Direct-to-consumer (DTC) marketing budgets are starting to include larger-scale media, which is having a massive impact on national TV ad spend, according to Magna’s fall 2019 ad spend forecast, released Thursday.
Marketing spend in the DTC category increased 30% YoY in Q2 2019. And DTCs spent 50% more on national TV in particular.
“These new brands are starting to reach scale, and therefore starting to invest a lot of money in advertising,” said Michael Leszega, manager of marketing intelligence at Magna.
While many of the world’s largest DTC brands initially grew through digital, they now need to expand into mass media to continue growing. In Q2, the top 35 DTC ad spenders, including Wayfair, Peloton and HomeLight, spent half as much on national TV as technology giants Facebook, Amazon, Netflix and Google.
“Many of these brands are finally reaching scale in their production,” Leszega said. “Before they were trying to target their message to early adopters. Now they’re looking to broadcast their message to more consumers.” Magna expects the DTCs to continue spending in national TV.
Despite all the DTC dollars, TV ad revenues were flat at $22 billion as ratings continue their double-digit decline. Lower ratings, mean fewer shows, which means less supply. Yet, linear TV is the only way brands can get mass reach, which is why demand for the inventory is high, and TV prices are still increasing due to that scarcity.
Total network TV ad revenues were up 1.1% including digital ad sales. Hulu in particular grew 45% in the first half of the year.
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