Commentary

Traditional TV Ad Revs: Still To Grow, Perhaps At Expense Of Digital Platforms

So what if we got it all wrong? Maybe more money than realized will land on traditional TV than on digital services in the future years.

This isn’t to discount digital advertising growth -- just to alter those crazy expectations. For some time, many TV/Internet advertising estimates have been talking up how online revenue will be larger than traditional TV advertising revenues -- around $70 billion per year currently.  And in particular, digital video will be a major factor.

But there are some key variables to consider. For one, Brian Wieser, senior research analyst for Pivotal Research Group, believes it comes with the availability of traditional TV inventory supplies: “If new inventory is freed up as characterized here – and even if it is not – we can still envision two other sources of incremental revenue, potentially: programmatically-driven data-driven or audience driven buying, and the shift of online video onto traditional TV -- rather than the other way around,”  writes Wieser.

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Of course, traditional TV business guys would have to get their act together -- and somewhat fast.  Still, the current evidence isn’t overwhelming that sharply higher Internet video advertising dollars are a given, says Wieser. In the age of digital video on-demand and seemingly better engagement, Wieser reminds us: “Web video remains highly concentrated among a small share of the population. Further, there remains relatively little consumption of high quality conventional TV content on the web; even short-form video is relatively scarce, except for user-generated content.”

Digital-media-minded marketers may still be wedded to the digital video sites. But, in future years, price, as well as lack of scale, might hinder strong continued growth.

Television cost per thousand viewers are still cheaper by way of comparison -- $10 CPMs and less, says Wieser -- versus digital platforms. And then one should consider that even TV’s niche-iest networks generally have much more scale than key premium digital areas.

Concerning the biggest video advertisers? Wieser says many still haven’t moved much to online areas.  Why? “It is perceived as different by most advertisers when compared with ads that run adjacent to premium video-based content.”

So what are we left with? Traditional TV networks rushing to ramp up programmatic media buying -- something which marketers desperately want -- as well as buying systems that would focus in part or in a large majority, on audience-targeted buying.

Additionally, those big digital video estimates -- especially those in the future -- should include digital video incremental gains made by traditional TV networks and/or producers.

 

4 comments about "Traditional TV Ad Revs: Still To Grow, Perhaps At Expense Of Digital Platforms".
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  1. walt horstman from AudienceXpress, September 29, 2014 at 6:27 p.m.

    Most long-range forecasts of the growth in digital video at the expense of TV likely assume that TV remains unchanged and does not adopt programmatic audience buying. Once that assumption is corrected, then the forecasting models will have a different outcome.

  2. Ed Papazian from Media Dynamics, September 30, 2014 at 9:56 a.m.

    I doubt that the TV networks are rushing to ramp up programmatic media buying, nor do I believe that the fate of TV has much to do with automated buying. What mystifies me is the constantly repeated refrain that programmatic would greatly enhance traditional TV. How would that work, exactly? Would the networks and cable channels submit a rate card for each of their shows, plus old data on their audiences, then allow the agency "trading desks" to pick and choose what they want? If so, what happens if they all want the same shows, but not the crappy rejects? Or will the system simply "purchase" so many demographic impressions in certain dayparts, on certain weeks, and it's up to the networks to deliver such audiences, regardless of what programs or telecasts are utilized? Suppose the networks get together in a smoke filled room and all agree to charge exactly the same CPMs? Then what? While the current buying and selling system for TV has many faults I am at a loss to see how automating it will improve things very much. Sorry.

  3. Jason Burke from clypd, Inc, September 30, 2014 at 1:54 p.m.

    One is in denial to think that countless data sets have not been used extensively in pricing and valuing television media throughout history. What programmatic brings to TV media owners and marketers is the automation of the use of that data.

    To be seen whether the industry realizes a new currency and/or pricing models with these new strategies, but huge wins are to be seen by all players who enhance their media selling/buying with the benefits of programmatic TV thru data and automation…even if it’s initiated in a smoke-filled room.

  4. Leonard Zachary from T___n__, September 30, 2014 at 2:17 p.m.

    Traditional TV ads is misleading. Traditional TV ads from major broadcast networks, if one assumes the magic of selling less audience for more ad dollars continues, then yes. TV ads over smart TVs and new technology platforms with accountable metrics, then yes. So would the latter be considered digital OTT or new digital TV? What is "embms"? Anyone here know?

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