Digital, TV Ad Trends in Focus at UBS Conference

Issue 1 REP Sony Tablet - H 2013

Issue 1 REP Sony Tablet - H 2013

As forecasts say digital will overtake TV spending in the U.S. in 2017, industry prognosticators and CBS' research chief discuss momentum and the role of Google and Facebook.

The growth of digital advertising and how it affects TV ads were key themes on the first day of the UBS Global Media and Communications Conference in New York on Monday.

"Digital, particularly mobile, continues to take dollars away from print media as consumers use mobile apps and other outlets to consume content digitally," Zenith said in its year-end forecast presented by global brand president Vittorio Bonori. "Digital consumption has also driven overall video consumption up, even while linear television viewing continues to decline."

U.S. internet/digital advertising spending will rise 16.9 percent this year to $60.9 billion and keep growing. In 2017, Zenith expects it to hit $69.2 billion to overtake TV, which will reach $68.6 billion.

Magna Global executive vp global market intelligence Vincent Letang said during an advertising panel that digital advertising should grow 17 percent in 2016, with Google and Facebook driving 90 percent of that gain. 

"The two global media vendors dominating search and social, Google and Facebook, together control more than half (54 percent) of total digital advertising market," Magna said.

Prognosticators on Monday differed on whether the digital giants would continue their dominance or give up some of their lead in the coming years. Bonori said the industry would see concentration go away in the next two to three years, while Letang said: "Actually, I see his concentration increasing in the coming years."

CBS Corp. chief research officer David Poltrack on Monday criticized Google and Facebook for their "walled garden approach" and lack of transparency. And Google's YouTube is selling ads "at this extraordinary premium on a [cost-per-thousand ad rate] basis," while "we see no evidence to justify that," he said. "[YouTube] doesn’t have much inventory” to sell marketers looking to advertise within premium content.

Major marketers are also not blindly believing anymore that online providers can target ads effectively, Poltrack said. Proctor & Gamble is one big company leading a shift back to traditional TV ads, he said, adding "many other [consumer products firms] are following P&G’s lead."

He told the conference that research shows that there is a "kicker effect” when TV ads are combined with digital spending, touting that this shows the effectiveness of TV ads. "No other advertising medium can match television in reach," Poltrack said. "Digital advertising lacks scale and, therefore, works most effectively in combination with television advertising."

Poltrack argued that longform video belongs as much in the TV ad category as in the digital space, suggesting it should be defined and seen as a separate segment of the ad market.