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Local News Advertising Has Little to Fear from OTT

April 25th, 2018   ||    by Callie Wheeler   ||    No Comments

If you were to judge the TV industry’s outlook by local news advertising rates, there would be little to fear from over the top (OTT) streaming. While many networks are in a race to combat OTT’s invasion of their traditional ad space, television news networks—national heavyweights as well as local stalwarts—aren’t feeling the same pressure to address the competition.

Cord-cutting and Ad Revenue

Over the last five years, the number of U.S. cord-cutters, determined by measuring the number of households using only OTT streaming services to access television, has tripled. At 14 million households, these cord-cutters make up 11 percent of television households, according to TechCrunch. And while 11 percent may not seem like too many lost viewers, the rapid rate of this demographic’s growth and its perceived impact on advertising revenue have made the television industry nervous.

Television’s share of ad spend is declining, dropping to 34.9 percent last year and expected to drop below 30 percent by 2021, as reported by Forbes. While elections and live events like the Olympics bolster television viewing numbers, and thus advertising revenue, television advertising is slowing overall.

Immune to the Change

Television news, however, appears to be the exception to the rule. Last year, advertisers increased spending on TV news programs 8.7 percent, to $4.07 billion, MediaPost reported. Adweek also shared that cable news ad revenue has been growing 25 percent year-over-year, with MSNBC seeing over 60 percent growth in ad revenue and CNN experiencing a 32 percent increase.

And advertisers are investing more for a reason—viewership is increasing across major news networks. The increase in viewership across networks, plus political ad spend during election years, are providing a unique opportunity for ad revenue growth around television news.

How Local News Factors In

This upward trend isn’t confined to the national level. Local news advertising is a powerful resource for brands and politicians, with over $4 billion in political advertising spend going to local markets as proof. Local networks provide viewers relevant, accessible, trusted news—news that’s more trusted than national news programs, and viewers respond by, well, watching.

So what does this mean for local broadcasters? It means they should plan on leveraging their local news programs and connecting advertisers to data about local audience trends—because investing in local news advertising means investing in a growing audience that’s consuming content they know and trust.

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