TV remains the 10,000 pound gorilla in the advertising market

By James Robinson , written on March 3, 2014

From The News Desk

Following the cherished annual tradition of 40 million Americans gathering in their homes to watch a live TV broadcast of celebrities huddled into an auditorium to celebrate themselves, Nielsen and Simulmedia released a report this morning to remind us all that in the advertising market, TV remains the undisputed heavyweight king, a 10,000 pound Gorilla that we keep on forgetting to give heed to.

The new report is headlined by a series of figures that provide a healthy dose of context about how disruptive online video has been to date. Out of 313 million Americans, 283 million of them - equivalent to 90 percent - still watch television the old fashioned way at some point each month. In contrast, just under half of all Americans, 155 million, watch online video.

You get a better sense of how the market for traditional TV advertising dwarves everything else by considering not just the audience size but the time spent with either format. Nielsen and Simulmedia’s report says that the average American watches 146 hours of TV each month (ten times as much long as the average amount of time spent on Facebook) compared with just 12 hours of digital video, split evenly across mobile devices and desktop computers.

The size of the two ad markets held up side by side? TV advertising, $74 billion; online video advertising, $5 billion. It is not reflected on enough today, that more money is spent on TV advertising than any other medium put together. Last year, TV took in almost 58 cents of every dollar spent on advertising in total.

It’s a reality that could be better considered in current arguments about networks opening up access to programming for cord cutters. There’s no financial incentive for ABC, which hosted the Oscars and offered up streaming (with some difficulty) to people who already have a cable package, to enable people with no TV to watch the Oscars. These figures provide a sharp needle to the bubble of hype about how disruptive online viewing has been to the TV market. Netflix CEO Reed Hastings’ can talk about his company being the TV network of tomorrow, but it’s 2014, and where digital media kicked the legs out from under print media, online video hasn’t done the same. Online video is less a new medium than it is a new screen, it replicates rather than replaces the experience of watching TV.

And the TV market is predicted to grow still. Where magazine, cinema, print and radio advertising dropped off in 2013, spending on TV ads increased by four percent, according to Nielsen. Internet advertising spending jumped by 26 percent last year, but that growth will start to slow eventually. Growth in the digital video advertising market is expected to be somewhere approaching 40 percent his year, slowing to 12 percent in 2017, according to eMarketer. All the while, TV will bubble away as it always has in recent years, with consistent single digit growth.

By 2020, Nielsen and Simulmedia conclude in their report, the TV advertising market will be worth $83 billion and online video advertising $33 billion. A more integrated approach between the two channels will become more common, but online is not going to wipe out traditional TV watching anytime in the coming decades.

These new figures from Nielsen and Simulmedia serve as a reminder to younger generations and early adopters riding the front of the wave, that there’s huge swaths of people for whom the needle hasn’t moved at all. Digital video might turn the traditional TV advertising market on its head, but not for a long time. In a sense, what we’ve seen is a shift in habits, that is awaiting a change in generations. TV is king still. We don’t dwell on that enough.

[illustration by Brad Jonas for Pando]