OTT Advertising Projected To Represent Half Of All TV Ad Revenue By 2020

TV advertising on forthcoming over-the-top services could represent about half of all TV advertising in five years.

Plano, Texas-based Diffusion Group says that by 2020, OTT TV ad revenue will be approximately $40 billion -- just under half of 2020’s projected $85 billion in total TV ad revenue.

Some of this is due to growing advertising time in a typical 30-minute OTT program -- which will rise 63% to 5.1 TV commercials in five years, from 3.7 TV commercials currently. 

Other studies have shown that premium digital TV video can see cost-per-thousand prices [CPMs] that are one-and-a-half to two times that of traditional TV network advertising inventory.

At the same time, the Diffusion Group says the average ad load for a 30-minute traditional linear TV program will decline by 38% by 2020, to about 5 minutes from 8 minutes.

This is not particularly bad news for traditional linear TV networks.

Diffusion Group says the value of linear TV advertising “in 2020 will be worth considerably more than today," and adds that new forms of TV advertising including native and other special sponsored promotions will generate new revenue to keep total TV ad revenue stable.

8 comments about "OTT Advertising Projected To Represent Half Of All TV Ad Revenue By 2020".
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  1. Ed Papazian from Media Dynamics Inc, April 10, 2015 at 11:06 a.m.

    Some rather odd predictions here.

  2. John Harpur from Yellow Submarine, April 10, 2015 at 2:07 p.m.

    Perhaps we need more clarification on how "OTT" and "TV" are defined here. As Wayne's adjacent article on Subscription Internet Video suggests, prime examples of OTT TV are Netflix, Hulu Plus, and Amazon Prime which are commercial free. No?

  3. Leonard Zachary from T___n__, April 10, 2015 at 3:43 p.m.

    Unfortunately the major TV network broadcasters are poorly positioned to compete in a defragmented industry landscape with no viable platform. All have become tumbleweeds being blown about by the "me-too" digital platform and the "me-too" Wi-Fi solution for mobile. A clear innovative strategy and implementation would position them atop the pyramid but the C suites are short term minded on upcoming pensions and let the next guy deal with it will not equate to being timely in an ever changing field. Who amongst the TV networks will lead?

  4. Ed Papazian from Media Dynamics Inc, April 10, 2015 at 4:31 p.m.

    A few doses of reality in pondering these projections. If we accept the notion that OTT commercial loads will be about the same as "linear TV' by 2020----with the latter being reduced by "38%" over the current situation, we have to add that typicall OTT CPMs will, no doubt, be twice or, perhaps, triple those of linear---which is what they are now, by the way. And, I'm not taking into account the "viewability" problem. If that is correct, this means that the average amount of time a typical American spends with OTT fare per day will not be 47% of the total---as implied by the projections for ad revenues---but more like 18%, or about one hour. But that's counting the entire population. If only 60% have one or more OTT subscriptions, this rises to 1.7 hours per day per person living in a subscriber home. Now that's a lot of time. Where will the OTT guys get all of the programming to keep their subs happy?To be continued-----

  5. Ed Papazian from Media Dynamics Inc, April 10, 2015 at 4:48 p.m.

    Now we come to another dose of reality. The poor, bedraggled broadcast networks and the other "linear TV" component---the cable channels--- far from being badly placed relative to the emerging OTT marketplace are, actually very well positioned. Why? Because they have content----tons and tons of it. They will, no doubt flood the marketplace with sports, news, talk and entertainment OTT services, most fully or partially ad -supported and charge premium CPMs whenever they can get away with it. So as their "linear" share of audience declines, their "non-linear" audiences will grow, probably offsetting any losses. What's more, it is most unlikely that the commercial loads on "linear TV" will drop, due to a dearth of ad revenues. Rather they may increase---to accomodate advertisers who are cost efficiency conscious or have small ad budgets. Also, if only 60% of America's TV homes buy into OTT services, this means that 40% would be uncovered----another reason why "linear TV" would remain attractive to advertisers. But the main reason, lies in the projected usage stats. If OTT TV garners only 18%---OK, let's call it 20%of all viweing time by 2020, this means that pitiful old "linear TV" is still capturing 70%---allowing 10% for non-commercial platforms ( PBS, HBO, etc. ). That's 3.7 hours per day per person, which is a lot of TV exposure compared to what OTT will deliver.

  6. Doug Garnett from Protonik, LLC, April 10, 2015 at 5:09 p.m.

    Thanks for the report, Wayne. As to these guys report...Yawn. More projections invented by the guys paid to get pontificate on the future. It's not that it's impossible. But which prognostications about the future of any media have turned out to be true recently? I can't remember one. Newspaper is supposed to be already dead. It's not exactly thriving but it's also very much not dead. Online sales are supposed to have killed brick & mortar. THat's probalby why Amazon is opening brick & mortar stores. Shall I go on? 

  7. Farhad Massoudi from adRise, April 12, 2015 at 4:41 p.m.

    There are two major trends in the OTT space:

     1) Viewership is growing rapidly whlie broadcast is decling (median broadcast viewer age is now 54)
     2) There is more content available on OTT that anyone had ever imagined: HBO Now/Go, ESPN (Sling TV), Netflix, Amazon, Hulu Plus, Tubi TV, etc. 

    Those who ignore these trends remind me of Kodak, Blockbuster, Tower Recrods, and Radio Shack.

  8. Ed Papazian from Media Dynamics Inc, April 12, 2015 at 5:12 p.m.

    @Farhad, the median age of the broadcast networks' primetime audience--if you count the "big 3" ( ABC, CBS and NBC ) -----is even older ( 57 years ). However, most of their losses in primetime and other dayparts are to cable, not OTT services. The latter require a great deal of quality program content to make a real dent in "linear TV's" audience delivery on a sustained, every day, basis; to accomplish this they must draw mainly from basic cable, not just the broadcast TV networks. It's time to stop defining "linear TV' as the fiefdom of the broadcast networks. They no longer dominate in the overall viewing "tonnage" stats.

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