Revenue from traditional television spot ads will account for just 25% of TV advertising by 2019, according to new research from Generator Research.
The result will be a market worth $13.1 billion in the US, down from $57.8 billion in 2008, the research firm said
Andrew Sheehy, head of research at Generator, said: “This could be the beginning of a slippery slope for the television broadcasters who are about to experience what it means to lose control of a distribution monopoly, just like the music industry.
“The biggest losers will be the terrestrial networks who have no way of delivering their own ads over the internet to television sets. This problem is solvable, but it will take a big effort.”
Generator believes that the future for ad-funded commercial broadcast television lies in delivering three types of targeted advertisements over the internet:
- The first type would be delivered to internet-enabled TV sets or set-top boxes and could account for 30% of all television advertising by 2019, representing $1.8 billion in the UK and $17.6 billion in the US.
- The second type would be where targeted ads are served to PCs or portable devices that can be used to view television content. According to Generator’s projections, this second type of advertising could account for 24% of all television ad revenue by 2019.
- The third and most intriguing type of targeted television advertising would be where a television broadcaster delivers scheduled programming using their existing broadcast infrastructure but where targeted commercials are delivered over the internet to broadband-enabled TV sets. This market could account for about 21% of all television advertising revenue by 2019, or $12.1 billion in the US.
Last October, UBS media analyst Michael Morris forecast that US TV ad spending would drop 8% to $44 billion from 2008. Local TV stations, in particular, were predicted to take the brunt of the drop – down 12% to $26 billion (see US Adspend To Reach $172bn In 2009).
In the UK, Screen Digest recently forecast that TV advertising would decline 7.7% in 2009. Amplified by audience fragmentation, analogue terrestrial TV will be hit hardest and both ITV1 and Channel 4 are forecast to be down 10% in 2009 (see UK ad revenue to drop 8% in 2009).
