Decline in TV ad spending, but is eMarketer right?

Categories: TV Advertising

Written By

January 27th, 2009

You have to remember what the "e" stands for in this case (electronic, as in online, as in internet, as in not on television!). Right in the first paragraph of the release below comes problems with "overall TV viewership is dropping". So far this is a fun myth to perpetuate by all of those who feel the power of the Internet. It's got an almost Borg-like "you will be assimilated" quality to it.

Unfortunately, so far it's not true. Overall, BROADCAST TV viewership is dropping, but that's much more at the expense of Cable than the Internet. Overall, TV viewing seems to be holding steady, and it's the broadcasters who are feeling the pain. That said, I buy the decline in ad spending -- you know when you're seeing promotions for World of War DVDs during primetime, on the broadcast networks, there is a decline in ad spending. It doesn't take research to figure that out! Here's the release from eMarketer:

press release via eMarketer

Numbers Show Decline in TV Ad Spending

JANUARY 27, 2009

Negative 4.2% growth projected in 2009

NEW YORK (Jan. 27, 2009)—Marketers still believe that Super Bowl spots are worth the money, even at $3 million for 30 seconds. That is why NBC says it’s having no problem filling spots for Super Bowl XLIII, an event for which most celebrate advertising rather than shun it.Overall, TV viewership is dropping, and the Super Bowl is one of the few exceptions where viewers aren’t fast-forwarding through commercials with their digital video recorders (DVRs). eMarketer forecasts a negative growth of 4.2% in US television ad spending in 2009.

Concurrently, US online video ad spending is expected to grow 45% to $850 million in 2009. Video is the fastest-growing format on the Internet, making expansion from offline video into online video that much more attractive.

Broadcasters need to find a way to redefine their businesses in an increasingly digital world to take advantage of this growth. In many cases, that means a focus on expanding programming to the online realm and testing business models there. Indeed, a trend is for viewers to go online to watch ads following the Super Bowl.

The TV networks are drawn to the growth in online video ad spending because the video format plays to their programming strengths, even if they have not yet figured out exactly how to effectively monetize online video.

“As television and PC technologies converge further, the potential exists for enhanced engagement with viewers—and more advertising opportunities,” said Carol Krol, senior analyst and author of the report, “Television’s New Picture: Seismic Shifts in the Digital Age.”

“But the networks will only succeed if they can continue to demonstrate a willingness to adapt to rapid online changes, weather the recession and respond to the changing viewing habits of their audiences,” Ms. Krol said.

The TV industry needs to sort out the winning business model, whether it is primarily advertising or a hybrid of advertising and premium pricing. Until that is defined, growth will be hampered.

To speak to Ms. Krol about the convergence of traditional and digital media, reach out to the eMarketer media contact listed below.

About eMarketer
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