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U.S. television advertising shrunk by just over $1 billion in 2017, according to a new report from eMarketer.
The research company predicts that the trend will continue in 2018 and 2019, resulting in an overall loss of $1.05 billion over the next two years. Cord-cutting and over-the-top video viewing is contributing to the declines, as is the continued growth of the digital advertising market, which dominated by Google and Facebook is expected to grow nearly 19 percent to $107.3 billion this year.
“The shift of audiences to OTT viewing is changing the climate of the TV ad market,” said eMarketer senior forecasting director Monica Peart, noting that the decline in TV ratings will coincide with the decline in advertiser spend.
TV ad spending in the U.S. grew in 2014, 2015 and 2016 but began to decline last year when it posted a 1.5 percent drop to $70.22 billion overall. That dip is expected to correct itself slightly in 2018, which will see only a 0.5 percent decline.
But the recent challenges at advertising behemoths Facebook and Google do not appear to be helping the TV industry capture more of marketers’ budgets. TV’s overall share of U.S. media ad expenditures is expected to drop from 33.9 percent in 2017 to 31.6 percent this year.
One bright spot will come in 2020, which eMarketer predicts will see an uptick in TV ad spending as a result of the Summer Olympics and the U.S. presidential election. The market is expected to grow by 0.5 percent to $69.52 billion that year.
While many OTT platforms are subscription-based and, therefore, do not air advertising, there are a handful of digital TV services that do sell ads. And they’re growing. Roku, for instance, will surpass $293 million in ad revenue in 2018. And eMarketer suggests that Hulu’s ad revenue will grow by 13 percent to $1.12 billion.
“Over-the-top platforms are growing in number and size, and many compete directly with pay TV by offering bundles of live channels at attractive price points,” said eMarketer senior analyst Paul Verna. “Consumers who want to cut or shave the cord now have a wealth of options that didn’t exist a couple of years ago. And we expect the offerings to become even more robust as more players enter the market.”
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