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GUEST OPINION: What will happen to TV ad spend as software eats the world

GUEST POST

Earlier this month, the US Interactive Advertising Bureau reported spending on internet ads outgrew broadcast TV ads for the first time. 

This is a big deal for New Zealand companies.

It is evidence that, as software is eating the world – our daily lives are being improved more and more by software – so is communications. Digitising of communications is happening right across the board and with that comes digital thinking.

In relative terms, New Zealand digital spending will grow to over $600 million a year, an estimated growth of $200 million over the next four years.  Alisa Higgins of the IAB pegs this internet advertising being bigger than TV broadcast in the local market in 2018. 

The implications are going to be discussed in every boardroom; our traditional broadcasters will have to move quickly. That change, while not all cannibalisation, is going to take quite a bite out of television revenue and put pressure on future growth.

Crisis is opportunity in disguise, so it’s not all dire.  Digital video advertising is increasing rapidly, growing 19% year on year.  AOL Brand Group chief executive Susan Lyne stated earlier this year that it had sold out (!) of video inventory, acquiring Adap.tv to expand. 

A clear opportunity exists for the on-demand platforms and local online publishers.

To many an online publisher’s relief, there will be more brand spending. 

A driving factor in the US is native ads, which feature ads native to the platforms they exist on. 

This can range from a Facebook post to an advertorial.  Native Ad spend is expected to hit $2.85 billion in the US this year and $9 billion by 2017 – equating to (and this is extrapolating) about $120 million in the New Zealand market.  Growth in brand spend will be supported by the aforementioned growth in digital video.

Mobile continued its rapid growth during the last year.  Our local market still has challenges with fragmentation and critical mass, but it is in a good place for brands to be allocating a portion of their digital spending.

All of this change does not mean that digital isn’t complementary –digital works best when it works together with marketers, using the reach of television and the targeting and metrics of digital.  This is especially true now that planners are taking a holistic approach with greater integration between the two mediums.

The takeaway is that if you don’t yet have a digital approach in the DNA of your company, now is as good a time as ever to get one.

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RAW DATA: IAB Internet Advertising Revenue Report FY 2013 (PDF)468.5 KB

Comments and questions
1

Agree with your conclusion, the best approach is layered media rather than a TV or online argument. The US Interactive Advertising Bureau report looked at broadcast TV only vs online advertising. Broadcast includes network, syndicated and spot television advertising revenue and excludes "National Cable Networks and Local Cable television advertising revenue." When broadcast and cable are combined TV outspends online $74.5B to $42.7B. Good overview of the US report is here: http://www.washingtonpost.com/blogs/the-switch/wp/2014/04/11/dont-buy-the-hype-the-internet-hasnt-killed-tv-advertising/?wprss=rss_technology&wpisrc=nl_tech