Traditional TV advertising value ‘to collapse’ by 2023 | Media Analysis | Business
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Traditional commercial TV, to date has dominated living rooms but a study from analyst Rethink has forecast not one, but two major price corrections in broadcast TV advertising coming over the next five years.
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In its new report, The Year of TV living Dangerously - How and when traditional TV advertising value collapses, Rethink Technology modelled the likely effect of SVOD and original content emergence on pay-TV subscriptions, and on ratings which essentially drive broadcast advertising revenues.

Rethink believes that the US broadcast TV will take the first hit with a predicted 20% softening in price, only cushioned by some improved uptake of addressable advertising. This fall will occur over 2019 and 2020, caused by the rising tide of SVOD and vMVPD viewing, which sees broadcast ratings plummet even further. The secondary hit, said Rethink, will happen when major US sports begin to go online, and in some cases, direct to consumer, lowering the interest in live broadcasts. European advertising markets will mimic this behaviour, and slowly so will all TV advertising markets around the world.

At the heart of this fall, argued the analyst, was US broadcasters making their advertising more and more expensive to satisfy their shareholders. Yet it felt that this rate of price increases could not be sustained.

Rethink believes this strategy will come home to roost in a collapse in advertising value late in 2019 and early in 2020. At the same time, the market is likely to experience a double whammy in the face of more US homes cutting the cord, resulting in fewer pay-TV homes, and more and more advertising opportunities with long form digital virtual MVPDs and others. The result will be fewer viewings, watched less often leading to a weak market and uncertainty and this in turn will likely lead to sports rights shifting to online properties and in some cases “going it alone” in a direct-to-consumer strategy.

The net result warned Rethink in The Year of TV living Dangerously - How and when traditional TV advertising value collapses was a further rating collapse and more cord-cutting, and a fragmenting of advertising opportunities which plays to the advantage of the online duopoly – YouTube and Facebook and undermines advertising value.