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TV Ad Spending Up: How Will Broadcast Sustain the Numbers?

May 25th, 2016   ||    by Duane Craig   ||    No Comments

Total TV ad spending inched up a percent in January, according to Standard Media Index (SMI), with broadcast TV climbing 9 percent year-over-year (YoY). The scatter market’s stellar run that started in October posted a 16 percent gain YoY as ratings declines triggered “make goods,” and drove up the costs of available inventory. Scatter’s growth continued in February with an 11 percent YoY increase, but softened for broadcast, posting a 2 percent drop, according to SMI. Here’s the history behind the recent TV ad spending numbers, and how programmatic can figure into boosting broadcasting’s ad fortunes.

Scatter Comes on Strong

As Adweek reported, one reason broadcast TV ad spending has trended upward is because of the extraordinary scatter market which made a strong first showing in October 2015. At that time, scatter was up by 19 percent over the previous year. CBS’ Les Moonves, speaking in December at the UBS Global Media and Communications Conference, said that while the third quarter scatter was really strong, the fourth quarter scatter was even better. In the same report, Fox said it was seeing a 60 percent increase in scatter spending. Toby Byrne, Fox president, called the scatter market “broadly based” and not dependent on any one category. The new year was even kinder to the scatter market with overall scatter revenue up 74 percent in January, according to Broadcasting & Cable, followed by its 11-percent-February gain.

Football Does Its Usual Thing

Football was also credited for boosting television ad spending into the new year. SMI reported all parts of the TV sector growing at double digits and pointed to the start of the football season as providing lift beyond the scatter market. Sunday Night Football and Thursday Night Football were two of the top three most expensive 30-second commercials in October 2015, according to Ad Age. Thirty-second spots went for $603,000 and $464,625, respectively.

Upfront Pulls Page From Scatter’s Playbook

Higher upfront pricing was a third factor bolstering TV ad spending at the start of the 2015–2016 season, and according to Variety, the trend in upfront continues. Sharp increases in the scatter prices are putting upward pressure on the upfront market. Advertisers are looking at advance ad buys to cushion themselves from rising ad costs. One TV ad buyer quoted by Variety predicted that TV networks would go for a 5 percent to 9 percent increase in TV ad prices for the 2016–2017 season. This is because TV still dominates when ad buyers want “broad reach, sight-sound-and-motion and brand awareness.” Brian Wieser, senior research analyst with Pivotal Research Group, was similarly quoted in AdAge saying the expectation for national TV’s upfront ads was high single-digit pricing and low single-digit volume growth.

With TV ad spending growing primarily through rising ad prices, and broadcasting showing some slippage, there are plenty of potential headwinds from the larger economy and from the ways TV marketers engage with the marketplace. To offset, broadcast might use creative digital and multiple-screen packaging for reserved, preferred, and private exchange deals to boost volume into the 2016–2017 season. With the included programmatic benefits of updated, verified and tracked metrics, the predictions of programmatic adoption gaining momentum in 2016 could come true.

If you’re ready to find out how programmatic can help you boost ad revenue, contact Videa.

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