As audiences erode on linear TV, supply is shrinking and pricing is going up on scarcity value.
Advertisers have already shifted a significant amount of money out of linear TV as audiences flock to digital. According to Zenith, digital will make up more than half of ad spend globally for the first time in 2021, when it hits $350 billion. In the United States, digital ad sales surpassed linear TV back in 2017, according to Magna.
But advertisers still rely heavily on linear TV as they struggle to recreate its reach and branding impact at the same efficiencies. Despite ratings declines, adults 18-49 years old still spend 66% of their video viewing time with linear TV, according to Nielsen. And price hikes are common in any industry when demand outpaces supply.
“You may not like the price, but for the audience you’re able to attract, it works,” said Catherine Sullivan, chief investment officer at Omnicom Media Group. “The pie is just changing, so the question is, how much should you be spending there?”
While ad buyers may be willing to put up with inflation for now, they’re already wondering how long pricing hikes are sustainable as audiences shrink – and whether TV is riding a bubble.
Upfront prices continued to rise by double digit percentages in 2019, and the scatter market is expected to rise at a significant premium as well, according to Standard Media Index. Yet, broadcast C3 ratings declined 11% this year, according to Nielsen. Just two-thirds of Americans still pay for a cable subscription, down 10% from 2016, according to PwC.
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