4 reasons why ad budgets may do a U-turn back to TV networks

Jack Myers, chairman of marketing intelligence firm MyersBizNet, thinks that this year we will see "the beginning of a long-term trend of marketers returning to legacy media," including TV and radio.

Myers said in a press release that he expects legacy broadcast network TV advertising to increase by 4.2% in the next year. This is very surprising given the many reports suggesting TV is a medium on the decline:

Digital ad spending is expected to overtake spend on TV as soon as 2017. TV ad sales are predicted to drop globally for the first time ever outside a recession this year, according to a forecast from advertising agency network Interpublic Group's Magna Global. Publicis Groupe's Zenith Optimedia expects digital ad spend to surpass TV spend in 2018.

So why does Myers think advertisers are actually coming back to TV? We emailed Myers after he aired his prediction on analyst firm Nomura's conference call on 2016 TV ad trends data.

He gave four reasons:

1. Digital advertising budgets are being more narrowly focused on specific companies. "Marketers are consolidating their digital budgets into fewer platforms where they can have a major presence - with their primary focus Facebook and Google."
2. Broadcast TV networks are now generating good revenue from on-demand platforms. "Legacy media, especially broadcast network television, have done an excellent job of implementing advertising opportunities within their on-demand platforms and capturing a growing share of digital video budgets. This includes Hulu and the full episode players."
3. Businesses have seen a decrease in the amount of revenue generated from ad campaigns recently, so they are returning to older forms of advertising. "There is a growing body of evidence ... that the target audience, reach, and awareness of ad campaigns has declined over the past decade, and that this decline has impacted on the ROI [return on investment] value of advertising. Their analyses point to the best solution being a reinvestment in television first, followed by out-of-home, radio and to a lesser extent print."
4. Old media companies are getting more innovative with their ad products. "Legacy media are investing in marketing solutions, research, branded content, and technology innovation that provides marketers and agencies with their requisite 'shiny new objects.'"

Despite a decline in linear TV viewership (watching TV live, as it is scheduled,) TV is still by far the most popular leisure activity in the US. This chart from FiveThirtyEight, using data from the U.S. Bureau of Labor Statistics, demonstrates that "TV Exceeds All Other Leisure Activities Combined."

Meanwhile, NBC's head of research Alan Wurtzel said last week that traditional TV has nothing to fear from the likes of Netflix and YouTube. He called YouTube a "sidebar" because people between the ages of 18-to-24-years-old spend just 12 hours a week watching videos on the online platform compared to 62 hours on TV (he didn't cite a source for the stat.)

He also highlighted data from analyst company Symphony Advanced Media that suggested Netflix audiences soon go back to watching linear TV the first week after a big Netflix premiere breaks.