Commentary

Who Cares About TV Cord-Cutting? Advanced Ads, Digital Sales Deliver

Cord-cutting news headlines sound terrible for the traditional TV business. Or are they?

What was once a pay TV market of 101 million subscribers six years ago is now down to 87 million. Yet we keep hearing about higher upfront advertising revenues, growing affiliate revenue and improving content distribution to third-party buyers.

For the last five years, upfront revenues for broadcast and cable networks have risen 4.6% to 5.9% for each year, according to Media Dynamics.

In addition, we are finally seeing some major media companies releasing their first data for upfront digital advertising revenue. NBCUniversal, for example, says its upfront digital advertising deals grew 50% to $1.3 billion.

Other media companies also cite sharply improving results — although little actual data.

In somewhat of a related disclosure, Viacom now says 20% of its domestic advertising revenue will come from advanced advertising, hitting near $700 million in revenue this year. That’s a big piece.

Those last two pieces — digital media and advanced-advertising efforts — are key for future growth, according to many analysts.

Looking forward, where are the inflection points? Soaring double-digit percentages for traditional TV network CPMs (cost per thousand viewers) may be telling.

When should marketers be buying more advanced/addressable advertising inventory — even if expensive — and less of traditional TV media, now that those media buys are pricier?

Now, take a look at where local TV stations are when it comes to revenues — relying and focusing on those steadily increasing retrans dollars versus the iffy, and somewhat declining, local TV advertising.

And where are local TV stations on digital media selling? Many analysts say local TV stations are still performing in digital media with an overall lackluster effort.

Local TV stations might say local TV content — especially news content which has expanded over the last few years — is a reason to be positive. Perhaps local digital news content deals offer meaningful revenues, too.

All this means there are plenty of shifts in the business, including more cord-cutting. But growing emphasis in direct-to-consumer businesses for traditional TV companies also means a bigger shift in dollars to the obvious: direct-to-consumer revenues.

1 comment about "Who Cares About TV Cord-Cutting? Advanced Ads, Digital Sales Deliver".
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  1. Debbie PATTERSON from Independent , August 15, 2019 at 2:27 a.m.

    What is your proof that the ads pay off? Do people really get gutters from such and such company? Wouldn't most people get word of mouth? Just wondering how they figure out the shopper has seen an ad that motivated them into a sale.

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