Funding Television: DSO, Audience Measurement & Advertising
By Emeka Mba
Although long overdue, the recent Creative Industry Summit organized by the Federal Ministry of Information and Culture in conjunction with ThinkTank Media group is quite commendable, especially at this time when the sector requires fresh sets of ideas to deepen growth. The focus of this yearâ€™s inaugural summit on Finance for the creative sector rightly brings welcome focus and attention on an issue which has remained the weakest link in the sectorâ€™s strive for sustainable growth.
A lot still needs to be done however to ensure that the sector is able to contribute measurably to Nigeriaâ€™s economic growth. One of the big gaps, remains the lack of credible broadcast industry audience measurement data, that is accepted by all players within the sector. The long-term success of Nigeriaâ€™s march to digital television, especially with regards to the free to air (FTA) digital channels depends largely on the robustness of the advertising market, and each serviceâ€™s ability to source their own advertising revenue. I would argue that the National Broadcasting Commission should take the lead in driving all industry players to establish a Joint Industry Committee (JIC) which shall work with all relevant stakeholders to set up a Broadcast Audience Research Board, which shall provide reliable data on estimates of the number of people watching TV, including which channels and programmes are being watched, when they are and the type of people who are viewing at any one time; fair, reasonable, and nondiscriminatory access to the Electronic Programme Guide, EPG. Already the approved digital set-up top boxes being deployed across the country which incorporates advanced middleware software and EPG with return path built in, is able to capture all the data required for analysis for detailed audience measurement statistics.
Even though three local companies (MPS, Mediatrax and MMS) measure audiences based on the monthly diary recall method; the data sets from these companies are still not highly regarded and are often questionable. There are also other issues at play, given that some of the media buying and advertising agencies are themselves the owners of some of the measurement companies; even then it is interesting and worrisome that the ratings data are not used in the media buying decisions as brands/agencies tend to use bespoke/ in-house research. Also, the ratings data are generally not published or available to the generable TV viewing public. The current diary method employed by current audience measurement companies is not sufficient and reliable enough to provide credible data sets to make strategic buying decisions by advertisers and brands. Besides, the lack of credible audience ratings data, broadcasters still have to content with highly opaque commercial terms often based on value of personal relationships within the industry, with agencies in some cases withholding payments for materials already aired for up to nine months.
Beyond simply having data about the most watched television shows, reliable audience measurement is also critical to the development of a strong broadcast advertising market. A weakened advertising market tends to weaken the incentive for investment in television and broadcasting generally. Our broadcasting market structure is characterized by TV and radio stations renting out blocks of airtime to highest bidder instead of commissioning/acquiring own content; the only type of available quality content on air these days are those produced and packaged by independent producers in collaboration with certain brands such as MTN Project Fame, StarQuest, GLo MegaMusic, Gulder Ultimate Search, etc.
With poor or non-reliable and generally acceptable audience measurement it helps to fester a vicious circle, as low audience measurement leads to low advertising revenue and thereby low investment in quality original content, and affecting viewers confidence. This is not going to instill confidence in our digital plans. Especially in an environment where a lot more viewers now have access to globally available content via OTT players such as Netflix etc. On the other hand, measurability leads to higher advertising revenue and higher investment in original content, which drives increased viewers value and thereby creating a virtuous circle. Rather than the current model in Nigeria which is sadly not based on the above values and is fraught with abuse. The result today is that Nigerian television market does not reward high quality original programming, since even the best programmes does not attract any additional premium in advertising rates. Every Sunday night, the seventh season of the very popular and perhaps most pirated show on television, the Game of Thrones airs on US pay tv channel HBO, as Americans wake up on the next day Monday, everyone will know what the ratings are for the latest episode. With digital television, and the fight for audiences going beyond the traditional TV set, content creators, channels and brands require more insights to enable them make decisions not just on the programmes to place their ads on, but also for the content creators to know how the audiences feel about the content.
Today, despite the vast improvement witnessed over the last decade, we are still a long ways off from the quality and diversity of programming that meets the expectation of most viewers. Take for instance the almost insignificant quantity of local children/youth or family oriented programming. The current airtime sales model within the broadcast industry, where independent content producers source for funds to produce programmes and still need to raise monies to â€œbuy airtimeâ€ on the prime television networks and radio stations needs to go away. This is an incredible aberration which has been left to fester, and should be done away with if the industry is to grow beyond the current levels.
Getting the Nigerian TV advertising market to work is essential for the creation of a viable digital broadcasting ecosystem. Nigeriaâ€™s TV advertising market significantly underperforms other emerging markets, at the current levels, our TV advertising to GDP ratio is one of the worst globally, underperforming at 0.04% to GDP; compared to Ghana at 0.13% or Kenya at 0.48%. If we are to expect increased channels and content, the sad reality today is that the current Advertising market will not be able to support increased FTA TV offerings alone.
Based on available figures analysed by Mediaator UK consulting firm, current estimates for the overall value of Nigeriaâ€™s advertising market stands around $750m, of which about $300m (40%) goes to television. Whilst PWC forecast a 10%+ growth for the industry, meaning that AD spend revenue could reach $500 by end of this year; however, given the industry agency commission rate of 30%, the real or actual revenues are relatively low for television sector at around $200m. This figure however you cut it, does not look good or represent an indicator of good health. Whilst it is not proper to compare apples with oranges, but imagine that it cost producers of Game of Thrones $10m per episode.
Fixing the problems in the broadcasting audience measurement system will be a great start to ensuring the future viability of the industry, and success of the digital switch over. For one thing, it would unlock the funding gaps as it creates confidence for major local and international brands to spend more money. Sorting out the problems with audience measurement will bring in additional inflow of $400- $600m of revenue to the industry. It is time to do this now. In order to ensure that the outcome of the Creative Finance Summit has meaningful impact on the emerging digital media ecosystem, I would urge the Honorable Minister Lai Mohammed, and the Director General of the NBC to seize the momentum from this summit and drive the process leading to the restructuring of the current broadcast advertising model.