The U.S. TV industry is a $129+ billion business, with net annual revenue projected to rise into the next decade. That figure includes advertising and distribution estimates from eMarketer and SNL Kagan, respectively.
Yes, cord-cutting is forecasted to cause a decline in pay-TV subscriptions, and consequently, pay-TV providers’ subscriber revenues from TV are expected to fall by half-a-point a year over the next 10 years. It is also forecasted that this lost pay-TV provider revenue will be made up by a 13% increase in broadband subscriptions over the same period.
The companies that distribute TV also provide internet access. In fact, overall annual pay-TV provider revenues are projected to increase $11 billion from 2016 to 2026.
What some are calling the end of TV is just another evolution.
Over the past 50 years, TV distribution has gone from over-the-air broadcast to broadcast and cable. Then, broadcast, cable and satellite to broadcast, cable, satellite and telco. Then, to broadcast, cable, satellite, telco and over-the-top (OTT). Today, it is a variety of different delivery mechanisms, with OTT expected to replace more conventional means over a period of time.
In the event OTT becomes the only form of delivery, it will still be TV — and TV will not be dead.
Another nail in TV’s forecasted coffin is that digital has been cutting into TV advertising budgets. This has been happening for several years. However, last year, researchers began to notice that some advertisers’ revenues began to decline as a result of moving too much money into digital.
The Advertising Research Foundation did a lot of research
on this topic. Research has shown that TV and digital advertising achieve better results together than either can achieve individually.
The ingredients for a digital-style TV marketplace are beginning to appear. Many TV-specific supply-side platforms (SSPs) and demand side-platforms (DSPs) have sprouted to bring programmatic buying to the TV industry. These include names like Videa, Clypd, WideOrbit, PlaceMedia and Audience Express, to name a few.
TV distributors and network groups are morphing into SSPs. Two TV data management platforms (DMPs) have been announced since last fall, and there are at least two companies vying to become established TV ad exchanges.
In-flight engagement metrics for TV are now possible; although, not widely in use. Most backhauled data from TV set-top boxes and smart TVs are provided on a delayed basis. Over time, data delivery speed will increase, and TV campaigns will be able to be managed in near-real-time the same way digital campaigns are today.
It will be possible to reallocate dollars to the highest-performing parts of a TV campaign while the campaign is still in flight.
Most addressable TV advertising sold today is placed in the two minutes of local ad time allotted to TV distributors every hour or in video on demand ad inventory. New industry standards and technology are available that will enable addressable TV advertising to be placed in the other 10 to 12 minutes of national hourly ad time.
In addition to an increase in addressable ad inventory, more TV homes are becoming addressable-enabled. Today, addressable TV is available in approximately half of U.S. TV homes and in all 210 U.S. markets.
Data-enabled linear TV is also on the rise. Start up companies like TRA and Rentrak did a great job of proving that as target audience density increases. so does the impact of advertising. It is no longer a question whether advanced TV ad targeting works, the relevant: Which target will provide the best result?
There has never been more data available for TV ad targeting.
To put in context: TV companies’ revenues are projected to increase; TV distribution has always been evolving and the transition to digital is no different. TV dollars moving into digital will level off as advertisers begin to see their advertising impact decline. TV ad tech companies are bringing digital-like buying to TV.
Near-real-time TV engagement metrics are just around the corner, as more companies begin to make TV set-top box and smart TV data available more quickly. TV targeting precision continues to improve, as a result of advances in data-enabled linear and addressable TV.
Target audience segmentation is increasing TV ad effectiveness as more data and data science flow into the space.
All said, TV never died — so a resurrection is impossible. Born again might be a more apt analogy. Whatever you call it, the TV industry is on the right track, and its future is anything but dire. The best years of television are still to come!