For the first time outside of a recession, linear TV ad spend has stopped growing, according to global ad revenue updates by MAGNA Global and ZenithOptimedia, both released Monday.
While national TV ad sales grew .3% to $42 billion in 2015, MAGNA predicted it will decrease by .3% in 2016. ZenithOptimedia’s Advertising Expenditures Forecast also found TV’s share of global ad spend will decrease from 38% in 2015 to 34.8% in 2018.
While “non-recurring events” like the US presidential and general elections and Summer Olympics (expected to bring $700 million in incremental ad spend) will cause incremental ad spend to pop, they won’t offset ratings declines.
“We believe that TV vendors, in the long term, won’t be able to obtain the CPM inflation rates they would need to offset double-digit declines in ratings,” said the MAGNA report.
MAGNA predicts digital will surpass TV as the No. 1 media category (accounting for 38% market share to TV’s 37% share) by 2017. Total global ad revenue is forecasted to increase 4.6% to $526 billion in 2016, driven mainly by growth in digital media.
In the US, that shift will happen more rapidly as linear TV ad sales slow, “caused by decreasing TV viewing that is no longer fully offset by CPM inflation, in most markets.”
“New generations increasingly rely on online VOD (sometimes ad-funded or sometimes premium, ad-free) for video entertainment, while advertisers are keen to embrace new digital formats like video and social,” said Vincent Letang, EVP and director of global forecasting for MAGNA.
GroupM, in its biannual global ad expenditure forecast, found that while TV traditionally comprised 44% of global ad investments, that reached its peak in 2012 and has shed about a point per year.
A shift in viewer attention and changing advertiser investments may therefore contribute to a decrease in both supply and demand for linear TV impressions.
While television is “the preeminent brand awareness channel,” said Zenith’s report, online video will grab a greater share of global display ad revenues as programmatic media continues to grow.
Programmatic advertising will account for 53% of display ad spend this year, but will increase to 60% of digital display by 2016. The growth in programmatic ad spend is fueled by automated technology and the rise of hybrid categories like “audiovisual advertising.”
Audiovisual advertising, according to Zenith, combines the reach of TV with the personalization of digital/mobile video ad targets; the agency estimates the audiovisual category will grow to account for 48.9% of display ad spend in 2018, up from about 44.1% in 2010.