TV Ad Spending to Hit 2% Rut

After growing 2.4% in 2016, TV spending held down by digital shift
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Tis the season for forecasters to come forward and tell us what they think the new year will bring when it comes to ad spending.

Late Thursday, Brian Wieser of Pivotal Research updated his ad revenue forecast. Wieser sees national TV advertising as growing by 2.4% in 2016 and 2.2% in 2017 (excluding the Olympics). Over the long-term, he says he’s reduced his expectations from more than 3% annually to closer to 2%.

Some of the reduction comes because marketing dollars appear to be moving away from TV to digital media.

“As digital-centric media owners pressed their case in recent years for marketers to increase digital spending, marketers collectively shifted incrementally higher shares of their budgets into digital media (although probably much less than many believe). This has caused some TV-centric media owners to reduce their own expectations, marginally diminishing investment and focus on related revenue streams,” Wieser said in his report. “We think local TV (ex-political) advertising will generally be flat in years ahead, compressed by the many of the same trends constraining other local media, if to a lesser degree,” he added.

For the overall ad market, Wieser believes 2015 was stronger than expected with ad spending up 2.8% compared to his prior estimate of 2.5%. For 2016, he expects another year of 2.8% growth, followed by 3.2% gains in 2017. The 2016 figure is down from Wieser’s early estimate of 2.9%, while 2017 is slightly higher than a 3.1% forecast made earlier.

“This tepid pace reflects factors including the limited creation of new mass market/big brand categories and a diminished role for local/regional marketers in the economy,” Wieser said. “Efforts to drive savings from marketing activities via the presence of procurement functions in larger organizations and an increasing reliance on marketer-side first-party data to more precisely target known customers (possibly at the expense of brand-building efforts in some instances) have an effect too. Further, brands concerned about ad avoidance will continue to look at branded content spending as a meaningful alternative, only some of which directly benefits media owners.”

Next week, at the UBS investor conference in New York, three major media agencies usually release forecasts.

Also CBS research chief David Poltrack provides his forecast for broadcast revenue and usually adds some insights into the efficiency of TV advertising.

(Photo via Ervins Strauhmanis's FlickrImage taken on Sept. 19, 2014 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)

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