Global TV ad revenue is estimated to decline by 3.6% | Media Analysis | Business
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On the heels of revealing similar data for the UK, leading advertising firm GroupM has released survey data showing that major markets are dragging down traditional TV growth with SVOD set to have an increasing impact on business.
GroupM US FORECAST 9Dec2019
The This Year, Next Year worldwide media forecasts study showed that despite solid growth in the US and UK, 2019 will likely see a deceleration in advertising growth compared with 2018, 4.8% compared with 5.7% and 3.8% growth in 2020. The study found that much of the growth was being driven by digital-first brands. GroupM says that digital advertising is increasingly changing the way consumers behave and digest information, accounting for 52% of the global advertising tracked in the report and 60% of total advertising in markets including China, the UK, Sweden and Denmark.

Yet it is a mixed bag for the TV industry. While overall global television ad revenue is estimated to decline by 3.6% in 2019, the median global growth rate forecast for 2019 is 0.1% and should be 1.8% in 2020. This says GroupM illustrates that there are many countries where TV advertising is still growing, especially as consumption using internet-connected devices continues to grow. Indeed the latter is said to account for nearly 15% of TV-related activity and growing by about 30% year-on-year.

The survey added that despite the inclusion of digital extensions associated with TV in some markets, especially the US and UK, and what it calls ‘various’ other advancements, TV is unlikely to grow in the future on an underlying basis. It forecasts just under $170 billion in annual ad revenue each year through 2024.

Interestingly, the advertising firm says that new forms of TV or premium video advertising will likely lead to a shift in spending within the medium going forward.

Although it adds that television arguably remains most effective in helping marketers build their brands, the survey showed also that relative effectiveness of television has likely fallen, at least incrementally and that the share of budgets allocated toward TV have generally diminished incrementally with each passing year.
The study revealed that this shift occurred as some advertisers took some budgets out of TV and into digital, and other advertisers shrank in size and reduced media spending, including TV. In all GroupM calculates that television now commonly represents around 40% of a typical large brand’s media budget, or 27% on average across all advertisers for 2020.

The survey estimated that the median growth rate in 2019 was 0.1% and should be 1.8% in 2020, illustrating said GroupM that there are many countries where TV advertising was still growing. The median country should see growth of between 1–2% each year through 2024.

GroupM stressed that top of mind for many marketers using television as a key part of their media mix is the impact of new SVOD services, especially the US-based media giants. It added that in a mature market such as the US, the impact of the availability of streaming alternatives prior to the launch of Disney+ was clear. Furthermore, cord-cutting and cord-shaving were seen to be accelerating to record levels, with total pay-TV subscribers now falling annually by low single digits, and the median network losing mid-single-digit percentages of subscribers on a similar basis.

The GroupM survey concluded by saying that traditional TV viewing across all audiences and all forms was down only slightly, but said the company, this masked the growth of streaming-related activity. Concurrently, consumption of television using internet-connected devices accounts for nearly 15% of TV-related activity, and is growing by around 30% year-on-year.