ABS-CBN, the biggest TV company in the Philippines, has set its sights on a bigger slice of the country’s ~US$800 million free-to-air ad market, pushing out its suite of digital TV channels to households with poor reception, while offering advertisers ratings guarantees with their media buys for their first time.

Both initiatives could reshape the free TV ad market, which represents around two-thirds of all media spend in the Philippines, in ABS-CBN’s favor, as long as the broadcaster can bring consumers and advertisers on board.

In the ad market, guaranteed ratings points – calibrating prices more closely with how well shows perform – have the potential to be transformative, introducing more transparency into media buys.

There has been little indication that other big broadcast networks will follow suit, as details of possible implementation take shape, although archrival GMA has maintained its ratecard pricing.

ABS-CBN's proposal, due to be introduced this month, has triggered some big discussions between media agencies and their clients.

"It changes the game in terms of pricing," says Miguel Ramos, CEO of media agency Dentsu Aegis Network Philippines.

A Push Forward For DTT

ABS-CBN has also taken a lead on the rollout of digital terrestrial television (DTT), another potentially powerful catalyst of change, putting its own boxes on sale in areas where its channels suffer from poor reception.

A clearer picture, together with a broader selection of channels, should have a ready marketplace in a country where only ~15% of TV homes subscribe to pay-TV.

The boxes themselves – branded TVplus – are relatively pricey however, retailing at 2,500 pesos (~US$55), about a quarter of the average monthly income for households on the minimum wage. Unlike other markets, the government has done little to encourage consumer take-up of DTT so far.

ABS-CBN is targeting 1 million sales of its own digital boxes this year, primarily among poorer demographics.

The broadcaster has prioritized DTT in its growth plans, spending 3 billion pesos (US$68 million) to date on tests and infrastructure rollout in Mega Manila and parts of Luzon, another major economic center in the north of the country.

The company has earmarked a further 600 million pesos to extend its DTT reach into other urban centers this year.

The boxes allow viewers to watch any digital channel, including those from ABS-CBN’s rivals, but the broadcaster has launched the most digital channels so far, including a movie offering (CineMo) and a kids channel (Yey!), both sourcing content from ABS-CBN’s library.

More change ahead

Better reception for ABS-CBN’s flagship Channel 2, plus its specialist Sports+Action channel, should bolster the group’s market share.

ABS-CBN's free digital channels will also be made available to cable subs, to minimize cannibalization.

In time, DTT's market impact will broaden, once other licensees start commercializing their digital assets. 

Rights-holders and production houses will benefit as demand for content grows, while strategic players could find more opportunites for local partnerships, as domestic providers finalize their own DTT strategies.

Full switch-off for analog broadcasts remains some way off however, expected between 2018 and 2020.

Meanwhile, economic growth continues to benefit free-to-air channels with mass reach. The ad market is experiencing an additional lift this year, ahead of elections in 2016.

“It should be a good year for advertising – if not double-digit, then close to double-digit growth,” Dentsu's Ramos notes.

“Traditionally, when elections come round there’s a big boost in economic activity,” Ramos adds. “The run-up to that starts very early.”