I wrote recently about the $100 billion annual connected TV ad spend projection for 2030 made recently by Dan Salmon, the prescient BMO Capital Markets media and Internet analyst. A key pillar in Salmon’s analysis was the fact that, finally, Internet advertising over the next decade would begin share-shifting ad dollars out of TV with the development of targetable CTV ad inventory.
A number of folks reached out, wondering whether linear TV would even be around in 2030 -- and whether it would still have a meaningful share of ad spend. Finally, they wondered what the "total” TV ad spend might be in the U.S. in 2030 (CTV + linear TV). My answers are yes, yes -- and $130+ billion.
Basically, I believe that if you abstract the total TV ad market in 2030, it will be $100 billion of CTV and $30+ billion of linear TV.
For sure, the growth of CTV ad spend is going to be huge as more Americans stream their TV content through Internet-connected dongles and apps. However, viewing of TVs connected to set-top boxes and digital antennas aren't going away entirely. Even in 2030, we’re still likely to have 25% of U.S. homes using linear connections as a primary TV content source, and half of U.S. homes still using it to supplement their streaming.
How is that possible? Don’t forget, consumer adoption of new technologies always takes time, particularly when folks have to change long-held behaviors related to consuming media. Cost is a factor, too, since broadcast TV viewing is free.
For guidance sizing up the linear portion of total TV ad spend in nine years, I looked to one of the very top TV analysts on Wall Street, Michael Nathanson of MoffettNathanson, and his U.S. ad spend report from March of this year. In his five-year projections, Nathanson also predicted massive increases in digital ad spend, but forecast that traditional TV’s market share would drop from 33% of spend in 2020 to 20% in 2025. That would still amount to well over $60 billion annually at that time, because that total U.S. ad market would grow significantly to the $400 billion range as it captures marketing spend that has historically gone to pure direct-marketing channels.
Nathonson believes TV will keep a respectable share of ad spend because it will still do well with top-of-the-funnel ad expenditures given its mass reach characteristics, costs and audience composition. I think he’s spot-on.
So, how did I get to the incremental $30+ billion going to linear TV inventory above and beyond the $100 billion consumed by CTV? I still expect 75 million Americans to watch two to three hours of linear TV a day in 2030, and another hundred million plus to watch 30 minutes to an hour a day. They will watch more than twelve minutes of ads each hour. That alone gets me to an incremental $30+ billion a year: three trillion impressions against persons two years old and older of 15- and 30-second ads at a $10 CPM. The impression count is a fraction of what linear TV delivers today, and the CPM is probably double today’s on a P2+ basis.
My sense is that this holds pretty well against Nathanson’s numbers, given the relative stability he sees in traditional TV ad spend from 2020 to 2025. Of course, in comparing and partially combining Salmon’s and Nathanson’s numbers, I know there’s a certain amount of double-counting, since each of their projections include some CTV spend that the other might count as TV, and TV that the other might count as CTV streamed.
However, given how strong and bottoms-up each of their analysis is, and the audience scale linear TV will still have in 2030, I believe that the $130+ billion total TV number holds up well.
What makes me feel especially secure with that predicted total for 2030 is the number of strong tailwinds that will drive ad spend on video screens that dominate users’ attention. They include:
What do you think? Is it crazy to see a total TV ad market of $130+ billion in the U.S. in 2030?
Dave, if total TV ad spend rose to $130 billion by 2030---which seems possible---the question is how would it be split up. If "linear" amounted to only $30 billion that would probaly mean that national linear was $20 billion and this would include all dayparts not just prime time. In that scenario, prime would represent about $13 billion---and that's in 2030 dollars. Account for inflation and 2030 prime would equal a mere $6 million today----and the upfront portion would come in at $4 billion. In other words, the upfront futures buying process, as it affects "linear TV" on a national basis would be virtually dead by 2030.
OK, maybe that's possible. However about 45% of current linear TV ad spend is devoted to news---national and local--- plus sports and specials of various kinds. That spend is fixated on those types of content---nothing else matters---not targeting, CPM, visits to websites, CTR rates, etc. And currently that represents something like $30-35 billion. In addition, other genres---early AM news-talk, for example--- are also in the same boat. Many advertisers who use these shows as platforms are also locked into the genre and/or the daypart. By 2030, it's likely that such ad spend would total $65-75 billion or a very large part of your $130 billion total TV pot. If most or all of these dollars were to shift to CTV that would only be likely if CTV was the the exclusive venue for such content---or had the lion's share---maybe several lions' share---of the content. That seems to me at least to be an unlikely proposition---though it is a theoretical possibility. Currently, "linear TV" networks are or have already locked up most of the prime sports franchises in long term contracts and there are no signs that "linear TV" is abandoning its news or special event functions. So, as I said, all of this may change---but that is far from a certainty.
Ed, excellent points. I think that in a future column, I will try to break down likely packaging and ownership of the inventory. To be clear, I don't expect linear inventory to continue to be sold separately from streaming/CTV. Thus, as is done today in a nascent manner, owners of streaming and linear inventory will package it together in their upfronts. For sure, content type - news, sports, ett. - will continue to be big drivers of the packaging, and buying decisions. Also, I do expect that time of day viewed will matter, but certainly not as much as it is today. The notion of prime-time will probably be not very improtant. It is a vestige of most Americans working 9am - 3/4/5pm factory/office hours (I still remember growing up with the 3pm fire house whistle for the factories to announce the ending of the day shift.
Most importantly, descriptions like distrbribution like linear, broadcast, cable, syndicatoin, satellite, dongle, app-based, etc will be anachronisms in 2030. What will matter most will be the content, audience, audience state of mind, purchase context, immersability of the content/enviornment, brand offers, etc.
Critically, by 2030, linear v CTV won't matter anymore.