Ad companies feel impact of network shutdown

The day ABS-CBN Corp. was forced by the government to stop airing, advertising executives watched in horror as half their market vanished.

The ad industry’s growth was fueled as much by consumerism and its own creativity as the distribution outlets inside people’s homes—the TV set—that were enabled by broadcast giants ABS-CBN and GMA Network Inc.

Both companies dominate competition in a country where TV remains the undisputed king of media, accounting for about 75 percent of the estimated P151 billion ($3 billion) advertising business.

“The Philippines is still very much a TV country,” Gladys Basinillo, a media advertising veteran with over 25 years of expertise, said in an interview with the Inquirer. “So, it’s like they removed 50 percent of the advertisers’ reach. This is a big impact for us.”

ABS-CBN’s shutdown, which came before 8 p.m. on Tuesday, was immediately felt.

“Some of the viewers switched channels, but the majority simply turned off their TV sets after 8:00 p.m.,” Basinillo said, citing data from third-party research outfit Kantar Media.

The industry is now coming to terms with the implications of the shutdown and how brands—from global giants that sell toothpaste and shampoo to fast-food chains selling fried chicken—might recalibrate their media strategy.

Changes are coming

“The move was so sudden and everybody, more so, the large stakeholder entities, thinkers and planners were caught flat-footed,” Dan Villa, chair of advertising agency CreatiVilla, said in a statement.

These changes are also coming as the industry reels from the coronavirus pandemic, which has forced big companies to divert advertising budgets to relief efforts or to conserve cash as the economy slips into recession.

Natural substitute

Two advertising executives, who spoke on the condition of anonymity, said the shutdown order from the National Telecommunications Commission had also threatened jobs in advertising, an industry that supports thousands, in addition to ABS-CBN’s 11,000 workers whose employment prospects are in limbo.

“There is some talk now that companies might spend less if they feel they can’t reach their audience. This is bad for us,” said one, who works for a major advertising company.

GMA Network is a natural substitute given its scale, but there are limits to how much advertising it can absorb.

“There is not going to be a big shift to the rival station, GMA, principally because GMA is almost all full,” Menardo Jimenez Jr., senior vice president for PLDT Home, said on Thursday.

Jimenez, whose family is among the major shareholders of GMA, said they would shift to digital or the PLDT Group’s own television platform, TV5.

Digital channels and platforms such as social media are often cited as an alternative, but the industry remains skeptical.

“I have nothing against digital advertising but it’s hard to match the reach of free-to-air TV,” said one of the ad executives who declined to be identified.

Preferred audience

For one, online viewers tend to be younger and have less spending power. Companies launching a new product, such as a detergent or laundry soap, will be looking at a broader and more mature audience.

These are some of the evolving challenges facing the industry and its many components.

There are the advertising agencies, which are the “creative” side of the business that conceptualize the campaigns seen on TV and billboards. Then there are media agencies, which advise clients how to distribute ads among television, print, radio or other formats, depending on the budget.

Some of these media agencies use sophisticated tools and technology to ensure brands reach their target audience.

Shock yet to fade

A media agency employee said the outfit’s concern was whether it could assure its clients that it could deliver the ads, and that ABS-CBN really could.

Across the industry, the shock over ABS-CBN’s shuttered broadcast business has yet to fade. Several agencies still had ad materials being readied to air once strict quarantine measures were lifted.

For some, the losses went beyond business.

“With this pandemic, the audience, the general public, has never been more attuned to the news and television is still a pervasive and good source for a lot of our masses and they have put it upon themselves to be factual,” said the ad executive.