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Will Internet Video Kill TV Advertising in 2017?

Tuesday, Jan 03 2017
CMO Tech
Written by  Karen M. Rider

What do the Olympics, the Super Bowl, and the run for President of the U.S.A. have in common?

TV Advertising.

2017 is a year that will lack two of these three events that generate TV ad revenue, leading to predictions that total digital ad spending will surpass TV for the first time. TV ad spending will reach about $72 billion (about 35% of total ad spending), according to an eMarketer report.  

Total digital ad spending, in comparison, will hit $77 billion (about 38% of total ad spending). The PricewaterhouseCoopers Outlook report (PDF) predicts similar numbers—online ad spending of $75 billion will surpass TV’s $74 billion in ad spending.

There are many factors pushing investment in TV ads right down the tube. Jim Weber, founder and CEO at Weber PPC, points out several in a recent LinkedIn post. First, the audience of people who actually watch commercials has shrunk. Today, folks are getting their advertising updates in the palm of their hand. Commercials just don’t cut it.

Even older viewers are more likely to switch channels during the commercial break (except during the Super Bowl). Then there’s DVRs and On Demand and Netflix services, all sans-commercials.

One other factor Weber mentions: Just because your TV is on when commercials are running doesn’t mean you are actually watching them, which is really the most important measure. Marketers can't accurately calculate ROI for TV ads. More on this in a second.

Another factor driving decreases in TV advertising is local business. Whereas large corporations can spread their ad dollars around to multiple media platforms, local business owners need cost effective alternatives to promote their product or services. They’re turning to the power of mobile, rather than focusing on TV.

Borrell Associates predicts local TV advertising revenue will drop nearly 17% in 2017. It’s less costly for a local business, of any size, to pull together a YouTube ad that reaches its target audience on a device in the palm of the customer’s hand. This kind of outreach to the local business owner, combined with advancing mobile technology and customer demand for accurate information at their fingertips will continue to push advertising dollars from TV to mobile for years to come.

Television is not the only medium that local businesses—and, eventually, bigger companies—will pull their advertising dollars away from. Drops will also be seen in newspaper, magazine, and yellow pages advertising. Other media alternatives to TV that will gain ground in 2017 are movie cinema advertising, social platform ads, and direct mail. The push away from TV and other traditional ad platforms has a lot to do with analytics, which brings us back to lack of meaningful ROI data for TV advertising.

Although the data mining in these newer mediums isn’t perfected, compared to TV they provide more specialized approaches for targeting market segments as well as more customized outcome measurement for advertisers. For example, TV does not provide real-time data on how many people saw an ad and the approximate time of day it was seen. It won’t be long before mobile ad analytics perfects the art of accurately tracking the number of customers who followed through on ad by visiting a business (online or in person) and making a purchase.

More and more, it looks like TV advertising’s days are numbered.

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