January 25, 2023
'Digital' Poised To Overtake TV Ad Spending Earlier Than Expected
- by Joe Mandese @mp_joemandese, September 13, 2016
The shift in ad industry
market share from so-called “analogue” media to “digital” media is accelerating, and the latter is now expected to surpass television’s historically dominant share of
U.S. ad spending by the end of 2016 -- months sooner than expected, according to the statsmasters at eMarketer.
Putting aside that television is a digital medium too, eMarketer's estimates categorize it separately from things like online and mobile digital media and based on its calculations, the sum of those categories will reach $72.09 billion by year end -- a smidgen higher than the U.S. TV ad marketplace’s projected $71.29 billion.
“That means digital will represent 36.8% of total U.S. media spending, while TV will represent 36.4%,” according to an eMarketer spokesperson, noting that the firm's original projections -- made in March -- called for TV vs. digital's market share tipping point not to happen until sometime next year.
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What makes digital’s ascendance so remarkable is that it occurred during a so-called “quadrennial” year in which TV ad spending benefitted from incremental spending from both a Summer Olympics and a presidential political season.
The eMarketer report notes that TV is, in fact, continuing to expand -- it's just not growing as fast as digital ad spending.
“The strong performance of the digital ad market is being driven by several factors, including, not surprisingly, mobile and video,” eMarketer notes, adding: “Mobile ad spending will grow 45.0% this year to reach $45.95 billion. As it grows, it will represent an increasing share of overall ad spending. By 2019, mobile will represent more than a third of total media ad spending in the US. Google is the undisputed king of mobile and will remain so for the foreseeable future. Google will capture 32.0% of the mobile ad market -- its closest rival Facebook capturing 22.1% this year.”4 comments about "'Digital' Poised To Overtake TV Ad Spending Earlier Than Expected".
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As I keep pointing out, Joe, these ad revenue figures---or estimates----include all sorts of "advertising"---direct response, search, sales promotional offers and info, etc. as well as mainly branding ads. So it's really apples and oranges when comparing TV, which is primarily branding and digital which is primarily not branding. If there was a way to properly characterize the ads, TV would be seen as leading digital by a huge margin---better than four-to-one---in ad spending for branding campaigns. According to our own estimates, digital is just now contending with long time hindrunners--- magazines and radio--- for second place in this regard. It's got a long, long, long way to go before it surpasses TV.
Joe, the real problem that everyone in the media profession is interested in spending money on advertising but no one cares about increasing sales. (Even though technology such as the GSI™ (Guaranteed Sales Increase) makes it possible to get a guaranteed increase in sales for every product advertised in any media.) Whether it's the online world you write about or the television market making the money, where do you think that $72.09 billion is coming from? I will tell you where. It's from shareholders of the companies that advertised. Those share holders purchased their stock with cash. And they expect a cash increase as a return on investment. Not clicks, likes, impressions, branding, research stats, or ratings percentages, cold hard cash! The present day disconnect between Wall Street and Madison Ave is staggering. But the day of reckoning is fast approaching.
Very cool and not surprising to me. It was Sept 2013 that digital surpased broadcast TV now it is poised to surpase broadcast + cable. Direcrt Response vs. Branding mix is a bit of a red herring to me. The fact that digital is more suited for direct response is characteristic of the channel and why it is attractive from an ROI perspective.
The amazing thing is that now for teens and early adults, the mobile screen is the primary screen, not TV. In my house, I am the only one that watches TV :) Think YouTube and Netflix delivered via mobile. Facebook and Snapchat are delivering a ton of video these days also. TV in the future, like print is today, will still be the primary way to reach the 55+ demo as time goes on, but look for digitgal to provide a return to investors as advertisers try to reach younger, more digitally connected audiences.
Rik, while it is true that, on a relative basis, digital video garners a higher share of its usage for the 12-24 set compared to the older adult population, Nielsen continues to report that in terms of reach and time spent, that even among younger people, digital is not the primary screen---TV is. And like it or not, Nielsen remains the most trusted--albeit sometimes fallable---source for such data.
While, for some young consumers---mainly the upscale elite---the dominance of digital may be the case, we must remember that the great mass of the population---including 12-24s----is not as refined or sophisticated in its TV/video entertainment tastes as is sometimes assumed. Net, net: until digital is able to supply a very great deal more worthwhile content it is unlikely to overtake TV in terms of audience attainment any time soon. Some of the digital players are trying, now, to upgrade and expand their program content. What they will learn---as the TV folks have learned the hard way--- is that this isn't merely a matter of going to the program producing community and demanding "better" content. It's much harder and costlier than that to attain scale and that's what advertisers will require, not a few isolated success stories, to come in with massive ad spending.