Leader: TV ad industry must adapt to the lessons of online

27 November 2008 | By Justin Pearse

One of the most fascinating aspects of life at new media age is watching the clash of cultures and business models as yet another established sector is hit by the seismic changes wrought by new media. TV is currently top of the interest charts, as digital media consumption habits upset its cosy, decades-old setup. The largely Soho-based industry has a well oiled value chain where everyone knows their place.

However, online economies are very different. The internet is revolutionising how and when consumers watch TV content. But it’s also presenting challenges to the TV ad industry. Online advertising’s growth has been in line with the availability and take-up of online video. With pre-roll ads on internet TV, viral ads or Katie & Co, the Jacob’s Creek-funded online drama on the Daily Mail’s website, online advertising is moving fast into the heartland of Soho’s traditional TV production industry: video. However, as our feature on page 26 discovers, TV ad production companies are finding the opportunities of digital to be as challenging as their content producer counterparts. For both sides it’s a question of economics. Content production companies wishing to produce for the web find the lack of a traditional commissioning structure necessitates finding a commercial sponsor to get projects off the ground. Ad production companies’ economic challenge is the gulf between TV and online budgets. This means opportunities are opening up for digital specialists to move in, used to working on far tighter margins and faster turnaround times.

The development of a production ecosystem for digital advertising is in its infancy in the UK. Poke’s Ian Tait at a recent new media age roundtable on digital creativity bemoaned the lack of a ‘Soho for digital’. At last week’s Digital Podge, a lot of the conversations I had were around the development of this new infrastructure and the boost it could give the industry. Replication of the decades-old interdependent infrastructure of traditional Soho will take time, but as our feature discovers the new Soho is starting to be built.