With the digital viewing market is going the way it is, some companies are questioning whether there’s still value in advertising on television. However, a report from the Standard Media Index indicates that there’s still profitability, even if the picture isn’t quite so clear.
SMI’s report (via The Wall Street Journal) indicates that TV advertising managed to grow 33 percent from the previous year, based on data from 80 percent of all U.S. ad agency spending. In addition, broadcast advertising spending has also increased by 44 percent in the “scatter” market, which is where advertising is sold closer to an air date instead of during the usual “upfront” time frame, when new shows make their premieres. It’s like buying into mid-season, instead of at the start. Cable also showed an increase in this market, 24 percent over the previous year.
It all comes down to supply and demand in the market, as shorter ratings for programs lead to networks having to make up airtime for certain advertisers. As a result, the window for new advertisers shrinks a bit, with the shorter supply resulting in improved pricing for the networks. This has led to a boost in arrangements for the mid-season, with “scatter” pricing set to pick back up as soon as January.
“There’s no doubt prices have increased in scatter, but the underlying reasons for that aren’t necessarily strengths that the networks would like everyone to believe,” said Dave Campanelli, Horizon Media’s director of national TV.
The “scatter” market also saw a pick-up over the holiday season, as more companies opted to release ads in the hopes of bringing in more consumers during the Black Friday/holiday season.
Even with these numbers, the television advertising picture is still a bit murky. Magna Global, part of Interpublic Group, reported that national television ad sales saw a very minor growth this year, only by 0.3 percent, although it still came in at $42 billion. However, a slight drop-off is expected next year, with “non-recurring events” (like the forthcoming Summer Olympics) excluded.
Jason Kanefsky, executive vice president and director of strategic investments for Havas Media, pointed out that big spending from a number of companies, mainly within pharmaceuticals, along with tighter ad inventory, have helped create a stronger “scatter” market overall. This is causing some networks to bring into question certain aspects of digital advertising, which has attracted a fair share of companies along the way. Toby Byrne, president of ad sales for Fox Network Group, stated that those investing in Web ads are “not exactly getting what they’re paying for, and what they’re getting may not be as effective or engaging.”
Even with networks and cable channels admitting that the “scatter” market is doing well in terms of advertising, there is still cause for concern regarding the popularity of the digital entertainment, mainly with streaming services like Netflix and Amazon Instant Video. Digital ad spending could be in for a monumental shift, with the medium eclipsing television for the first time. Magna Global sees this as the reason more companies are hopping on board digital advertising instead of routine television ads.