Demand for TV ads 'has never been higher,' and it could give the TV business one last windfall
- Live TV viewing is in decline. But the TV industry is expected to enjoy robust advertising demand this year.
- In fact, TV networks are expected to garner higher ad pricing this year, despite ratings declines and the growth of ad free streaming.
- A new UBS report points to a strong economy, digital media's ongoing problems, and an enduring belief in the power of TV among marketers as buoying the TV business.
Streaming is eating TV. Ratings for live, ad-supported show continue to plummet. Netflix is set to make 1,000 original shows and movies this year.
And the TV advertising business is set to have a killer year.
Counterintuitive it may be, but the just-kicked-off TV upfront selling period, that annual spring ritual during which TV networks sell the majority of their ad space, is expected to be robust. That's in spite of a growing number of Americans ditching scheduled TV watching.
"Panelists were bullish on the TV Upfront," reads a new US Media & Internet report from UBS, which quizzed 40 major advertisers on their media spending plans for 2018. "Demand for high quality TV inventory has never been higher."
Those advertisers "do not expect a sudden inflection point in TV share losses in the near/medium term," the report reads. "Eventually advertisers cannot keep paying more and getting less, but for now there is no better alternative for the majority of TV budgets."
In other words, that TV advertising tipping point you've been waiting for isn't happening this year.
In fact, while volume, or the sheer number of ads sold, is expected to be flat, TV ad prices are expected to jump over the coming year.
A unique set of short term conditions are helping prop up the TV ad business for now
- A strong economy and the Trump tax cuts.
- Brands realizing that TV advertising helps buoy other ad channels, like search advertising.
- Digital media's rash of brand safety and data issues has made marketers skittish.
- There's simply a lack of better alternatives. "Where else are these brands going to go?," said ad industry veteran Eric Bader.
It's hardly all good news for TV, which may be enjoying a short term blip
UBS did splash some cold water on what is otherwise a strong moment for TV advertising. For example,
- TV ratings in homes with subscription video services like Netflix are generally much lower than homes without - which represents an alarming long term trend for marketers.
- Brands definitely want more data and targeting options for TV. That's an area of clear strength for digital platforms.
- Over the next two years, 50% of the advertisers surveyed plan to shift some budgets from TV to digital outlets. Advertisers expect to shift ad dollars from TV to digital, 40% expect to maintain the current balance and ~10% plan to shift budgets from digital to TV.
Digital is still expected to steal ad share from TV over timeUSB
TV is still the best way to reach millions of consumers quickly. But digital media wins on targeting.
