As more customers turn to digital options for their video entertainment, TV ad spending is flattening. In eMarketer’s latest report on US digital video, the market research company forecasts that US advertisers will spend $70.30 billion on TV this year, a decrease of 2.9 per cent from 2018.
eMarketer forecasts that total ad spending at the TV Upfronts increased by 2.4 per cent to $21.25 billion in 2019. Upfront spending remains strong in part because TV companies have been consistently raising their prices on inventory sold at the seasonal events. Upfront CPMs this year are up 10 per cent to 15 per cent compared with last year, according to Variety. We expect this trend to continue, as sought-after inventory becomes scarcer due to viewership declines among younger demographics.
TV companies are selling more inventory at the Upfronts that was previously saved for the scatter market (inventory that is not sold during the Upfronts). Unlike the Upfronts, where inventory is sold well in advance of when programmes air, scatter inventory is sold closer to a programme’s air date. The prices of Upfront and scatter inventory often vary depending on demand. Since TV networks secured a lot of upfront commitments this year, eMarketer expects a tighter scatter market.
TV networks are also making inroads in automating their ad selling. eMarketer forecasts that $2.77 billion of US TV ads will be transacted programmatically this year, up 58.4 per cent over 2018. But programmatic TV transactions will likely be conducted with limited available inventory in a highly curated fashion for the foreseeable future. (eMarketer defines programmatic TV as the use of software to automate the buying or selling of TV advertising distributed through cable, satellite or broadcast networks.)
eMarketer also expects TV networks to start selling more addressable ads, which are targeted ads delivered on a home-by-home basis via set-top boxes. These ads include both linear and VoD delivered in this way, but exclude connected TV, smart TV and OTT ads.