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
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