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Does TV Get a Disproportionate Ad Spend?

15 July 2014 | Blog

Balancing media budgetsFor a while now, it’s been fashionable in digital circles to complain that TV gets a disproportionate amount of ad spend dollars. TV is overpriced, they claim, and dying as well. Digital is a more efficient way to reach audiences. They shake their heads at the folly of hide-bound marketers stuck in ancient ways of doing things, looking forward to a golden era in which digital gets its appropriate recognition and claims the bulk of the ad dollars.

Meanwhile, advertisers continue to spend on TV.

There’s been some good explanations why lately: TV works. At a recent event, David Hallerman of eMarketer noted some interesting facts. One was that a lot of the new money going to digital video isn’t being taken from TV—it’s only companies who are new to digital who mine their TV budgets for funds. Experienced advertisers leave their TV budgets intact and kill their print budgets to free up funds. The incomparable reach of TV and its power for branding efforts is just too effective to pass up. TV gets reach quickly. Digital takes longer.

Some of this is because, while time spent on digital is growing, it still hasn’t approached TV. Hallerman noted that in the 18-24 demographic in 2013 Q4, for every hour of digital video, people watched 9 hours of TV. In his opinion, it was digital video that was overindexing. People buy digital because it’s fashionable, and they don’t want to be left out. But for the real value, TV is still a cornerstone.

This was confirmed last week by Brian Wieser. In a report cited by Mediapost, he estimated that

digital ad spending currently represents 68% of TV’s total, but is generating only 35% of consumer time spent. “If time did equate to money,’ he writes, ‘either too much is being spent on  Internet advertising or too little is being spent on TV.”

Of course, it’s not quite that simple, and he goes on to explain how in reality, different approaches suit different advertisers’ needs. But in a second report, he notes

Ironically, we note that web publishers might only be as likely to capture TV budgets as traditional TV owners are likely to capture online budgets over time… With so much TV inventory going under-monetized and yet more inventory not getting monetized at all, there is arguably more room to create value by using digital tactics to improve the yield of ad inventory on “traditional” TV than will occur on the web.

There is always room for improvement in any ecosystem, and TV is no exception. Digital provides a wealth of techniques that are only recently being applied to television. But while some assume that digital will someday rightfully assume its place as the leader in ad spend, TV clearly has no intention of budging.