THIRD ANNUAL SCREENS ISSUE - MediaPost
THIRD ANNUAL SCREENS ISSUE - MediaPost
THIRD ANNUAL SCREENS ISSUE - MediaPost
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Q+A<br />
With so many consumers switching to<br />
online video services, cutting the cord<br />
and turning their noses up at current<br />
TV programming, it’s hard to think<br />
that advertisers’ TV budgets will be left<br />
unaffected for much longer. In reality,<br />
TV ad revenues are up, live programming<br />
is stronger than ever, and the<br />
upcoming elections and Olympics are<br />
setting TV ad spending up for a strong<br />
year. But what of digital? Vincent<br />
Létang, MAGNAGLOBAL’s executive<br />
vice president and director of global<br />
forecasting, recently sat down with<br />
MEDIA to talk about the brave new<br />
world of TV.<br />
Vincent Létang<br />
EVP/Director of Global Forecasting for MAGNAGLOBAL BY CARRIE CUMMINGS<br />
What is the current state of TV ad spending? Projection<br />
for 2012?<br />
In 2011, television companies’ advertising revenues were<br />
$58.4 billion. That is a third, 33.6 percent, of the total advertising<br />
market in the U.S. The share of television has gradually<br />
increased since the early 2000s, mostly due to the rise of cable<br />
networks. National networks attract 66 percent of the revenues<br />
against 34 percent for local television. Broadcast television —<br />
national and local — represent 55 percent versus 45 percent<br />
for cable television.<br />
For 2012, we predict TV revenues to grow by 6.8 percent, but<br />
a lot of that growth will be driven by the periodic events that<br />
generate incremental ad spending in quadrennial and even<br />
years: elections and Olympics. The 2012 election cycle will generate<br />
$2.5 billion just for local broadcast TV which gets the bulk<br />
of the bonanza, which will be an all-time high. The Olympics<br />
will generate approximately $600 million for national television.<br />
Without the $3.1 billion of extra revenues, TV growth would only<br />
be 2.4 percent in 2012.<br />
How will companies like Hulu and Netflix impact TV ad<br />
spending in the future?<br />
So far, Netflix does not carry any advertising, so it “competes”<br />
with traditional television for viewers’ time, not for advertisers’<br />
money. The 21.7 million Netflix household clients who are<br />
streaming — out of 25 million clients — streamed an average 93<br />
hours in Q4 of 2011. That’s 2 billion hours during the quarter.<br />
Compared with the total U.S. population, that’s only 2 percent<br />
of linear TV viewing. Netflix streaming subscribers stream<br />
approximately 7 hours a week compared to 34 hours of TV view-<br />
Spring 2012 MEDIA MAGAZINE 37