UK telecoms research group Informa said this week that TV advertising continues to grow on a global basis and predicts that it will jump 5.8% to $123 billion during 2008.
This confident prediction comes in the full knowledge that there are fears of a global recession, but 2008 will see a positive affect from the Olympics and advertising sales will be up from the 3.5% global rise in 2007.
This prediction doesn’t sit all that well with us. We buy into the Olympics idea, but this is temporary, and in the US TV advertising is actually falling, although it is reported as rising, because it now includes the same programming, pulling in internet advertising. If the same practice is continued across the globe, and as DVRs become more global, and as TV shifts more to the internet and to handsets, we would expect actual TV advertising over this period to actually be down, though total spend on adverts accompanying video might go up. Then again, addressable advertising should emerge over this time frame, in some formats, but actual viewing on a TV is going down significantly every year, especially in the markets where advertising is strongest.
Another issue is that in many parts of the world, this advertising spend is being spent across more and more channels, which could mean a situation where fewer of them are profitable, compared to now.
Informa points out that as Pay TV rises globally, substantially more of the advertising revenues come from there rather than from free to air services. During 2008 this will reach $18 billion, a figure which has doubled over the last five years, and which now makes up 15% of total TV advertising. It is true that there are more Pay TV homes in the world each year, but then again the number of DVB-T free to air homes is also going up, often shifting the average number of TV channels that a home can view, from a handful to 50 or 60, which creates more advertising.
Looking out five years to 2012, North America will remain the dominant advertising region, with $53 billion of TV advertising, with Western Europe next at $39 billion and Asia Pacific reaching $33 billion, dominated by Japan, as the global TV ad spend reaches $148 billion, 21% ahead of the 2008 figure.
Naturally Pay TV, still rising its customer base rapidly, will grow faster than this total, at around 39% over this five year period. The forecast is done on the basis of the monies received by broadcasters, not counting agency commissions, production costs and takes into account real discounts. The average ad spend per home for TV advertising is around $100 now, but is as high as $380 in the US and is lowest in China and India, at around $10 or $11.