By 2010 traditional television advertising will be one-third as effective as it was in 1990, according to a new report from McKinsey & Co.
The predicted loss of effectiveness is down to an assumed 15% decrease in buying power caused by cost per thousand rate increases.
Other factors which are identified in the McKinsey report are a 23% decline in ads viewed due to watchers switching off; a 9% loss of ad engagement caused by an increase in multitasking and a 37% saturation-induced reduction in message impact.
The report says that real ad spending on prime-time broadcast TV has increased over last decade by about 40%, while at the same time viewers have dropped almost 50%. Paying more for less translates into much higher cost per viewer reached, a trend also seen in radio and print.
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