Study: TV Advertising Falls Globally; Digital Poised to Overtake by End of 2017

Rob Lowe DirecTV Ad - H 2015
Courtesy of DirecTV

Rob Lowe DirecTV Ad - H 2015

In the U.S., digital advertising will surpass TV in 2016.

For the first time in history, outside of recession years, global television advertising revenue fell year-over-year as digital advertising surged once again. Digital, in fact, should overtake TV by the end of 2017, according to a study released Monday from Magna Global.

In the U.S., digital advertising will surpass TV in 2016.

A different study from ZenithOptimedia, also released Monday, says TV's share of the advertising pie probably peaked at 39.7 percent in 2012, and it will be overtaken by digital for the first time in 2018.

Both studies paint a rosy picture for digital advertising and a troubling one for traditional cable and broadcast TV, at least in the long term. Many TV cable channels have been losing subscribers lately — including Disney's crown jewel, ESPN, down 7 million subs in two years — while others at Viacom and elsewhere have seen declining ratings.

TV's problems are reflected in falling stock prices, with Viacom, CBS, Disney, Comcast, 21st Century Fox, Time Warner and Sony all down since August, when Wall Street began to worry anew that digital services like Hulu and Netflix and ad-skipping DVRs were taking a toll.

Magna Global said TV ad sales will fall 0.1 percent in 2015 to $193 billion while digital will rise 17 percent to $160 billion. "This suggests an underlying slowing trend caused by decreasing TV viewing that is no longer fully offset by CPM inflation, in most markets," says Magna Global. With ad dollars following eyeballs and print, radio and other traditional media having shrunk so much already, some of the digital growth now is coming at the expense of TV, the company says.

It's not all bleak for TV, of course, as even-numbered years typically fare better than odd-numbered years, so TV ad revenue should grow in 2016 courtesy of a U.S. presidential election, the Olympic games and the UEFA Football championship in Europe. Magna Global predicts TV advertising will rise 3.8 percent globally in 2016.

ZenithOptimedia predicts that overall advertising for all media will grow 4.7 percent globally in 2016 to $579 billion. North America will grow 3.8 percent and "fast-track" Asia will lead all other regions at 9 percent growth. That region is defined as China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam.

Magna Global says that 62 countries will have grown in 2015 while 11 will have shrunk in ad revenue this year. The decliners include, Russia, Finland, France, Greece, Peru and Singapore.

In the U.S., ad revenue will have grown 2.1 percent this year to $167 billion and will grow a healthy 5.2 percent next year, when digital media becomes the No. 1 category with $68 billion in revenue compared with $66 billion for television.

"National television" ad sales will have grown this year by 0.3 percent to $42 billion, according to Magna Global, courtesy of FanDuel and DraftKings, two daily fantasy sports sites that bought a ton of TV, radio, print and digital advertising in the latter half of the year. Next year, national television will fall by the same amount, and the daily fantasy sites will no doubt rein in their spending, given the opinion by some lawmakers that the activity amounts to gambling and should be outlawed, or at least regulated more.

Digital media will have grown 19 percent to $59 billion in North America this year, with the most growth (50 percent) driven by social media, followed by video (42 percent growth), according to Magna Global.

The largest ad market in the world is the U.S. with $182.6 billion in all categories in 2015, followed by China with $74.3 billion. Japan, the U.K. and Germany round out the Top 5, and the order isn't expected to change any time soon, according to ZenithOptimedia.


Georg Szalai contributed to this report.