TV Still King, But Young Audience Defections/Poor Measurement Limit Growth

NEW YORK & LONDON — GroupM today published Interaction 2017, a state of the union assessment of digital advertising worldwide. 

Independent creators should consider what this means. We have long asserted advertisers would attempt to make the internet more like TV, and here it is in black and white. They actually view online content as needing “enhancement” to achieve “greater quality like TV”. 

“This bifurcation among classes of advertisers is subject to change as television becomes more data-fueled and targeted (more like digital) and as video content on digital platforms continues to be enhanced with greater quality (more like TV).”

Why? Ad spend. The report offers in-depth insights underpinning digital advertising growth forecasts in 46 markets. Topics covered include ad fraud and marketplace integrity, fake news, privacy, ad blocking, artificial intelligence, augmented and virtual reality, video competition across platforms, live video, advanced television, streaming and on-demand audio, and much more. 

In the report, GroupM’s Global Chief Digital Officer, Rob Norman, and Adam Smith, Futures Director, also share views on media pricing, the consolidation of economic value in media among a small group of companies, and media consumption and ecommerce trends.

Global Interacction Metrics

As reported in its This Year, Next Year, worldwide media and marketing forecast, GroupM predicts:

  • Digital advertising will capture 77 cents of every new ad dollar in 2017
  • TV will capture 17 cents

Digital advertising continues to grow rapidly as marketers follow consumers to the media destinations where they spend their time, and increasingly transact for goods and services.

Digital investment has already surpassed TV in ten markets* and another five will cross this bar in 2017 (France, Germany, Ireland, Hong Kong and Taiwan), GroupM predicts.
GroupM’s data shows that for now, TV is still king with advertisers when global data is aggregated. TV’s share of advertising investment was largely stable at 42% in 2016; GroupM predicts a share decline to 41% in 2017. TV rode a five-year peak share at 44% from 2010-2014, with only minimal share shedding since then.

Still, linear TV demographics continued shifting in 2016, with the loss of the 16-24 year-old demographic remaining one of its biggest challenges. Though the global population of 16-24 year-olds only decreased 1% 2014-2016, the average “tonnage” of the 16-24 linear TV audience shrank 16%, with some markets reaching numbers closer to 30%. GroupM clarifies that some of this loss is exacerbated by TV’s other big challenge – the inadequate measurement of TV’s total audience across platforms. GroupM continues to advocate measurement improvements to better evaluate television across all devices in markets across the globe. The absence of close substitutes means that for now, those advertisers seeking this young adult TV audience can be willing to bear price inflation in proportion to its rising scarcity.

In the report, GroupM also examines the coalescing of economic value among six global companies who hold the lion’s share of digital ad spending, with Google and Facebook at the forefront. GroupM notes that these companies have very different business models than the owners of linear TV, and they also attract different advertisers.

Advertisers accounting for 90% of TV advertising revenue represent between 30% and 40% of the revenue earned by the digital giants. The other 70% of their revenue comes from a combination of small and local businesses, often ones that trade in digital products or services.

Full release available here.

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