A definite reason to grow local-direct to stay ahead of technology! Phiip Jay LeNoble, Ph.D.

COMMENTARY

Forecast: Local TV Ad Revenues Trend Downward In Future

• by Wayne Friedman , Staff Writer, December 6, 2019

Tired of that every other year up-and-down TV advertising revenue? The good news is much of this up-and-down stuff seems to be ending. The bad? It might just be in the negative direction.

Brian Wieser, global president of business intelligence, GroupM, wrote in his latest reading of the marketplace:

“National TV advertising will be closer to zero [in 2019], or even up very slightly, while local is down by low-single-digits. We expect this declining trend to persist, even with new forms of premium TV advertising regularly emerging.”

And now we dig deeper. For this year, Wieser expects total TV ad revenues to sink 7% to $65 billion. Taking out the every-other-year bump of political, there is still a 2% decline in total TV.

He says new SVOD (and AVOD) platforms will help replace some of the erosion of traditional TV’s reach and frequency, but “the core set of advertisers that have historically driven TV spending are likely to reduce the budgets they allocate to the medium.”

Perhaps all this is why it is increasingly harder to get traditional local TV advertising estimates. Financial data continues to be downplayed by local TV stations groups as they talk up retransmission and other digital revenues.

Still, we dug up this from BIA Advisory Services: Traditional local TV advertising will be $18.6 billion this year, going to $20.2 billion in 2020. But looking out four years from now little changes: $20.6 billion by 2024.

Increasingly, big TV station groups, such as Tegna, Sinclair Broadcast Group, Cox Media and Nexstar Media Group, are selling local/regional video inventory from thousands of OTT platforms.

No problem there. But a sizable chunk of their monetization in future years, will continue to be with traditional TV advertising spending on their own TV station airwaves. 

And we’ll continue to get those positive headlines in big political years. Political TV advertising will improve, in part due to rising local TV news content impressions from more news programming. BIA estimates that could total another record next year: $6.6 billion.

Back to traditional TV ad stuff, Wieser notes: “Many of the digital-first brands we’ve been discussing will also spend on traditional media, especially television. [While] defining a “digital brand” is highly subjective, those marketers are undoubtedly making up for most of the cuts in spending that other marketers appear to be making.”

Political advertising typically goes hand-in-hand with rising Olympics advertising in recent years. TV stations -- beyond digital-first marketers, beyond political advertisers -- will need to find a new category of TV marketers to count on in future years.

Cannabis, plant-based hamburgers, self-driving cars or really fast-food businesses, anyone?