Last year, TV ad spending in the U.S. saw a first-time drop since 2009. With the double-digit growth of digital video, TV ad spend will continue to decline this year with TV’s share of total U.S. media ad spending dropping from 33.9% in 2017 to 31.6%.
With the swift acceleration of cord-cutting and the upsurge of over-the-top (OTT) viewing, spending on TV ads will slip 0.5% in 2018 to $69.8 billion, according to eMarketer’s latest U.S. advertising forecast. TV ad spend is expected to see a slight uptick in 2020 due to the U.S. presidential election and Summer Olympics in Tokyo, but it will sink back to negative territory in the following years and fall to less than a quarter of total ad spend by 2022.
“The shift of audiences to OTT viewing is changing the climate of the TV ad market,” says eMarketer senior forecasting director Monica Peart. “As ratings for TV programming continue to decline, advertiser spending will also continue to see declines, especially in years that do not boast major events such as presidential elections and Olympic games.”
Meanwhile, total digital ad spending in the U.S. will climb 18.7% this year to $107.3 billion. OTT platforms, which have a small but growing share of the market, will continue to play an import role. This year, Roku’s U.S. ad revenues (mostly video but some display formats, as well) will surpass $293 million, up 93% over 2017. And, Hulu’s U.S. ad revenues will increase by more than 13% to reach $1.12 billion.
“Over-the-top platforms are growing in number and size, and many compete directly with pay TV by offering bundles of live channels at attractive price points,” said eMarketer principal analyst Paul Verna. “Consumers who want to cut or shave the cord now have a wealth of options that didn’t exist a couple of years ago. And we expect the offerings to become even more robust as more players enter the market.”
These advertising trends come as cord-cutting continues to gain momentum in the U.S. Last July, eMarketer increased its estimates for cord-cutters substantially for 2017 through 2021. This year, the number of TV viewers in the U.S. will drop 0.2% to 297.7 million. Conversely, the number of OTT viewers will grow 2.7% to reach 198.6 million.
This isn’t a new trend, as digital advertising has been pulling its dollars from traditional media for several years now. This has been due, in large part, to the decline in newspapers and magazines. Another major factor has been the convenience of streaming on any device, from anywhere, at any time. Advertisers are following eyeballs, and simply put, their dollars are better spent online.
