Ovum states from Gamekeeper to Poacher: TV Advertising’s Digital Opportunity
London, 10 August 2015 – Despite concerns over the longer term viability of TV advertising, Ovum’s latest forecast* shows that, on a global basis, revenue growth is expected to continue through to 2020. The US$174 billion generated by TV advertising in 2014 is expected to increase to US$224 billion in 2020, testifying to the medium’s enduring strength at a time when it is being challenged on multiple fronts.
Looking on a region-by-region basis, the Middle East & Africa will be the standout performer, growing at a CAGR of 10.4% to reach TV advertising revenues of US$11 billion by 2020. Latin America is also making impressive progress and a CAGR of 8.4% will see it generate revenues of US$26 billion in 2020. Elsewhere the gain rates also remain steady: North America – US$80 billion revenues by 2020 at a CAGR of 2.4%; Western Europe (US$34 billion, CAGR 2.7%); Asia Pacific (US$66 billion, CAGR 5.8%); Eastern Europe (US$8 billion, 2.7%).
According to Adam Thomas, Ovum’s Lead Analyst for Global TV Markets, “While digital advertising is providing strong competition to TV, the established TV players are innovating and countering threats that would otherwise have led to a much greater level of revenue cannibalisation. However the digital threat is significant and persistent: its impact is being keenly felt in the more mature digital advertising markets such as the USA.”
Figure: Global, TV advertising revenues, 2006-2020
Source: Ovum
But there is still much to play for: Ovum believes that the next five years are crucial in determining the future of the broadcast TV advertising value chain. Digital media has successfully cannibalised spending from print media and classifieds and also invented new categories in ad-supported search, streaming, gaming and music. But TV distributors and channels have also worked hard on making incursions into the online environment. TV content is widely available on a range of connectable devices such as PCs, tablets, games consoles and, of course, mobile handsets. Broadcasters and pay TV operators are continuing to evolve by launching streaming services which focus on the linear TV experience, augmenting the extensive on-demand offerings already available. Their existing relationships with brand advertisers are also helping them build online TV advertising propositions.
Ed Barton, Ovum’s Head of TV Practice, notes: “The reach and impact offered by primetime TV remains unmatched by other media. However the opportunities open to commercial broadcasters and TV service providers are extensive and have to be capitalised upon soon. TV and digital strategies and technologies are increasingly merging: this is one of the defining trends of the current era of advertising. The companies which will control their destinies in 2020 will be those which leverage their relationships with the audience to provide the data and targeting which will transform TV advertising from a blunt knife to a laser guided scalpel. Brands want integrated campaigns which can identify and target audiences across all media but with the accountability of digital. TV is currently the missing piece of the jigsaw: the companies which successfully address this need will be strongly positioned to lead global TV and digital advertising markets for decades.”
Ovum anticipates that TV’s reputation as the go-to medium for delivering mass audience awareness will continue throughout the forecast period, despite the determination of digital media to cannibalize TV advertising budgets.
“Long-established TV distributors and broadcasters are asserting their existing dominance in the value chain by leveraging online distribution for their own ends. TV is still seen as unique in its ability to deliver the reach and size of audience that global brand advertisers need. By adding a strong online presence they are now combining the reach of traditional linear TV with the targeting, addressability and accountability of digital advertising,” concludes Thomas.