Report: Online display spending overtakes TV

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US advertisers are spending more on online display formats than television for the first time this year, according to analysis by WARC Data.

Television in the US shows that TV was still the largest display advertising medium in 2018, at $64.8 billion (the third-highest level ever recorded); it accounted for just under a third (31 per cent) of all advertising spend, although this was down from 2012’s peak share of 41 per cent.

But a 6.6 per cent fall in US television advertising spend is anticipated this year, to $60.5 billion (a 27.6 per cent share of all spend) – the lowest level in nearly a decade.

And as brands chase next-generation viewers who are primarily consuming digital media on multiple devices, online display formats – including social media, online video, content and banner advertising – are collectively set to be worth more than TV for the first time, but only marginally: the difference is a mere $7 million in the context of a $60.5 billion investment.

“Americans are spending less time watching traditional TV and ad investment has now reached a tipping point”, noted Robert Clapp, Data Analyst at WARC and author of the research.

“Legacy players are only just responding, with Disney+ launching to technical issues on Tuesday and NBC’s Peacock and HBO Max expected in April and May next year. As most viewers only want to pay for two or three services, competition will be fierce in a space where Netflix already holds a commanding lead.”

The viewing habits of younger viewers are shifting rapidly online, even as traditional TV continues to account for the majority of video consumption among all adults. Cable TV accounted for just one-tenth (12 per cent) of all video consumption among teenagers in fall 2019, down from 20 per cent in the spring of 2018; YouTube and Netflix together account for nearly three-quarters (72 per cent).

Marketers looking to move their television spend online, however, cannot expect the same kind of reach and engagement in the options that are open to them – and the most popular services, like Netflix and the newly launched Disney+, are subscription services that carry no ads.

And that is a significant draw: among US Netflix users, for example, two-fifths said they would stop watching if ads were introduced even if membership fees fell.

Meanwhile, the three largest product categories – media & publishing, retail and automotive – have all cut spend on television advertising since 2016; only five of 19 product categories tracked by a new collaboration between WARC and Nielsen spent more on TV this year than they did in 2016.

While TV advertising will return to growth in 2020, rising 4 per cent to $62.9 billion as it’s boosted in part by the summer Olympics and political campaign spending ahead of the November election, WARC Data predicts that online’s lead is set to widen further.

Online display formats are expected to increase in value by 15.7 per cent, to $70 billion in 2020 – meaning TV’s overall share will dip to just over a quarter (26.4 per cent) next year, with online display’s rising to 29.4 per cent.


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