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Why more competition from digital media hurts TV ad sales

Why more competition from digital media hurts TV ad sales (Part 1 of 6)

Why more competition from digital media hurts TV ad sales

TV faces intensifying competition for ad dollars from online video outlets

TV is seeing a sharp decline in viewership for many networks—particularly in the younger demographics. According to the Wall Street Journal citing Magna Global, among people aged 18 to 49, this season’s average prime-time audiences through March 30 were down 19% at CBS (CBS) and 6% at ABC but up 3% at Fox (FOX) and 22% at NBC, which is part of Comcast Corporation (CMCSA). The report also mentioned that TV is facing intensifying competition for ad dollars from online video outlets such as YouTube and Yahoo (YHOO).

Broadcast Network Audience GrowthEnlarge Graph

The economy and competition from digital media are two main factors for TV growth

According to Todd Gordon, executive vice president of Magna Global, “The swing factors for this year’s upfront are the economy and competition from digital outlets. The good news is that the core economic indicators are really improving. On the downside from the traditional TV space, there’s increased supply in the market because there is so much more interest in other sources of video.” The programming events that spurred TV ad spending during the last year were the Super Bowl and the Winter Olympics.

Internet revenues are growing much faster than TV revenues

According to a report by the Interactive Advertising Bureau, Internet ad revenues grew 17%, to $42.8 billion, in 2013 compared with 2012, while overall TV ad spending remained stagnant. While TV still draws more money than digital outlets, eMarketer recently projected that advertising on digital media will pass television by 2018.

AMC performed the best among cable channels

According to Nielsen, nearly all cable channels had their audiences shrink in the 12 months ending March 30, compared with the previous year. Among the cable channels, TNT’s audience was down 8.9%, USA was down 6.3%, FX was down 5.1%, and History Channel was down 13.7%. However, AMC (AMCX) and Bravo were exceptions. They experienced audience growth of 27% and 3.7%, respectively.

The Realist Discussions

  • dlagewaa

    The worrysome aspect of this article is that the numbers and observations pertain to the US market. US companies targeting US audiences. Resolution Media may be big in social media, but a large part of their clientbase are companies that cater to the US market only.

    Yes. In the US it’s all growth and success, but I have the distinct feeling that outside the US it’s a totally different ballgame. Judging from the Dutch Facebook pages of Resolution Media’s international clients I cannot find the slightest indication of growth and success.