TVNZ's says its digital revenue grew 14 per cent in FY2023 - but it wasn't enough to offset the decline in ad spending on its broadcast channels. Photo / Chris Keall
TVNZ's says its digital revenue grew 14 per cent in FY2023 - but it wasn't enough to offset the decline in ad spending on its broadcast channels. Photo / Chris Keall
TVNZ is pinning hopes on a new AI tool as it seeks to boost digital ad revenue faster than its traditional business declines.
“Digital advertising revenue now makes up around a quarter of our total advertising revenue. Our business plan is focused on growing this to 50 per cent by2028,” TVNZ spokeswoman Rachel Howard told the Herald.
The state-owned broadcaster - which makes nearly all of its revenue from ads - recently reported a fall in net profit from $7.92 million to $1.72m in the year to June 30, 2023 as revenue slumped 12 per cent year-on-year from $341.69m to $327.63m. It’s a long way from the $33.9m net profit booked in FY2011. It was revealed this morning that nine top jobs will go.
There were immediate challenges and distractions, from the recession to the aborted RNZ merger.
But more broadly, like its peers worldwide, TVNZ has seen a fall in its traditional broadcast audience (and revenue from the high-yielding ads they view) as it faces new competition from streamers like Netflix, Disney+ and Amazon’s Prime Video to alternative attractions from TikTok to Fortnite.
Also like its peers, TVNZ is pushing to grow its streaming arm, TVNZ+, which it says had 380 million streams in its 2023 financial year, up from 355 million in 2022 and 269 million in 2021.
TVNZ+’s average weekly audience is now more than 1.25 million, according to Nielsen.
Source / TVNZ, Nielsen
And one bright spot in the 2023 result, even if it wasn’t enough to arrest the overall decline, was a 14 per cent year-on-year increase in digital revenue.
A key complication is that many don’t watch streaming video on a traditional TV. And on tablets, laptops, phones and other smart devices, “cookies”, or web browser and app tracking software used to track audience habits and build profiles of viewers for targeted ads, has lately been under pressure from privacy regulators and, more keenly, a clampdown by Apple.
For TVNZ, its workaround has been to become the first media company in NZ to adopt AWS Clean Rooms, which it put in the market in late August.
First announced by AWS (Amazon Web Services) in November last year, Clean Rooms uses machine learning (a branch of AI) to analyse shared data - and create built-in safeguards around outputs. Other customers include Fox, and AWS’ parent, Amazon.
It’s a platform that allows a media company to track and profile its audience, and advertisers target ads to segments of that audience, without either getting access to the other side’s data, protecting individual’s data and keeping it anonymous.
Personalised viewing recommendations, via AI
TVNZ has also adopted Amazon Personalize, a machine learning service pitched as a way to enable companies to create real-time personalised user experiences faster at scale, to recommend content based on individual viewing behaviours.
For example, a viewer who watches a rugby documentary may receive recommendations to watch other sports shows or shows that are popular with other sports viewers.
Sharing without revealing
AWS frames Clean Rooms as a way for two or more parties in media (or finance or healthcare or another industry) to collaborate on combined datasets without revealing underlying data (such as the real identity of a viewer), or copying the other’s dataset.
“No data exits either party’s environment,” TVNZ GM of digital Rob Hutchinson said.
Clean Rooms “reads data where it lives” and enforces rules around outputs.
While free, TVNZ+ requires viewers to register, which involves providing a basic demographic profile (age and sex) before they can access content.
Your profile can be matched to your viewing habits as TVNZ collects data including show preferences - the better for you to wrangle your binge list, and the better for advertisers who want to target a person like you.
The broadcaster says the data is collected with consent, and anonymised before being shared with advertisers.
A complication is more than one person can be on the sofa in front of the goggle box, and different people can watch it at different times, but TVNZ+ (like other services) allows for secondary profiles, and streaming content often watched on smart devices where it’s much more likely to be a single viewer.
Anticipating tighter privacy laws
While New Zealand has been relatively slow to move on internet-age privacy, Hutchinson told the Herald that Clean Rooms was chosen because it met tougher regulations offshore, including those in Australia that he expects will eventually be adopted here.
Hutchinson said it also conformed to TVNZ’s data governance and privacy policy, which prevents the broadcaster from accessing advertisers’ private consumer data.
McProfiles
TVNZ is pushing pilot customer McDonald’s as its hero case study for Clean Rooms.
Working with its OMD, McDonald’s has been to identify “unique customer insights” generated by Clean Rooms such as identifying the types of programmes McDonald’s customers watch on the TVNZ+ mobile app.
But Hutchinson said part of the appeal of the platform was that it was also quick, easy and accessible to smaller advertisers.
AWS says a secure “clean room” can be set up in minutes. One wrinkle is that Clean Rooms uses a number of AWS technologies, so every partner involved by necessity has to be an AWS customer. (Google and various startups also offer clean room services).
Hutchinson said it was also quick for TVNZ to implement, taking six just six weeks, working with Slalom, an AWS consulting partner.
“You’re an early adopter of this. It will become ubiquitous in coming years [but] you’re definitely on the front end of this,” Slalom global market transformation lead Rio Longacre told Hutchinson at a roundtable at AWS’s re:Invent 2023 conference in Las Vegas this week.
"A lot of TV and media companies are trying to increase revenue to combat what’s happening on a global scale with advertising. We see personalisation as a key way they can increase viewership - if you’re watching this rugby game, maybe you want this documentary”. AWS NZ country manager, commercial Tiffany Bloomquist.
“TVNZ’s AWS solution gave us a new opportunity to provide a solution to the ongoing challenge of being able to anonymise and deploy McDonald’s first-party data across advertising channels,” said OMD business director Jen Hilliar.
“Analysing our collective data safely and effectively in the cloud helped us deliver more personalised and relevant ads to users. Both McDonald’s and OMD are excited to be part of this first-to-market opportunity, and we look forward to achieving more advertising campaign goals together, paving the way for retaining McDonald’s valued data in a safe environment.”
Will it help TVNZ turnaround its profit slump, and make progress toward that 50 per cent of of revenue from digital ads target?
The Herald earlier reported that the broadcaster is bracing for a $15.6m loss for the financial year it is now in, to June 30, 2024 - in part because of the costs of a transformation plan that includes upgrades to the TVNZ+ platform.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
