CBC to CRTC: Rethink assumptions about new media

For one thing, contends the Ceeb, video advertising amounts to less than 1% of Canadian Internet advertising revenue, which is insufficient to offset losses from media fragmentation.

On Friday, CBC/Radio-Canada hit the CRTC with a feisty submission stating that the basic assumptions underlying ‘Perspectives on Canadian Broadcasting in New Media’ – a compilation of research and views released by the commission in May – are ‘false.’

The public broadcaster’s official contribution to the CRTC’s reassessment of new media maintains that the phenomenon ‘is neither displacing traditional media, nor will it solve the financial difficulties facing conventional broadcasters.’ Instead, CBC is encouraging the broadcast regulator to recognize the importance of traditional media as the source of professional broadcast content for all new platforms.

CBC’s contention appears to contradict the CRTC’s assertions about new media’s potential as a viable revenue stream, as expressed in the Commission’s October 2007 statement announcing its intention to review new media. ‘Internet advertising in Canada grew to $1.01 billion in 2006, and is estimated to reach $1.337 billion in 2007, a growth rate of 32%,’ read the statement. ‘Should growth continue at this pace, Internet advertising in Canada would reach $2 billion in 2008 or 2009, and $3 billion by as early as 2010. By that point, it would rival or exceed total Canadian TV advertising revenues.

‘While some of this money can be seen as incremental advertising (e.g., replacing marketing and promotion dollars),’ the CRTC statement continued, ‘the majority appears to be the result of expansion of inventory and options for advertisers without expansion of the advertising pie. In particular, widespread use by Canadians has made the Internet an increasingly desirable advertising vehicle through the addition of new advertising inventory, and in particular, expansion of available inventory through the ability to monetize activity historically not available (i.e., placing ads on forms of communication); and new, more targeted and measurable forms of advertising (cross-platform direct response, interactive, etc.). Moreover, as advertising typically lags usage, there may be ‘pent up demand’ that effectively understates ultimate impact.’

‘Internet use is replacing some activities in Canadians’ lives, but it isn’t replacing television watching,’ argues Richard Stursberg, EVP of English services. ‘Viewing television on the Internet represents less than 1% of the total time Canadians spend viewing television. In fact, Canadians watch more TV now than they did 15 years ago.’

CBC’s contention is that the Internet is used primarily as a communications and research tool, not for watching TV, and that virtually all professional video content consumed via the Internet actually originates from traditional television.

As a revenue stream, the network considers new media iffy at best, insisting that ‘video advertising on the Internet represents less than 1% of the $1.24 billion of Internet advertising revenue generated in Canada today.’

While conceding that ‘the Internet represents an exciting marketing opportunity to reach audiences seeking more personalized content,’ CBC’s submission says ‘it does not provide broadcasters with any significant advertising revenue opportunities.’

‘The Internet today is a fundamental tool for achieving our mission as Canada’s public broadcaster,’ explains Sylvain Lafrance, EVP of French services. ‘That said, the revenue we generate from it will not offset the losses associated with media fragmentation. The current business model for conventional television needs to be reconsidered.’

CBC/Radio-Canada’s bottom-line recommendation is that the CRTC’s current ‘misconceptions be corrected… in order to ensure that a new media policy will be founded on a thorough and accurate understanding of the broadcasting system.’

CBC/Radio-Canada’s complete submission is available online at http://cbc.radio-canada.ca/submissions/2008.shtml.