Quality digital content expected to draw advertisers' budgets

Not only will the move to digital television create billions of baht in investment for the broadcasting business, the advertising industry will also benefit if the new technology results in high-quality content, industry experts say.

Of the more than Bt135 billion spent per year on advertising, 60 per cent goes into free-TV commercials, and that figure does not include cable and satellite television. The expansion in the next couple of years from the current six analog free-TV channels to 24 digital TV operators will open many more doors for advertisers.

This transition could boost the approximately Bt80-billion advertising expenditure via free-TV by four times in the near future, Anupon Tajawanno, business development manager at Cisco System (Thailand), said at the recent "Thailand Digital Broadcast 2013 and Beyond" seminar.

Anupon explained that digital terrestrial television would follow in the footsteps of the satellite TV business, which allowed content providers to run their own TV stations. New advertisers were attracted to invest their limited budgets in such media platforms.

The National Broadcasting and Telecommunications Commission plans for digital terrestrial TV to reach 95 per cent of the country's 22 million households in the next four years, with the NBTC providing discount coupons to help viewers acquire TV receivers compatible with the new technology.

Importantly, cable and satellite TV audiences will also be able to watch free-TV programmes via their set-top boxes. Under the NBTC's "must carry" rule, cable and satellite operators must also air selected commercial digital programmes.

Given these factors, digital TV operators are not too worried about the number of viewers reached in order to set advertising rates.

Rathakorn Surbsuk, trading partner at GroupM, a leading advertising company, told The Nation that competition between the digital-terrestrial and satellite-TV businesses would increase for sure.

However, he said many satellite operators also wanted to be digital-TV operators. Once the penetration of digital terrestrial is higher than satellite, they might move to digital.

He added that advertising expenditure would follow audience behaviour. If people watch more satellite TV, ad spending will increase accordingly.

On the other hand, Wannee Ruttanaphon, chairwoman of IPG Mediabrands, who also serves as chairwoman of the Media Agency Association of Thailand, said that if people enjoyed watching digital TV programmes because of better-quality content, advertisers would put their money into this medium.

"Content is always king, no matter which media platforms carry it," Wannee said.

Cisco's Anupon also stressed that though major content providers could transmit their TV programmes via various platforms, at the end of the day, digital terrestrial would become a key rival of satellite TV in terms of advertising.

According to Kasikorn Research Centre, sales of televisions in Thailand this year are expected to expand by 6.4-10.7 per cent to between Bt37.25 billion and Bt38.75 billion, thanks partly to the transition to digital. The NBTC's coupon plan to help viewers buy either digital-compatible TV sets or set-top converters could stimulate TV sales in the fourth quarter of the year.

TV manufacturers are also expected to launch heavy campaigns to promote the sales of the analog sets remaining in their inventories as they switch their production lines to manufacture digital units. Demand for LED (light-emitting diode) TVs is expected to grow this year.

However, TV sales might also be affected by declining purchasing power of households that took advantage of last year's first-car scheme, and now face monthly payments on their car loans amid rising living costs in general. These people might prefer the cheaper option of digital set-top converters for their old analog TVs.

As well, if the NBTC delays its auction of digital TV licences to the fourth quarter from midyear, this could also remove people's incentive to rush out and buy a digital set.