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Nope, the TV Business Isn’t Dead Yet. Far From It, Really. Over the past few years, media analysts have bemoaned the End of TV. Some have wondered, as ratings tumble year after year, why would advertisers continue to buy ads? Meanwhile Facebook and Google’s ad businesses have exploded, even though marketers aren’t spending drastically more than they have in the past. But the traditional TV industry is not dead just yet. This fall, CBS, 21st Century Fox, and Time Warner all reported advertising revenue growth. CNN and Fox acknowledged they’ve seen higher ratings (and ad revenue) thanks in part to the election. And, sure, CBS had the Super Bowl this year. Even so, the company says its ad revenue is “the strongest we’ve seen in a long, long time.” The media business runs on ads. But since the birth of the web, the ad business has been changing. Analysts expect brands to spend $68.8 billion dollars this year on digital advertising, according to eMarketer. Even so, TV has remained the single biggest recipient of marketers’ money. As more people abandon traditional TV for streaming services, YouTube, and social media, broadcasters will have to fight to keep advertisers coming back. But by then, the dichotomy between TV and digital may not mean much anyway. “It’s definitely a complicated picture,” says senior analyst Paul Verna of eMarketer. “But it’s not easy to say digital is killing TV.” Protecting the Business In its own way, TV is still pretty unique. The internet dramatically changed the newspaper, magazine, and radio industries. Many advertisers are no longer willing to pay top prices (or advertise at all) in those places as the audience shifted online. 8 DIMENSION
“ “There’s a lot more inertia in television than there was in the media that succumbed more quickly to disruption from the Internet,” says Andrew Frank, a longtime analyst at Gartner who follows the marketing industry. How have major broadcasters and cable networks held onto their dominant share of the public’s attention? Well, for one, people still watch a lot of TV on TV. Major sporting events, like the Super Bowl and the Olympics, draw millions of viewers. And yes, electoral politics still largely play out on television. “TV still has massive scale, it has that cachet,” Verna says. “If it’s on TV, it’s important.” And advertisers want to be where they can reach people. Even for those who don’t watch TV in the old-fashioned way, many networks have developed their own websites, It’s definitely a complicated picture, but it’s not easy to say digital is killing TV. ” apps, and digital services. Advertisers consider ads on websites and apps “digital spend.” For networks, however, it’s all ad money coming their way. Take Fox. Advertisers can buy slots during The Simpsons on its broadcast station or The Americans on basic cable. They can serve ads during full episodes streaming on its website, streaming apps, and Hulu. (During last week’s earnings call, 21st Century Fox’s CEO James Murdoch called the going rate for ads for Fox’s shows on Hulu “very, very attractive.” Fox owns Hulu in a joint partnership with Disney–ABC and NBC Universal.) But when advertisers are spending money for ads attached to TV streaming on the internet, they don’t think of it as TV. “Hulu, Roku, Apple TV. Is that television? No, it’s not. It’s consumed on a big screen potentially in your living room, but we consider anything delivered by an IP device is not linear TV,” says David Cohen, the president of Magna US TV vs. Digital Ad Spending in billions of dollars Global in North America, a major ad-buyer that works with companies like Coca Cola and Johnson & Johnson. In other words, networks are getting advertisers’ money both ways, which for the moment seems to have led to an overall bump. But Cohen predicts marketers will begin to see more of the distinction blur. “In the short term, I think it’s not outlandish to think that a billion dollars will come out of the linear television market this year and move to digital video.” Time of Transition And yet that doesn’t mean that the future for broadcasters and cable networks is ultimately secure. Analysts with eMarketer estimate that more money will be spent on digital advertising than TV by next year. Ad buyers and marketers are frustrated with the fact that TV ads continue to increase in cost even as ratings, for the most part, continue to fall. “Why as marketers have we agreed to pay more for that decline in audience is exactly the question,” Cohen says. Magna, for its part, said last week that it was moving $250 million from its TV budget to YouTube. As the basic cable bundle comes apart and viewers get more options to pay for fewer channels in so-called “skinny bundles,” Frank believes that less popular channels may struggle as advertisers shift dollars to digital content people actually watch. But digital advertising is also complicated. Facebook and Google may dominate when it comes to competing in the digital space. But the ads still have to be shown to be effective, which is easier to demonstrate through “apples-to-apples” comparison. This is why YouTube, with its TV-like pre-roll ads, has thrived. Over time, ad tech will get better at helping marketers understand who you are, where you’re watching, and what you want, whether you’re on Facebook, YouTube, or just watching plain old TV. And that may help save traditional TV simply because advertisers will be able to show couch potatoes more ads for stuff they really do want. Television may be changing. But evolution is, if nothing else, a survival strategy. $71.29 $72.09 $72.72 $82.86 $74.53 $93.18 $76.02 $103.39 $77.93 $113.18 2016 2017 2018 2019 2020 Source: eMarketer, Sept 2016 9
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