Despite all of the talk about customizing content and using behavioral targeting to reach a unique audience, there are still marketers who want to connect with millions of consumers instantly. For decades, TV has been one of the leading media formats used to accomplish this goal. And many industry watchers believe that despite a shrinking audience, marketers will continue to spend a significant portion of the media mix on TV.
One problem TV media firms face is the rise of online entertainment and current economic conditions that have caused the number of TV households to drop in the U.S. But marketers still want to use this format to display ads for their products and services. And they are willing to pay more than last year – between $30 and $40 dollars to reach each group of 1,000 viewers in the market sweet spot (18–49 year olds) during prime time.
Some may wonder how a media format with fewer viewers can command a higher price. As Jessica Vascellaro and Sam Schechner write in their recent Wall Street Journal post, the TV audience isn't shrinking that quickly. And there's currently "no substitute for its reach." On the other hand, the fast-growing Internet caters to a highly fragmented audience and the increasing inventory of display ad space serves to dilute the effectiveness of this marketing format and therefore erodes price.
Last year, TV commanded 34.4% of the U.S. advertising media mix. The format is predicted to increase revenue by nearly 9% next year. However, revenue for online media concerns will likely rise well over 14% next year. A large part of this growth can be linked to paid search spending as marketers compete to the top spot on the list of results.
The long-term outlook for any media format is linked to the audience it is able to draw. For now, TV remains at the top of advertiser lists.[Source: Vascellaro, Jessica and Schechner, Sam. TV Lures Ads as Audiences Scatter. Online.wsj.com. 21 Sep. 2011. Web. 22 Sep. 2011]