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End of an Era for TV Advertising? A Procurement View

Oct 16, 2017

As you make your way through the blog, you would have already got past many advertising on your desktop or mobile device right from website ads, Google paid search to promotional e-mails. You may struggle to remember the last time you saw a TV commercial or turned the TV on for that matter. If TV advertising is dead then why are TV advertising rates still high with brands willing to pay millions of dollars just to get their spot there? Although the market share of traditional media like radio and newspaper is dwindling, TV advertising is still unshaken, which can be justified by its steady growth rate with a CAGR of over 4% (SpendEdge Report: Global TV Advertising Market – Procurement Market Intelligence Report 2017-2021).

Request Free SampleGrowth Constraints of TV Advertising Market
Brands on an average spend 8-10% of their marketing budget for the TV medium. The high cost of purchasing TV advertisement is driving the brand managers to evaluate alternate advertising channels. Additionally, it is difficult to determine the ROI of TV ad campaigns making the companies skeptical about massive investments in this medium. The emergence of the alternate channel along with growing use of mobile devices could hinder the growth of this market.

Shift from TV to Online Platform?
It has been observed that brands are reallocating their TV advertising budgets to online platforms by analyzing the recent trends. As per the report, the global digital advertisement spend had surpassed global TV advertisement spend in 2016. However, TV advertising agencies can benefit from this trend as broadcasting agencies will lower the TV advertising costs to attract brands and sustain in the market. Additionally, the shift towards digital medium is moderate in APAC and MEA regions due to lack of penetration from online platforms.

Is the TV Advertising Market Growing?
The growth prospect for TV medium may look bleak, but certain factors are driving the growth of this market. The most important one being increasing penetration of DTH across emerging markets. DTH allows for increased transparency and broadcasts content based on personalization and customer recommendation to ensure targeted reach. The most exciting growth prospects come from online businesses who are opting for TV medium to reach the masses and thus contributing around US$860-US$865 on TV mediums in the US.

Read more about the procurement view of the TV advertising market along with supply market landscape, pricing strategies, pricing trends, negotiation strategies, cost modeling, and procurement insights in SpendEdge’s upcoming report on the global TV advertising market.

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