Buyers Say TV Dollars Moving to Digital

Survey by Cowen finds shift accelerating
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Despite what appears to be a hot scatter market for television commercials, media buyers say that the shift of advertising dollars from TV to digital is accelerating, according to a new Wall Street research report.

Cowen & Co. surveyed about 50 ad buyers and says 90% of them said the shift to digital is accelerating. From 2005 to 2017, the brokerage expects TV to lose 5 share points of ad spending to 38.8%, while digital gains 6 percentage points to 41.9%. Cowen expects digital spending to surpass TV spending this year.

“If we assume that U.S. economic performance in 2016-17 remains roughly in-line with its recent trajectory, then we estimate that annual national advertising growth should be in the 5% to 5.5% annual rating over that period. Putting these two figures together then suggests that national TV growth will be flat to slightly down,” said Doug Creutz, media analyst at Cowen in the report.

Creutz acknowledges that the TV market “feels good” right now and that trends are better than in the first half of 2015. “However, given the survey results and the overall dynamics of digital media’s ability to reach many consumers in an efficient manner, we suspect that the TV ad market is currently seeing a ‘strong patch’ rather than a real, lasting improvement,” he said.

Looking at TV’s declining ratings, most buyers think they reflect a real drop in viewership, rather than a result of measurement issues.

At the same time, 67% of the buyers said that when TV shows are delivered on the Internet, they consider them as part of the digital category. Just 33% of the buyers called TV shows delivered over the internet TV.

Nearly half of the media buyers said that the efficiency of digital increases ad spending, while 6% said that digital’s efficiency would result in deflation.

Overall, the ad buyers indicated that they expect media spending to rise about 2% in 2016. Cowen raised its digital advertising forecast for 2015-2000 on strength in social and digital video advertising.

The broker says it remains positive on Facebook and Google.

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