In the past few days, two analyses powerfully capture dramatic changes taking place in the world of video media. Over the weekend, Business Insider published a long piece heralding the “Death of TV,” replete with more than a dozen charts that only a statistician’s mom could love. While news of television’s death may be slightly exaggerated, the article certainly paints a picture of a medium in transformation. Ample documentation for the steady erosion of audiences for traditional TV models over the past decade is the key theme of the piece.
The B.I. piece glosses over a few important points. On the one hand, yes, “cord-cutting” does appear to be a legitimate phenomenon: even the National Cable & Telecommunications Association’s own data, not cited in the article, shows that “peak cable” was in 1999, when 67 million homes subscribed to cable video, which has shrunk by more than 10 million homes since. Meanwhile, Nielsen shows that the number of people who watch videos online (150 million) is just more than half as many as those watching traditional TV (283 million); and more importantly, in terms of time spent, TV still rules by a long shot, with 147 hours per person monthly compared to 6.5 hours for online video.
Also, the B.I. article barely touches the advertising side of the story, which shows that despite the change in how audiences access the content, TV ad spending in aggregate (across spot TV, syndicated, network and cable) has continued to grow to $82 billion in 2012 from $67 billion in 2005. The balance of ad spending in “traditional TV” models has also shifted in that same period, with cable becoming the dominant TV ad sector, accounting for 40% share of those billions, despite its simultaneous audience decline.
Internet advertising, meanwhile, was up to $36.6 billion by 2012, according to the IAB. That is less than half of all of TV advertising, and most of digital advertising is paid search; digital video ads accounted for just $2.3 billion of that total. But digital advertising’s double-digit growth rate for most of the last 20 years is the envy of the advertising world.
So, while B.I.’s story may be somewhat alarmist (considering also that many of those internet video ad dollars are flowing back into the pockets of TV producers, whose programming is a staple of streaming video content), the basic message is correct: traditional channels for TV are eroding, as audiences consume more video online and on mobile.
The other article of note is yesterday’s Ad Age piece describing the online video ad industry’s rapid movement to programmatic buying and selling. It quotes Forrester Research as projecting that $1.1 billion of digital video ad dollars will be traded through exchanges and other automated means next year, nearly a quarter of the $4.6 billion the analyst group projects advertisers will spend on online video ads overall in 2014.
Much more can be said about this video programmatic ad market — and will be said here on this blog in the weeks and months to come — but we’ll leave you with just that introduction to the topic today. Disruption on top of disruption, that’s what video advertising promises for the future. It will be anything but boring.