Commentary

Agencies Continue To Decrease TV Ad Spend

by Richard Whitman , Columnist, January 21, 2015

A recent report from Standard Media Index paints a grim picture of TV ad spend.

While the Super Bowl is upon us and plenty of brands are parting with $4.5 million to appear during the broadcast, a recent report from Standard Media Index paints a grim picture of TV ad spend.

TV ad spend dropped 2% year-over-year in the 4th quarter of 2014, with October and November seeing the biggest drops. National broadcast ad spend fell to $4.8 billion and cable dropped to $6.8 billion. Notably, the computer and software category saw a drop of 40% in Q4 but consumer electronics did see an increase of 24%.

Why the drop? Well, one can only surmise that finally, yes, finally, media buyers have wizened to the fact that maybe, just maybe, there's a bit of efficiency and effectiveness to a medium -- um, the Internet -- that allows for the measurement and automated management of just about everything.

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7 comments about "Agencies Continue To Decrease TV Ad Spend".

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Leonard Zachary from T___n__, January 22, 2015 at 8:34 a.m.
TV ad spend , specifically major broadcast TV networks appears to be living in a jumbo fish bowl with reliance on carriage rights and retransmission fees that allows selling less audience for more the past decade. The math spend by consumers for payTV bundles are leading younger audeinces to SVODs. The math spend by advertisers are leading to an order of magnitude better pricing with digital audiences. Are these trends cyclical or secular? If it's the latter then the fish bowl has an expiration date that TV broadcasters seem to ignore at their own peril.
Reply

Ed Papazian from Media Dynamics Inc, January 22, 2015 at 9:49 a.m.

The drop in TV ad spending on the major broadcast TV networks---I assume this means ABC, CBS and NBC---- in the fourth quarter of 2014, reflects the "down" upfront sale that took place last spring. Similar results should apply in the next couple of quarters, unless there is a major surge in scatter CPMs. If the next upfront sees a significant uptick in CPMs---as is entirely possible----this will produce apparent ad revenue gains in the fourth quarter of 2015 and into 2016. Again, these will be mainly due to whatever happened in the upfront for that season. Moreover, ABC, CBS and NBC are not the only players in "linear TV" . In fact, they account for only 13% of TV's total audience tonnage across all dayparts and approximately 30% of nationally placed TV ad revenues. If you factor in spot buys on local stations and cable, this percentage shrinks considerably. In short, it is misleading in the extreme to equate the ups and downs of the three major broadcast TV networks with the medium's health as a whole. The broadcast TV networks remain the most visible and, to many, the most important players, but they no longer monopolize audience delivery, ad revenues or original program development as they once did. As for retransmission fees, why shouldn't the broadcast TV networks charge cable and satellite distributors for the right to transmit their shows to subscribers? The cable channels have done so for decades. Without such incomes very few cable channels could survive as profitable entities---- unless advertisers were willing to triple the CPMs they pay to run spots on cable.

Stephen Baldwin from Didit, January 22, 2015 at 10:19 a.m.

I don't think I know anyone who still has a television. But I work with a lot of younger people...

Barry Edison from The Hiebing Group, January 22, 2015 at 10:54 a.m.

God bless Ed Papazian! What are we ever going to do if he decides to leave the rest of the fools in the media community. Today every other data point is reputed to sound the death knell for television advertising. The fact is TV is one of the only vehicles that we know how it works and its effect on consumers. Be careful about advocating the efficiency of "the Internet", the internet is a lot of things, with a lot of potential ad buys. Many of which are still plagued by fraud, misreporting and a general concern about their true effectiveness. Video CPM's don't look so efficient when you want a "viewable" impression. Sure, TV is losing a portion of its audience and we are going to have to find a variety of new ways to connect with those people, but my greatest wish for my clients is for their competitors to move their money out of TV.

John Grono from GAP Research, January 22, 2015 at 3:40 p.m.

+1 Barry.

Ed Papazian from Media Dynamics Inc, January 22, 2015 at 4:32 p.m.

Thanks, Barry and John.

Doug Garnett from Protonik, LLC, January 22, 2015 at 5:07 p.m.

Sweet. More inventory for those of us who know the real power of TV to build, drive and define markets and brands...