Report: Spend on TV advertising took a tumble this year
Spend on traditional TV advertising in the US continued to drop in the most recent broadcast year (October 2014 to September 2015.)
Data from Standard Media Index (SMI) shows that total TV spend dropped 4% compared to the previous broadcast year.
Here's the data:
Broadcast TV - networks such as CBS, ABC, NBC, and Fox - suffered particularly badly, down 7%.
Spot TV advertising -where advertisers elect to run a TV ad to a select market, network, or geographic area, rather than just running an ad across several networks to reach a mass audience - also had a rough time over the past year, down 7%.
The way advertisers buy TV also appears to be shifting.
It used to be that the bulk of TV advertising was bought in the "upfront" season, when advertisers made big commitments to networks ahead of time to spend a certain amount next to their premium programming. The upfronts see media sellers creating a short, quick window for ad sales in which advertisers feel forced to lock in the best deals they can. The system has typically kept TV commercial prices high - even though advertisers feel they're locking in discounts because they are buying in bulk.
Upfront spend dropped a massive 10% in 2014-15.
Spend in the scatter market grew 10%. But the scatter market represents TV advertising bought nearer the time of broadcast, which tends to be cheaper. And broadcasters must ensure they deliver high ratings to ensure they keep scatter prices high, which seemingly didn't happen.
SMI chief commercial officer James Fennessy told Business Insider: "Results for the broadcast year are very much in line with how we have seen spend shaking out over the period. We knew the '14/'15 television upfront was weak and we saw evidence of this all year in our booking data from the agencies. It was hoped that scatter advertising would make up for this softness but the networks haven't delivered the audiences they had hoped so it's been difficult to demand pricing that would close the gap caused by the weak upfront."
Looking ahead, ratings for the new TV season "haven't set the world on fire" either, according to Fennessy. But he adds that the market is hopeful new programming in the upcoming months should bring in strong ratings.
Overall, SMI found that digital advertising appears to be taking away dollars from traditional TV. On the surface, that looks like bad news. But online video is capturing a lot of those dollars. And TV broadcasters and networks tend to own the best premium video content.
SMI analyzes 80% of total national US agency spend from the booking systems of five of the six global media holding groups, as well as a number of independents.