The next few years will bring minimal gains in local TV spending
April 7, 2015
One bright spot: The 2016 Summer Olympics will lift spot revenues but those gains will be offset by declines elsewhere.But one area that will see much slower growth is spot television.
Spot has only just rebounded from the depths of the recession, when spending plummeted as local and national businesses pulled back on their commitments.
ZenithOptimedia is predicting modest growth for the medium over the next three years. This year will be up 1.5 percent, next year will rise 3 percent, and in 2017 spending will be flat.
By comparison, total media economy spending is forecast to rise 3.7 percent this year, 4.1 percent next year, and 3.6 percent in 2017.
“In 2015, local television dollars will see a slight uptick, although at a less robust growth rate without political spending in the marketplace,” notes the report.
Even with the biannual gains from political and Olympics, spot suffered mightily during the recession, with $5 billion lost from 2007 to 2009. Last year was the first time since 2007 that spending topped $23.6 billion, hitting $24.4 billion.
By 2017, ZenithOptimedia predicts, it will grow to an all-time high of $25.5 billion.
The spot TV forecast
Political will be the key to most of the gains over the next three years, of course.ZenithOptimedia says the robust growth of political action committees, third parties that spend in support of candidates or ballot initiatives, could lead to some political dollars being spent in fourth quarter of this year, in anticipation of the 2016 elections.
That will give the end of 2015 a lift.
And analysts do expect record political spending on next year’s presidential election, with spot TV accounting for the biggest chunk.
Plus, Summer Olympics in 2016 will also bring in money to spot TV.
But those gains will be offset by more modest increases for the top spot TV spending categories, such as retail and automotive.
Both have started this year slowly, with retail suffering from a funk that began last year with sales down for many of the major department and discount stores.
They’ve been pulling back on advertising across a range of media in response to that slowdown, including spot.
Auto, meanwhile, has been experimenting more and more with local search and social media, which buyers say has cut into spot budgets for some dealers.
According to Dr. Philip Jay LeNoble CEO Executive Decision Systems, Inc. of Littleton Colorado, "The only real way to visualize revenue growth and increased net profitability in local television is to employ management to concentrate in enhancing the training, development and sustaining of long-term, local-direct contract dollars." "There are little or no other options," he adds.
U.S. TV Ad Expenditures
2010-2017
$ Millions at Current Prices
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2010
|
2011
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2012
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2013
|
2014
|
2015
|
2016
|
2017
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Spot TV
|
20,134
|
20,134
|
22,550
|
23,227
|
24,388
|
24,754
|
25,496
|
25,496
|
Total TV
|
56,525
|
58,029
|
62,547
|
64,348
|
67,004
|
66,865
|
68,153
|
68,393
|
Source: ZenithOptimedia
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