Traditional TV ad value to collapse by 2023?

Jan. 17, 2019
Rethink Technology Research has forecast not one, but two, major price corrections in broadcast TV advertising coming over the next five ...

Rethink Technology Research has forecast not one, but two, major price corrections in broadcast TV advertising coming over the next five years.

Its Rethink TV division sees U.S. broadcast TV advertising taking the hit first, a full 20% softening in price, only cushioned by some improved uptake of addressable advertising. The fall is expected to occur over 2019 and 2020, caused by the rising tide of SVOD and vMVPD viewing, which sees broadcast ratings plummet even further.

A secondary hit is expected when major U.S. sports begin to go online, and in some cases, direct to consumer, reducing the interest in live broadcasts. European advertising markets are expected to mimic the behavior, followed by TV advertising markets around the world.

U.S. broadcasters have been making their advertising more and more expensive to satisfy their shareholders, but the rate of price increases cannot be sustained. At the same time, more U.S. homes are expected to cut the cord, resulting in fewer pay TV homes, and more and more advertising opportunities with long form digital virtual MVPDs and others.

Fewer viewings, watched less often, are expected to lead to a weak market and uncertainty, which in turn is expected to lead to sports rights shifting to online properties and in some cases "going it alone" in a direct-to-consumer strategy.

The research house expects the trends to snowball, leading to a further ratings collapse and more cord cutting, and a fragmenting of advertising opportunities, which plays to the advantage of YouTube and Facebook and undermines advertising value.

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