Spending on Digital Ads to Overtake TV in 2017

Magna Global said U.S. digital ad revenue would reach $72.0 billion in 2017, compared with TV ad spending of $70.5 billion. Last year, digital accounted for $43 billion, with Magna forecasting it will reach the $50 million mark this year. 

I think they meant $50 billion this year...

By comparison, digital media advertising is already bigger than total TV spending in such countries as the U.K., Australia, Germany and the Netherlands. The fact that digital isn't the biggest ad category in the U.S. "shows the strength and resilience of television in the U.S. compared to other advanced ad markets despite the current plateau in viewing," Magna said.

Nothing new here.  This trend has been apparent for several years now. Consumers already spend more time with their digital devices than their TV.  eMarketer reported in August 2013,  "The average adult will spend over 5 hours per day online, on non-voice mobile activities or with other digital media this year, eMarketer estimates, compared to 4 hours and 31 minutes watching television."

Advertisers (and the advertiser's money) are simply following the consumer's behavior.  

My surprise is that the flow of money has not moved to digital more quickly.  I am surprised that more marketers are not proactively taking advantage of this trend towards digital engagement.  This is a generational opportunity  to get in front of the largest change in consumer behavior since the launch of TV.  

You have to hand it to the broadcast and cable industry.  They have done an admirable job of hanging on to advertiser's budgets in the face of a dominating change in consumer behavior.  Of course over the long haul, I am convinced that this trend will reverse itself.  

As shown in the diagram below, the newspaper industry has not figured out how to successfully re-invent itself in the face of consumer change.

"At the American Enterprise Institute’s Carpe Diem blog, Mark J. Perry finds that print ad revenues are now the lowest they've been since 1950, when the Newspaper Association of America began tracking industry data."

Borrell Associates, in their 2014 Benchmarking Local TV Stations Online Revenue, talks about the importance of capturing digital in local markets to offset the impending loss of broadcast dollars.  

Much of the the good news in Broadcast TV comes from the relatively new (2008) explosion in retransmission fees.  These are fees that local broadcast stations now charge cable and satellite companies to rebroadcast their signal.  

The problem is that TV ratings continue to decline.  There are more programs and channels to watch than ever before.  But the net result of this fragmentation is that the audience watching an individual show continues to decline.  (Consumer behavior).  So the biggest hits of today (excluding special events like The Super Bowl) - NBC Sunday Night Football - generated a 12.8 rating last year.  In 1952, I Love Lucy generated a 67.3.  In the 1960's the highest rated show was Gunsmoke at a 40.3.  In the 1970's All In The Family topped the charts at a 34.0.  1980's - The Cosby Show was the only show that topped a 30 rating.  In the 1990's, ER generated a 22.0.  Notice a trend?  

Over the next few years, we are going to see an increased shift in advertising dollars into digital marketing.  And much of this shift will come at the expense of TV.  Look how the change in consumer behavior decimated the newspaper industry.  Most TV broadcasters have done an admirable job at trying to increase their expertise into the digital arena over the previous 5 years, but many are still saddled by a management team at the local market level that talks about the digital transition, but still lives and breathes TV, at the expense of digital revenue.  In many cases, digital, even their own products, is the competition.  

"The very best marketing comes from observing consumer behavior and insetting your message into their behavior."