Commentary

So What If Digital Ad Revenues Are Higher Than TV's?

by Wayne Friedman , Staff Writer, November 7, 2014

Estimates are that revenues from digital media platforms could overtake traditional TV’s in the next few years.

Here’s one projection: Forrester says the amount U.S. advertisers spend on digital advertising will overtake the revenue for TV advertising in 2016. By 2019, digital ad revenue will be up to $103 billion, with TV revenue lagging behind at $85.8 billion

But that isn’t the real issue. The main concern is which companies will come out on top, whether digital advertising networks, programmatic services, digital video middle players, or maybe some traditional TV-video purveyors.

Despite continued weakening TV ratings overall -- not just on broadcast but also on cable -- TV networks will focus on “premium” content they own and will look to increasingly monetize in the digital space.

Mobile looks to drive a big chunk of the digital expansion -- where lots of TV networks are already situated, and where brands will look to buy in soon. A recent estimate from BI Intelligence was that consumers spent 20% of their time with mobile devices --but only 4% of brands’ advertising share was spent on mobile. By way of comparison, consumers spent 5% of their time with print media, but that industry gets 19% of advertising dollars.

And for all the worries about traditional TV crumbling, time spent and advertising spending isn’t that out of line for this category: Consumers spend 38% of their time on TV, with advertising spend 43% of the total.

ad spending, digital, digital content, tv

3 comments about "So What If Digital Ad Revenues Are Higher Than TV's? ".

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Trung Ho from ASU, November 8, 2014 at 1:17 a.m.
Although people are still consuming content on TV, but they tend to desire to consume it and pay for it on what they want to watch. People have gone from actually sitting in front of a television to watch shows when they air to shows that are recorded to watch at their convenient time. In addition, they also want to avoid commercials whenever possible. Advertisers should be aware of when planning advertising budgets and considering between TV advertising and digital advertising. The goal of TV ad is always for viewers to watch the ad and receive the message, but advertisers need to make sure that they are reaching the right audience. Currently, digital advertising seems to be affordable and more effective than TV advertising. Because advertisers can track who watched the digital ads, and they have quantifiable data to reference. They can also use Google Analytics to gather additional data about website traffic, meanwhile there is no measurement for TV advertising. For example, advertisers can use TrueView on YouTube bring awareness to their brand and drive traffic to their website. TrueView allows viewers to skip ads after five seconds and advertisers only pay for the ad if it is watched for at least 30 seconds. People are changing their daily viewing behavior, so advertisers should take consideration into this when planning their advertising. People are no longer watching their favorite shows when they air, and we can assume that they are not always watching commercials. Digital advertising is a better choice with the ability to better target and track ads at a lower price.
Reply

Ed Papazian from Media Dynamics Inc, November 8, 2014 at 5:07 a.m.

Trung Ho, if you check the statistics you will find that people haven't dropped live TV but, rather, they sometimes view shows on a delayed basis. Live TV still accounts for the vast majority---about 90%----of the average person's TV exposure. Even if this percentage drops---as is likely--- this will be a very slow change, taking many years and, even then, most viewing will still be on a live basis. As for digital being superior because it offers better targeting, is cheaper and can tell the advertiser whether his ad is actually seen, there are questions about this as well. For example, typical digital video CPMs range between $23 and 35, depending on whether the buy is "targeted" or not. In contrast, a typical TV CPM ----including cable, which accounts for more than 50% of the average person's viewing---and all dayparts, is closer to $10-12. Add to that, the digital viewability issue----how many impressions are "phantoms", in the sense that the ad never appears on the user's screen, plus the fact that just because ad ad is shown on said screen, this does not mean that it is "seen" and digital's superiority is not so great after all. Despite this, I believe that both media have an important role to play for most advertisers, if used wisely in a synergistic and complimentary manner. It's not a question of one or the other, nor is it true that TV is dying and digital is "taking over"as some of its ardent supporters----not you, necessarily----maintain.

John Grono from GAP Research, November 10, 2014 at 6:13 p.m.

You beat me to it Ed. But can I add some more points. First, on TV your are buying the whole screen's real estate and not a sub-section of it - it is much harder to "miss" a TV ad than an ad on a computer. Second, the beauty of computers (but not yet all mobile and tablet devices) is that they are multi-tasking devices - the effect of this is that while an ad may have been served, the person may have already bailed out to (say) read an email or IM that just arrived. Third, if they haven't bailed out and are still in their browser, then may have skipped to a different tab. I know that one should never gauge all people's behaviour as being the same as your own - but I sure am guilty on those last two charges. Moral of the story - traffic is a pretty poor proxy for an audience.