Broadcast Ads Are Being Seen by More Viewers, but Revenue Is Still Down; Will Streamers Make the Difference?
It’s likely that the average viewer won’t shed any tears when they learn that the advertising industry is not having its best year. Commercials are occasionally entertaining at best, repetitive and irrelevant at worst, and a constant distraction from the content audiences turn on their TVs to watch.
But TV providers are reliant on the money they make from advertisers, and without it there would be no way for TV networks to be able to afford creating new shows, pursuing live sports rights, or anything else. A new survey from the advertising measurement company iSpot is detailing how badly advertisers are struggling, despite a growing audience.
iSpot’s data shows that ad impressions have grown 5% year-over-year in the first half of 2023. Ad impressions are the term used to measure the number of times an ad is seen. A 5% increase an impressive figure, but it has not translated into a growth in revenue for advertisers; ad spends are down 7.4% YoY across the TV landscape. The estimated national TV ad spend for the year now sits at $21.6 billion.
In short, more people are seeing ads, but those views are not translating into big money for advertisers. Live sports are still drawing big audiences; the NBA saw its ad impressions grow 14% YoY, accounting for nearly 5% of all impressions between Jan. 1 and June 30 of this year. Among TV series, Drama and Action shows jumped 4.7% YoY, thanks in part to the spread of syndicated shows like “Law and Order.”
(Click images to enlarge)
The big-picture problem for advertisers is there are simply fewer and fewer people watching traditional TV. One recent survey found that 45% of internet-using audiences say they don’t watch any linear TV at all in a given day, and cord cutting is worsening that problem every day. Advertisers are reaching the viewers that are watching TV, there are just fewer and fewer of them to reach.
That’s where streaming can turn the tide, at least potentially. The top streaming services in the United States have an ad-supported streaming tier already or are currently constructing one. Prime Video is just the latest example, as it was reported Amazon was taking steps to launch a plan of that streamer with ads in early June.
Netflix has been running its ad-supported tier since November of 2022, and Disney+ launched its own in December. Streaming platforms can account for billions of hours of viewing, but there is a big catch for advertisers: streamers usually limit ad loads to around 4-5 minutes per hour, as part of an implicit compromise made with customers when ad-supported streaming was first introduced to keep streaming video a distinct product from traditional TV.
That means that if advertisers are going to rely on streaming services to make up for revenue lost by cord-cutting, they’ll have to make their ads more effective. Some experimenting along these lines has already taken place; Prime Video and Peacock have trotted out “virtual product placement” technology which allows the streamers to change signs, billboards and other such ad spaces within TV shows over the life of a series. Most recently, Roku began placing shoppable ads on its platform that viewers can use to navigate to, and purchase products with their remotes.
A study published last week shows that 65% of consumers are likely to buy a product they want with a clickable ad, so these experiments are a good start. Advertisers might have to rely on streaming even more heavily as cord-cutting continues, and traditional ad revenues may never rebound to the height they saw in cable’s heyday.
Amazon Prime Video
Amazon Prime Video is a subscription video streaming service that includes on-demand access to 10,000+ movies, TV shows, and Prime Originals like “The Lord of the Rings: The Rings of Power,” “Jack Ryan,” “The Marvelous Mrs. Maisel,” “The Boys,” and more. Subscribers can also add third-party services like Max, Showtime, STARZ, and dozens more with Amazon Prime Video Channels. Prime Video also offers exclusive live access to NFL Thursday Night Football.