NEW YORK – TV ad spending will continue its decline this year, says eMarketer’s latest U.S. advertising forecast.
Outlays on TV ads will slip 0.5 percent in 2018 to $69.87 billion, causing TV’s share of total U.S. media ad expenditures will drop from 33.9 percent in 2017 to 31.6 percent this year.
However, TV ad spending will see a slight jump in 2020 with the U.S. presidential election and Summer Olympics in Tokyo. Still, researchers predict traditional TV spending will fall to less than a quarter of total ad spend by 2022.
Cord cutting and over-the-top (OTT) viewing remain the reasons for the decline, according to eMarketer. Monica Peart, the group’s senior forecasting director, says the shift of audiences to OTT viewing is changing the climate of the TV ad market.
“As ratings for TV programming continue to decline, advertiser spending will also continue to see declines, especially in years that do not boast major events such as presidential elections and Olympic games,” Peart says.
Meanwhile, total digital ad spending in the U.S. continues to climb – it will rise 18.7 percent this year to $107.3 billion.
OTT platforms, which have a small but growing share of the market, will continue to play an important role. This year, Roku’s U.S. ad revenues – mostly video but including some other display formats as well – will surpass $293 million, up 93.0 percent over 2017.
Even though OTT streaming video options are growing at a steady clip, they’re not necessarily replacing traditional video subscriptions, says a new report from the Video Advertising Bureau (VAB).
The report found that while the number of households using OTT services has tripled since 2013, only 14.1 million homes are OTT-only. More than 90 million homes continue to subscribe to a traditional multichannel video package.
More than 70 percent of OTT households also had a multichannel video subscription, suggesting that OTT viewership was not serving as a replacement for those traditional services. “It’s important to note that the math of OTT is a formula of addition, not subtraction,” Jason Wiese, VAB’s vice president of strategic insights, tells Digital News Daily.
He adds, “The average TV household continues to collectively watch almost eight hours of ad-supported TV every day, but people have a voracious appetite for even more video content, evident in the fact that a large majority of OTT households also have an MVPD subscription. Interestingly, some of the most popular content on the major SVOD platforms is TV network series [programming], both current and prior seasons.”
The VAB report also says advertising accounts for about 45 percent of online video revenue today and that it will grow to 60 percent during the next 10 years. In addition, viewers increasingly consume content on mobile devices while they watch programming, opening up other opportunities to reach them. The report found that 65 percent of consumers looked up products advertised during programming.
“As the ecosystem evolves and online video advertising grows, greater ad opportunities will exist on both the service and device side,” Wiese says. “With more TV networks now developing their own direct-to-consumer offerings, advertising opportunities will increase in this space as these services act as a conduit to connect consumers directly with brands.”