Posted by The TV industry is about to go through some very dramatic changes. Yes, people have been saying that the Internet, Social Media and other new media channels would spell their doom, but few probably imagined that the current economy would really push that agenda forward.
"Revenue in the television industry will take a dramatic fall below the $20 billion mark starting this year, according to BIA Advisory Services. After six years with industry revenue hovering between $20 billion and $22 billion, 2009 is expected to end at an even $17 billion in revenues, a 21.2% drop in two years from 2007’s $21.5 billion, BIA says."
That was the news yesterday over at MediaBuyerPlanner in the item, TV Revs to Decline 21% in Two Years; ‘Transformation’ TV’s Only Hope: BIA. According to the BIA report, Investing In Television Market Report 2009, there will be a slight increase in revenue in 2010 (+0.6%), but 2011 might experience a slip back into the negatives again. That same report is expecting to see a return back to positive revenue streams in 2012. What’s even more interesting is the expectation of a 1.1 billion dollar increase in ad revenue that will come from mobile video programming – yep, content on your mobile device.
What is going to save the 30-second spot?
“Since 2003 TV revenues have held steady but are now beginning a dramatic downward shift. This corroborates our calls for transformation as the only path to expansion for the industry. This will come from cross-platform growth and real energies put into finding local advertising revenues available through mobile and online advertising,�? said Mark R. Fratrik, Ph.D., Vice President, BIA Advisory Services.
This is going to be a huge challenge.
If the recession really does drop the television industries revenue below 21%, the channels’ abilities to truly innovate and "transform" are going to be dramatically inhibited by other more immediate needs (like replacing the billions lost in advertising while trying to maintain the integrity of their traditional media channel). It is something that the newspaper industry is grappling with in the public eye at this moment.
What is your advice to the TV industry?
Never another podcast episode or article 
We need to go back to the model from the 50’s. Lux Soap presents…Need to get rid of all those prod placement regulations in programming. I want to produce kids animated series with a cartoon character drinking a Coke Zero. I am serious.
It’s a very good point that people’s time are spent more in front of their BlackBerries, MacBooks and PC’s as a form of entertainment.
PVR’s aren’t helping the issue at all either, as many seen to jump over watching the ads. HD production costs are also increasing, and as ad revenues decrease, that spells a lot of trouble.
Having said that, as the economy slows, there are more people in the U.S. that are spending time in front of the TV or in movie theatres.
So, one would think that the target audience for advertisers will be greater and that the opportunity to sell to them is increasing.
Hey Mitch,
I know the TV Gods don’t want to hear this but their revenue won’t ever increase.
The goods times are vanishing. I don’t mean that TV corporations won’t make money, just TV ad revenue growth will keep on decreasing.
Microsoft put out a report saying that Internet will overtake TV in terms of amount of time people are spending on these mediums. But Mitch, both of us know that here in Canada reports already show that individuals are spending more time in front of their computer.
In addition, there is a huge disproportion in terms of ad spending. Only 10% of advertising budgets are allocated towards online advertising even though users are spending the same if not more time on this medium.
Does anybody really think that people will turn back on the internet and the growth of mobile browsing on such devices as the iPhone and Blackberry?
The only reason online advertising hasn’t overtaken TV spending is that organizational leaders are stuck in their old traditional ways, pushing one way methods. Not to say they don’t work, but the industry overall has to go through this shift. TV to Online, is like Radio to TV all over again.
Thanks for letting me rant,
Alex “Change” Ikonn
Advertises are finding it difficult to place ads on TV because they are not sure about the presence of audiences.
It will take a few good campaigns conducted online to get more spend in this sector. The problem in online advertisement is similar, you don’t know where the audience is going to be wandering, so even if they are spending more time in front of computers, reaching out to them is problematic.
I think the answer lies in becoming more pull than push oriented engaging multiple channels TV and Web to increase viewer involvement and make commercials/brand stories more relevant.
It also requires advertisers to revisit their creative execution – if there is something compelling to watch, people will not FF through the commercial.
There needs to be a rethink as to where different types of Communication and Offers are better suited.
here is a post I had on the subject earlier this year
http://www.canadianmarketingblog.com/archives/2009/01/tv_commercials_20.html
I’m all for branded content, and product names in show titles… I mean who doesn’t know that the major sponsor for Lawrence Welk was Geritol?
