Traditional TV Ad Revs: Still To Grow, Perhaps At Expense Of Digital Platforms

Note: This column was first published last September, but is still relevant today.

So what if we got it all wrong? Maybe more money than realized will land on traditional TV than on digital services in the future years.

This isn’t to discount digital advertising growth — just to alter those crazy expectations. For some time, many TV/Internet advertising estimates have been talking up how online revenue will be larger than traditional TV advertising revenues — around $70 billion per year currently.  And in particular, digital video will be a major factor.

But there are some key variables to consider. For one, Brian Wieser, senior research analyst for Pivotal Research Group, believes it comes with the availability of traditional TV inventory supplies: “If new inventory is freed up as characterized here – and even if it is not – we can still envision two other sources of incremental revenue, potentially: programmatically-driven data-driven or audience driven buying, and the shift of online video onto traditional TV — rather than the other way around,”  writes Wieser.

Of course, traditional TV business guys would have to get their act together — and somewhat fast.  Still, the current evidence isn’t overwhelming that sharply higher Internet video advertising dollars are a given, says Wieser. In the age of digital video on-demand and seemingly better engagement, Wieser reminds us: “Web video remains highly concentrated among a small share of the population. Further, there remains relatively little consumption of high quality conventional TV content on the web; even short-form video is relatively scarce, except for user-generated content.”

Digital-media-minded marketers may still be wedded to the digital video sites. But, in future years, price, as well as lack of scale, might hinder strong continued growth.

Television cost per thousand viewers are still cheaper by way of comparison — $10 CPMs and less, says Wieser — versus digital platforms. And then one should consider that even TV’s niche-iest networks generally have much more scale than key premium digital areas.

Concerning the biggest video advertisers, Wieser says many still haven’t moved much to online areas.  Why? “It is perceived as different by most advertisers when compared with ads that run adjacent to premium video-based content.”

So what are we left with? Traditional TV networks rushing to ramp up programmatic media buying — something which marketers desperately want — as well as buying systems that would focus in part or in a large majority, on audience-targeted buying.

Additionally, those big digital video estimates — especially those in the future — should include digital video incremental gains made by traditional TV networks and/or producers.

A media critique by Wayne Friedman
Wayne Friedman is West Coast Editor of MediaPost.
Courtesy of mediapost