• by Wayne Friedman , September 5, 2014

In a report from Brian Wieser, senior research analyst of the Pivotal Research Group, he says that although online video is growing rapidly, “it generally lacks the necessary volume of advertising inventory or sufficient unique reach for national advertisers to make up for a shortfall on the scale of what we saw in the most recent upfront negotiations.”

Wieser notes that the national TV upfront market was” unambiguously weak” not only for broadcast, but for cable. Industry estimates were broadcast dropped nearly 8% during the recent upfront marketplace, with cable down 5%. In total, national TV was down 6% to $18.1 billion.

Last year, national TV advertising amounted to $42 billion, with online cable at around $3 billion. But Wieser notes online dollars are not necessarily coming from national TV budgets.

“Some share of that spending would have come from advertisers that are not national TV advertisers,” he writes. “Another share (probably a larger one) of spending probably came from large brands seeking to accomplish goals that might otherwise have been performed via banner ads or rich media.”

Wieser assumed at best an incremental $2 billion of online video’s total take this year may be coming directly from TV marketers looking to make up for their “TV-related media goals.” He says: “At these levels, national advertisers’ online video budgets would equate to nearly 10% of their total national TV spending levels, on average.”

Still, media marketers just can’t get the reach of consumers that TV has, he says.

“Consider further that 17% of the population accounted for 96% of online video consumption during the most recent period from which we have Nielsen data on these metrics (1Q14),” he writes. “This group of people accounted for 16% of conventional TV consumption.”

In addition, the online content may not work for many media marketers.

“Online video content consumption equates to maybe 5% of total TV consumption and half of the online video consumption figure is accounted for by user-generated content that most advertisers might stay away from,” he notes.