A veteran advertising executive warned that the non-renewal of ABS-CBN Corp.’s franchise can affect the country’s $3-billion advertising industry and disrupt the marketing strategies of many companies that depend on television for their advertising exposure.
Dan Villa, chairman of advertising agency CreatiVilla, said that aside from the livelihood of ABS-CBN’s 11,000 workers, the closure of the network would have implications on the general economy, particularly on the advertising and marketing industry. He said ABS-CBN, being the largest broadcast network, also has the greatest marketing reach in the country.
“The king of TV—ABS CBN—goes to the grave with the most reach. A key factor for a media buy to be most cost-effective now goes down to the grave with its departure. This means too that the selection of an array of proven efficacy and reach becomes too narrow and ineffective,” said Villa, a former chairman of the Advertising Board of the Philippines and the Association of Accredited Advertising Agencies-Philippines.
“Advertising is a major player of the marketing mix…and TV still dominates the media sphere. The absence of one dominant TV network tilts the balance,” he said.
Villa said competition in the media is a major component for a media buyer’s choice with more options to choose from. “Now, it [ABS-CBN’s absence] would inadvertently eliminate both. We have a problem with that,” he said.
He said this would create a gap in media buying. “We have to be more creative in media buying with this kind of scenario. While digital media is fast occupying the media landscape, it doesn’t fulfill a good media mix. TV still dominates,” said Villa.
Net income reports submitted to the Philippine Stock Exchange showed that ABS-CBN, which employs more than 11,000 individuals, declared P1.9-billion net income out of P40.1 billion revenues in 2018, with P20.4 billion of that coming from advertising.
The next biggest player, GMA Network, earned P2.3 billion out of P15.2-billion revenues during the same year, with P13.9 billion representing airtime revenues. A 30-second TV commercial on the two networks costs anywhere from P500,000 to P800,000.
ABS-CBN reported improved earnings in 2019, which was an election year, although the full-year figures are not yet available. In the first three quarters of 2019, ABS-CBN earned P2.36 billion out of P32-billion revenues, of which P17 billion represented advertising revenues.
“Imagine losing the leading TV network off the air. Gone. Gone too is the media platform with the greatest reach in the country. And what do you mean by this? The selection of programs that are proven with certainty to achieve reach, with its demise, shall be co-terminus with this single stroke of fate,” said Villa.
ABS-CBN, whose 25-year franchise from will expire on May 4, has yet to renew its franchise from the House of Representatives. The chamber has not yet started hearings on a dozen bills seeking a new legislative franchise for the network.
Solicitor General Jose Calida asked the Supreme Court to revoke ABS-CBN’s franchise for the latter’s alleged “highly abusive practices.” President Rodrigo Duterte, however, said that he had accepted an apology from ABS-CBN president Carlo Katigbak.
Business groups said the closure of ABS-CBN would hurt freedom of expression in the country and displace thousands of workers who depend on the network for their livelihood.
Results of the national TV ratings survey conducted by Kantar Media on Feb. 17 to 20 showed that three of the most watched TV programs in the country—FPJ’s Ang Probinsyano, TV Patrol and Make It With You—were aired over ABS-CBN Channel 2.
Philippine Competition Commissioner Johannes Benjamin said the closure of ABS-CBN might also be a concern in the media industry, as ABS-CBN has a market share of 31 percent to 44 percent. Bernabe said GMA Network could eventually take ABS-CBN’s market share.
Villa said while this may be true, this would mean less options for the advertising needs of various companies.
“There shall be a shift of media buys to GMA, 15 percent of which shall be coming from ABS-CBN viewers. Digital media shall have a major additional slice of it too as the shift to digital is imminent,” he said.
Villa, however, said this would drastically change the industry. “When the king dies, another king emerges, but that kingdom dramatically changes the TV landscape. ABS-CBN controls up to 44 percent of viewership vis-à-vis GMA’s 34 percent to 46 percent, depending on the source of the research survey,” he said.
ABS-CBN uses Kantar Media and while GMA taps AGB Nielsen.
“Inclinations indicate that the demise of ABS-CBN would shake the ground and swells in a ‘shifteroo’, with the ABS-CBN viewers shifting with tectonic dimensions towards GMA,” Villa said.
He said such shift would not be healthy to the market. “Now, that is not funny to media buyers, where options are real concerns. Choices in a very competitive world dictate serious battles and fierce wars to occupy the viewers’ space and gain from the luxurious business,” he said.
“We are talking of a market worth at least $3 billion. But the numbers should simply get the highest share and bite for the biggest chunk of the viewers, then translate that further into leadership positioning. It is still a numbers game in the critical eyes of the buyers, with a viewer’s profiling to rationalize a buy,” he said.