Advertisers' Online Budgets Still A Fraction Of TV Spend

National TV’s current advertising concerns are not coming at the hands of online advertising, according to one analyst.

In a report from Brian Wieser, senior research analyst of the Pivotal Research Group, he says that although online video is growing rapidly, “it generally lacks the necessary volume of advertising inventory or sufficient unique reach for national advertisers to make up for a shortfall on the scale of what we saw in the most recent upfront negotiations.”

Wieser notes that the national TV upfront market was” unambiguously weak” not only for broadcast, but for cable. Industry estimates were broadcast dropped nearly 8% during the recent upfront marketplace, with cable down 5%. In total, national TV was down 6% to $18.1 billion.

Last year, national TV advertising amounted to $42 billion, with online cable at around $3 billion. But Wieser notes online dollars are not necessarily coming from national TV budgets.

“Some share of that spending would have come from advertisers that are not national TV advertisers,” he writes. “Another share (probably a larger one) of spending probably came from large brands seeking to accomplish goals that might otherwise have been performed via banner ads or rich media.”

Wieser assumed at best an incremental $2 billion of online video’s total take this year may be coming directly from TV marketers looking to make up for their “TV-related media goals.” He says: “At these levels, national advertisers’ online video budgets would equate to nearly 10% of their total national TV spending levels, on average.”

Still, media marketers just can’t get the reach of consumers that TV has, he says.

“Consider further that 17% of the population accounted for 96% of online video consumption during the most recent period from which we have Nielsen data on these metrics (1Q14),” he writes. “This group of people accounted for 16% of conventional TV consumption.”

In addition, the online content may not work for many media marketers.

“Online video content consumption equates to maybe 5% of total TV consumption and half of the online video consumption figure is accounted for by user-generated content that most advertisers might stay away from,” he notes.

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3 comments about "Advertisers' Online Budgets Still A Fraction Of TV Spend".
  1. Ed Papazian from Media Dynamics Inc , September 5, 2014 at 7:43 p.m.
    I'm a bit surprised at Brian's comment that an "incremental $2 billion in online video ad spending equates to approximately 10% of the total TV ad spend by national advertisers. Actually, nationally-placed TV buys ---on the broadcast networks, cable and syndication----in all dayparts, total roughly $41 billion and, if we add spot TV buys by the same advertisers, the total rises to about $48-49 billion. Therefore if his $2 billion figure is correct for national advertiser spending in online video, this represents an incremental increase of only 4%. Of course, it must be stated that online video ad spending is increasing, so its share of the total TV pie for national TV advertisers will, no doubt, keep growing, but at present, it is, as Brian pointed out, a relatively small part of most TV ad budgets.
  2. Douglas Ferguson from College of Charleston , September 8, 2014 at 7:44 a.m.
    Linear TV reminds me of newspapers in the late 1990s. Everyone knew the air was escaping from the envelope of the hot air balloon, but they seemed content that it was only a slow leak.
  3. Ed Papazian from Media Dynamics , September 8, 2014 at 9:03 a.m.
    Douglas, what happened to newspapers was a combination of a huge loss of ad revenues, especially the classifieds, coupled with protracted circulation and readership declines. Much of the audience loss has been due to other media----cable TV and The Internet----supplanting traditional newspaper news functions. "Linear TV", which includes the Broadcast networks, cable, syndication, and station programming, is not losing its audience reach nor tonnage. It's just being sliced and diced differently. And the same can be said for ad spending. It's keeping pace and growing, not "leaking" to online.