TV Ad Model May Soon Change

There’s little consensus among analysts about the growth of the U.S. ad market in 2010. Earlier this year, a Barclays analyst mentioned an overall 3.5% increase with sectors such as TV benefiting from both political and Olympics advertising.  But based on the results of a recent survey, national TV advertising may be flat in 2010.  In addition, the business model may need some adjustments if it is to compete effectively with newer media formats.

Findings from a joint ANA (Association of National Advertisers) and Forrester Research Inc. survey show that large national advertisers dropped their percentage of TV as part of the total media mix from 58%  in 2008 to 41%  in 2009.  Respondents note that the following factors are important with respect to the future of TV advertising:

  • TV ads have become less effective (noted by 62%) because of the number of ads run in each break.
  • Marketers would like to “target consumers more precisely” (78%) but only 59% will opt to pay extra for this benefit.
  • Reach and frequency are growing old as metrics for audience measurement, especially in light of what's available in online media formats.  One possible new measurement statistic would be individual commercial ratings (82%).

Branded entertainment may be one way for marketers to grab viewer attention. In 2010, up to 28% of marketers will spend more on branding a show as opposed to running a 30-​second spot.

ANA President and CEO Bob Liodice acknowledges that the shift in marketing overall will force “change upon the TV advertising ecosystem.”  The survey results also point to a high interest level in interactive TV advertising which will further blur the line between what has traditionally been the TV ad industry and what is now the online ad industry.

[Sources: TV Advertising Budgets are Under Siege, Forrester release, 2.8.10; Rabil, Sarah. U.S. Advertising to Rise 3.5% in 2010, Barclays Says, Bloomberg​.com, 1.28.10]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.