“They want absolutely to secure that share of a shrinking supply” of television, Letang said. “They are ready [to spend more] because they don’t feel that they have a good enough substitute in the market. … You still need to build your campaign on national TV if you are launching a new product in one of those verticals.”
Local TV faces a similar erosion of supply, but it’s not seeing the same price inflation as linear TV because local businesses are shifting more money to mobile search and social. Excluding the 2016 election (local TV dominates political ad spend), local TV advertising would be down -1% this year to $20 billion.
But local cable TV shows promise in its targeting capabilities at the household level.
“Household addressability is attractive to political advertisers, but also auto and finance,” Letang said. “Within local TV, those capable of superior targeting will continue to grow.”
Despite TV’s resilience, Magna said digital will outpace the medium by 2020, when it is expected to reach 51% market share at $105 billion. TV ad spend growth is expected to slow to 1.5% next year.
Magna attributes digital growth in the first half of 2016 completely to mobile, which saw 45% growth as desktop declined -0.6%. Social media grew 43.7%, followed by digital video at 31.7%. Social video was the strongest growth category within all digital segments at 162.5%, and is forecast to continue growing 100.2% in 2017.
Overall, digital ad spend is expected to grow to $179 billion this year, the strongest growth rate since 2010.