TV ad spending is down -- but not for the reason you think

  • Advertising budgets are bleeding out of television, but that’s not necessarily because of a shift to digital media, Pivotal Research reports.
  • Rather, the traditional marketing giants that have largely fuelled the TV ad market for decades are cutting spending in general.
  • Declining ratings mean TV is starting to suffer from a growing “negative sentiment” among marketers that don’t want to look as if they are throwing away money.

Spending on TV advertising dropped considerably during the third quarter of 2017.

That alone probably won’t surprise you if you’ve been reading about cord cutting and DVR-ing and how people are generally unable to look up from their phones.

But the latest drop in TV ad spending is not due to broader technology-driven shifts in media consumption or marketers moving their ad budgets to the web. It’s simpler than that, according to a new report published by Brian Wieser, a senior analyst at Pivotal Research.

Big marketers – the kind that have pumped money into TV advertising for decades – are hurting.

Like who? Think retailers, which are getting disrupted by Amazon, or giant breweries, which have been hit by craft-beer drinkers, and soda and snack giants, which face healthier eating trends. Etc., Etc.

Specifically, Pivotal’s report found:

  • National TV ad spending was down 2% during the quarter, while local TV ad spending slipped by 6%.
  • Overall TV ad spending declined 4% year-over-year, causing TV’s share of total ad spending to drop to 29% from 31%.
  • The large brands who dominate TV are generally weak at the present time, generally constraining total budget increases to low single digits or otherwise reducing them, and with few increasing spending on digital by more than single digits.”

Yes, digital media is pulling some money from TV, Wieser said.

On the flip side, digital sure isn’t helping its cause with a string of mishaps such as YouTube’s latest embarrassing scandal, in which big advertisers pulled spending over fear of running ads next to videos popular with pedophiles.

Regardless, the researcher argues that digital advertising is still largely the domain of e-commerce companies and small to midsize marketers and is not responsible for a drain on TV ad spending.

The bigger trend is that TV’s core advertisers are just not spending as much overall. And that trend isn’t changing anytime soon. It is more bad news for TV, which itself could beget more bad news.

“Negative sentiment ultimately leads to advertisers’ efforts to explore and encourage the use of alternative media vehicles, or otherwise establish marketing goals that are not necessarily awareness-driven,” Wieser wrote in the research.

In other words, the more news emerges about declining TV ratings, the more that big marketers feel as if it doesn’t look very smart to keep spending money on TV ads.

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