Maybe TV Networks are Smarter than We Think

Apart from New Year’s predictions, this is also the time of the year that agency networks share their updated projections on (global) ad spend.

The good news is that marketing and advertising spend continues to rise. The bad news is that if your job is in any form of printed media, you’re not selling a whole lot, and you will sell even less by the end of the year.

In fact, media agency Zenith Optimedia predicts that between 2014 and 2017, newspapers will go from a 15% share to a 12% share of global ad spend, and magazines from 7.3% to 5.9%. Can you say “dodo bird”?

The demise of print media saddens me. I actually love reading a newspaper, and I do — every time I’m offered one on a plane or in a hotel room. Or when I spend time at my parents’ home or at my father-in-law’s. But buying one myself, or subscribing to one: nope. Not even a digital one.
In fact, last year I canceled my last two remaining printed magazine subscriptions, despite the fact that they are now dirt-cheap — offers of 90% off are not uncommon — and come with digital access as well.

According to Zenith Optimedia, television’s share of global ad spend also continues to decline, albeit at a much slower rate. Zenith predicts that the 2014 share of 39.6% will decline to 37.4% by 2017.
In some markets, TV ad cost is still relatively low (like in India, Turkey and some other up-and-coming economies). So the TV number is perhaps a little rosy because of the influence of these markets. In the markets with high media saturation (like the U.S. and most of Western Europe), the decline of the share of TV advertising is far more pronounced.

I think that all these small changes (declining ad share; the number of people cutting the cord; U.S. prime time not selling out anymore, just as in some other developed markets; digital share of advertising larger than TV) are all indications of the true seismic shift of TV advertising.

We know that digital isn’t the savior for either print or TV. Yes, digital ad spend continues its meteoric rise over the next few years (from a share of 23.8% in 2014 to 31% by 2017). But the income from digital simply does not make up for the loss of traditional ad dollars for traditional media companies.

Perhaps the real truth is that some TV networks have already realized that advertising is cumbersome, labor-intensive and in perpetual decline. Plus viewers hate it. So for as long as they can, networks simply keep jacking up the prices, because there are still plenty of advertisers buying.

But the TV networks’ real interest is in how they can ultimately replace those ad dollars with income from you and me directly. TV networks seem to focus a lot more on new forms of (paid) distribution and other ways to monetize content. At CES, CBS CEO Leslie Moonves said that CBS Television is 50% advertising-based. Which means he could also have said that 50% of his business is not dependent on advertising revenues. And I think he’s decided that’s the 50% that is going to grow. Ad dollars are nice, but they aren’t the future for TV.

By Maarten Albarda
Maarten has lived in five countries across three continents and honed his integrated marketing communication skills at JWT, Leo Burnett, McCann-Erickson, The Coca-Cola Company and AB-InBev. He now runs his own integrated marketing consultancy in partnership with Flock Associates, and has written the book “Z.E.R.O.” with Joseph Jaffe.
Courtesy of mediapost