So let’s take the model from the dawn of TV advertising and in a move that is ‘deja vu all over again’ fit it into online video.
When we tried to put 15 second, then 7, then 5 second pre-roll spots in front of our online content, people bailed from watching. We removed the pre-roll and they watched more, even hit replay. In a survey 90% knew that they were being advertised to with our content, and didn’t care because they were entertained, and received info that they though was relevant and important to them.
Perhaps this would work again in broadcast? It would take a total shift in thinking…
Product placement is the way to go to give advertisers more value so they will spend more. Like Lee said, go back to the ’50s model, but adapt it to the 21st century and interactivity.
I.e. make the product placement relevant, don’t make people drink Coke just to show the can, but have them drink it at the right time when it’s relevent to the storyline and makes sense to the audience.
– this I know is a lot less measurable, but may I ask when was TV ever really measurable? It’s not because you have ratings that you have any idea who’s watching and or reacting to the ads…
As well, as TV needs to embrace the web and interactivity in all forms, whether they send trafic to their website (ie drive more revenue that way) instead of the audience going elsewhere, or by asking the audience to respond in real time by mobile / app / widget or whatever to news, opinions, music clip…
I have some surprising news from the trenches of the TV ad sales world: We are hitting / overachieving our sales budgets in a number of areas.
And like in any business, new technology (in our case PVR, VOD, etc) presents challenges that demand hardcore innovation on the part of the ad community.
If I had to call how things will play out:
1. Broadcasters will get fee-for-carriage from cable co’s within the year. That doesnt help ad revenue but it does provide much needed cash to support production of local news / content (which rarely makes money)
2. Over the next few years, advertisers will flock to online video. Video pre rolls in my opinion are the BEST way to maximize ROI with video creative. Agencies like MindShare are developing metrics (like the iGRP) that will allow TV buyers to understand how to measure reach of TV online.
3. Within the next 10 years, advertising on broadcast television will become more dynamic (instead of a static 4 x 30-second ad cluster), allowing advertisers to target viewers based on behavior and not just program. This is similar to cookies online. So depending on WHO you are and WHAT you watch, a TV commercial will be “trafficked” directly to you.
The projected decline in revenues for the TV industry makes me wonder how the quality of the shows themselves will ultimately suffer.
Lower quality would lead to even less viewership, which would lead to even less advertising revenues. Addictive and fanatic-spawning shows like LOST with huge production budgets could be LOST forever.
Targeted messaging, sponsored content, and product placement (when it seemlessly suits the content of course) is great imho.
I catch up on LOST online on CTV, and have no problem with McDonald’s and Blackberry sponsoring the content if their advertising dollars help me get what I want.
First of all, a number of the comments above mine point to multi-pronged approaches to advertising (TV+radio+web+print), which is a fine idea for the advertiser, but provides little, if any solution for the TV industry, since its not actually doing anything to help them, adjust to the new market, unless they are going to expand out of what they are great at, TV, and start handling the multi-pronged advertising campaigns themselves and dive into other mediums.
Second, while I’m a big proponent of product placement that isn’t so horrid as to ruin the content, it only helps the TV industry in the INITIAL showing of the content. For daily shows, that’s fine, but w/out the ability to change the placed product and w/out the 30 second spot, where does this leave reruns? I can’t imagine an advertiser agreeing to a contract that required them to pay out EVERY time a show w/ their product was in it aired, regardless of network or time. Product placement just doesn’t monetize the rerun.
Another possibility might be to go with the whole “DVD ON TV” model, with a couple of hosts presenting a “classic” episode of something, tossing in some trivia and hopefully witty banter, and the whole shebang sponsored by XXX. Even that wouldn’t work across the board, tho, for all reruns.
I don’t have the answer. I just don’t see the classic moves working across the board. There needs to be some more innovative thinking at work here.
Personally, I watch a LOT of content on HULU. My TV is almost dead to me. And I don’t have any real issue w/ the ads. If I was presented w/ options on that site as to whether I’d rather pay for content directly or accept commercials, I’d gladly accept the commercials.
But that’s just me.