Rick Ducey, managing director of ad data firm BIA Advisory Services, was advising a Justice Department audience Thursday (May 2) that while local broadcast and cable TV remain foundational media, ad growth is now concentrated in digital video and local broadcasters are competing with a bunch of hungry media mouths for a local ad pie being divvied up in ever-smaller portions.
Justice is holding a two-day forum (May 2-3) on the local ad market, stemming from broadcasters' arguments--during DOJ investigations into their ad practices--that their relevant competitive market should include online advertising platforms,as well as in TV station merger reviews DOJ was recently vetted or is still vetting.
Delrahim has pointed out that in its review of the eventually-abandoned Sinclair merger, DOJ had concluded that the relevant market was limited to broadcast spot advertising in a given DMA. Now it apparently wants to collect data on whether that will be the right call going forward.
The point about all that digital competition is one broadcasters have been making in arguing that the FCC should loosen ownership restrictions that don't apply to other competitors in that crowded space.
"Although they may have embraced digital advertising, we must understand if advertisers view advertising on digital media as a substitute to television advertising or as a useful complement," Delrahim said in the introduction to the forum Thursday. He suggested it would take more study to reach a conclusion, given that DOJ had found in its investigation of the broadcast ad market that "even if it means absorbing a price increase, some of the evidence we have seen suggests that advertisers are unlikely to look beyond broadcast spots within a given DMA."
To make the point about digital competition, Ducey came armed with a slide deck that showed, among other things, just how much local ad spending goes to others.
For example, according to the slide on total U.S, ad dollars targeting local audiences (see graphic, above), over the air TV with 11.8% of that 2019 $145.8 billion pie, compared to 14% for online/interactive, a pie that also includes direct mail, 25.4%; mobile, 12.3%, as well as cable, magazines, newspapers and more.
Digital, in which broadcasters are also a player, is expected to approach half of that local ad pie by 2023 BIA told Justice.
Antitrust chief Makan Delrahim has said that DOJ is contemplating whether to adjust its merger reviews given the argument that edge providers are growing competitors for bread-and-butter ad categories like local car dealers and thus should be considered part of the relevant competitive market for broadcast and local cable advertising. The forum was meant to inform that review and featured various presentations by academics, media and ad representatives.
A BIA survey released last month also highlighted the growing competition in that automotive category vital to local TV coffers. In 2015, BIA predicted that despite "traditional media's dominance," digital ads would get about a third of all local automotive ad spending in 2019. It has now upped that prediction to over 40%, and predicts it will be effectively half (49.3%) by 2023.
Back in January, Delrahim signaled that DOJ was interested in learning more about what factors it should consider when looking at the local TV ad marketplace and the impact of online advertising. He echoed that Thursday.
"While we are confident in how we have defined markets in our past cases, we recognize that industries change. In order to ensure that we continue to update our analysis of media markets, we need to take into account the latest industry trends, the latest technological evidence and the latest economics—reason enough to hold this workshop today and tomorrow," he said.