if we look at a deeper analysis of cost per % cover point, YouTube actually provided a comparable performance to TV (albeit with a much lower frequency).

Looking ahead to Q4 as the cost of linear TV increases, YouTube will not only outperform TV in terms of cost per % cover point, but also cost per impact. So, does that mean YouTube will command the largest share of Toys & Games advertising spend? The reality is that this won’t be the case in 2021. For all the advantages that YouTube is now providing when it comes to media metrics, doubts still remain as to whether it can be as effective at driving ROI at the tills (in store and online). This will result in TV still retaining over 50% of ad spend. Growing evidence does suggest that YouTube and other Digital platforms are making gains on TV when it comes to sales based marketing metrics. According to the latest wave of Giraffe Insights Little Voices study, 27% of 4-9 year olds claim they see the best adverts on YouTube, compared to 20% for TV. 28% of 4-9 year olds cite YouTube advertising as a source of inspiration for products they want, whilst 55% of 2-9 year olds remember seeing adverts on YouTube.

The confidence in TV’s continued dominance in 2021 assumes that ad spend will be deployed as planned. However, ongoing supply chain issues mean that there may be advertisers who are not able to commit to the early booking deadlines. Given the audience declines, there is the possibility that when such advertisers are in a position to book, there will not be enough inventory to meet demand. This will result in investment being shifted to Digital platforms where flexibility is much greater and inventory continues to outstrip demand. This being the case, do not be surprised to see some brands run 100% Digital campaigns this Q4, which will then generate the case studies needed to prove the effectiveness of YouTube et al at generating sales.

Should this be the case, then Q4 2022 will see TV lose the crown and Digital emerge as the largest destination for Toys & Games UK ad spend. As things stand, YouTube will be the recipient of the largest share, no surprise given its market-leading reach and cost efficiencies for advertisers.

It will not have a monopoly though. Facebook, Instagram and other Social Media platforms will gain share as more attention is focused on parents and gift givers, where sales can be more easily tracked online. TikTok will likely have resolved its compliancy issues in the US and globally, so it may once again decide to allow children targeted advertising (in a COPPA and GDPR-K compliant manner). We will also see content owners and developers stake larger claims for ad spend as they diversify their portfolios across more platforms. And let’s not forget gaming. Huge portions of children’s time is devoted to gaming, and partners such as SuperAwesome, Playwire and Venatus continue to innovate in the creation of engaging new formats. SuperAwesome, as part of the Epic group, could well be placed to make moves in 2022 that give them the advantage in this space.

All of the above will of course be utilised in 2021 by the vast majority of advertisers in some form or another, but it is 2022 when they will need to come to the fore of successful marketing strategies. If you are not yet looking ahead to 2022 marketing (and beyond) and making the most of 2021 as a successful testing ground, then get in touch to discuss the best solutions for your brands.