Traditional TV Ad Revenue Predicted to Plunge

LONDON: Revenues from traditional television spot ads are expected to fall by 75 percent within 10 years, resulting in a market worth $13.1 billion in the U.S., according to analysis from Generator Research.

In its report, "Television Advertising: An Irreversible Decline?," Generator predicts that only 25 percent of television advertising by 2019 will be the ad spot as we’ve come to know it. Rather, the future may lie in delivering three types of targeted ads over the Internet. The first would be delivered to Internet-enabled TV sets or set-top boxes. Generator expects this to account for 30 percent of all TV advertising by 2019, representing $1.8 billion in the U.K. and $17.6 billion in the U.S. The second would feature targeted ads served to PCs or portable devices that can be used to view television programming. According to projections, this could account for 24 percent of the total ad-revenue pie. The third form involves broadcasters delivering scheduled programming from their existing infrastructure, yet targeted commercials being delivered over the Internet to broadband-enabled TV sets. This market could deliver some 21 percent of ad revenue by 2019, or $12.1 billion in the U.S.

"This could be the beginning of a slippery slope for the television broadcasters who are about to experience what it means to lose control of a distribution monopoly, just like the music industry," commented Andrew Sheehy, the head of research at Generator. "The biggest losers will be the terrestrial networks who have no way of delivering their own ads over the internet to television sets. This problem is solvable, but it will take a big effort."