Commentary
How TV, Digital Media Should Prep For The Next Economic Downturn
- by Wayne Friedman , Staff Writer, September 17, 2019
Recently, every TV network seems to have scored not only nice mid-level, double-digit percentage gains in the price per thousand viewers in upfront deal-making, but decent single-digit percentage overall volume gains on revenue.
Digital media? Despite nagging fraud, transparency and other issues, including possible regulator concerns, revenues continues to soar -- almost unabated, by still double-digit percentage hikes.
Which brings me to the possible, and probable, oncoming recession.
The last one -- a real doozy, the so-called “Great Recession” between December 2007 and June 2009 -- hit the TV industry as hard as other businesses.
For example, there was a sharp 12.5% reduction in overall broadcast/cable upfront advertising revenue for the 2009-2010 TV season -- with around a 5% reduction in the cost per thousand viewers, according to Media Dynamics. Even digital/online dropped 2% in revenue, according to a report in Forbes.
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It’s only a matter of time before another recession hits. The big question: Is the overall TV industry -- TV networks, local TV stations, syndication, cable, and even new OTT platforms -- ready to take another punch?
Things have shifted mightily in media over the last 10 years. Can TV networks do better than last time, or will competitive, nontraditional TV-connected digital media just continue to accelerate, perhaps more modestly?
Media theorists would say: Don't stop advertising products and services -- even in a recession.
While cost-cutting continues to be prudent in an economic downturn, stopping or severely curtailing advertising sends the wrong message to consumers. Some customers could just forget about you, or worse, look at their own financial situation and make drastic cutbacks to their products and services.
At that moment, will marketers -- big and small -- ask: What must I keep in my media plan -- overall big brand messaging (TV) or return path consumer narrow-targeted ROI media (digital)?
That’s when a company's media message hits the road.
The key is to watch calm media/marketing executives find some significant ad dollars to spend during the recession. That will be followed by post-recession plans to accelerate growth.
Remember this, says Forbes: In 2009, Amazon sales grew by 28% during the Great Recession.
Also, while we know recessions do repeat, their intensity varies greatly. Sit tight, and take some of the emotion out of it. It may not be as bad as you think.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, as a rule, the immediate response of many advertisers who are concerned mainly with short term issues will be to cut their media spending. This is what happened to TV the last time we had a major downturn in the economy. However, once the panic phase ended, national TV quickly recouped most of its lost ad revenues---first in the scatter market and later in the next upfront. Unfortunately other media, notably magazines, which also took major ad revenue blows didn't recover and are on a long term downward spiral. Why? because they were seen as marginal---sadly---not basic like TV and facing rising TV CPMs many advertisers reduced their print spending permanently to fund higher costs per viewer on television. In other words they got used to less spending in print. So the real danger is not so much a national TV problem. If history repeats itself, another big recession might hit print media and and national spot TV and/or radio much harder long term as well as short term---but not network TV. Where digital stands in such a scenariio is not as clear because so much of digital's ad spend is not long range branding money but short term direct response/search activity.