TV ad spending growth rates in the US continue to outpace the aggregate of all media, according to MarketingCharts analysis of figures both provided and publicly released by Kantar Media. This article examines: how TV ad spending has continued to grow in the US despite a nearly saturated audience; why TV remains the prime medium for ad spending; the segments that are growing most rapidly; and projected TV ad spending growth rates up to 2016.
Note: The Kantar Media figures provided below (unless noted) were tabulated on a consistent like-for-like basis that controls for changes in monitoring coverage. Figures are therefore directly comparable across every time period.
TV ad spending growth continues to exceed the industry average, according to Kantar Media figures. That has been the case through 2011 and the second half of 2012, marked by a buoyant 15.3% increase in Q3 2012 that was fueled by political and Olympic dollars. Overall ad spend growth rates are being dragged down by print declines, but that only emphasizes how TV advertising has been able to withstand the digital onslaught that has contributed to plummeting print spend.
There are some important caveats to this analysis, though. The Kantar Media data, for example, includes only display advertising in its analysis of online ad growth, also excluding video and mobile advertising from its display figures. As a result, the online portion of overall ad spend ended up contributing -4% growth to the equation for 2012 as a whole, while online ad spend estimates from the IAB and other researchers have been far more positive (in the double-digits). That may be why a recent report from Standard Media Index, which looked at actual data from the processing systems of 4 of the 6 major agency holding companies, found TV ad spending in 2012 to be slightly less than overall media outlays (6.5% vs. 6.9%).
TV Doesn’t Need a Surging Audience to Grow Revenue
Leaving other media out of the equation for the moment, the data still shows that TV is maintaining its stronghold in the ad market. That spending (on a like-for-like basis) continues to rise even as audience size and consumption remain flat or declining (see here for an in-depth look at TV consumption rates) speaks to the value advertisers continue to place on TV commercials. Indeed, comparing the figures provided by Kantar Media with Nielsen audience estimates reveals that TV ad spending growth continues to be solid even amidst an apparent saturation in audience size. In fact, as the above chart shows, TV ad spending growth continues to be healthy even as its audience size declines. The size of the TV-viewing population (Americans aged 2 years and older) declined for 6 consecutive quarters – even as TV ad spending growth rates exceeded the media average during each of those quarters.
TV Is The Most Influential Ad Medium
So why do advertisers keep pouring money into TV, even amidst the rise of everything digital? Simply put, most consumer surveys that compare advertising media still find TV to be the most influential and most favored. Following is a select list of those pieces of research, in reverse chronological order.
- Multiscreen consumers are more open to advertising on TV than on computers, tablets, gaming consoles, and mobile phones. (Microsoft Advertising, 3/13)
- TV is rated most effective advertising channel by SMBs. (Vocus, 2/13)
- TV is the dominant driver of word-of-mouth, both online and offline. (Ad Age, 2/13; Thinkbox, 3/13)
- 51% of smartphone and tablet users around the world (including the US) say they have a very or somewhat favorable attitude towards TV ads, on par with radio, and ahead of all other traditional and digital media. (Millward Brown, 11/12)
- 2 in 3 consumers find TV commercials to be more effective than online advertising – although only half of marketers agree. (Adobe. 10/12)
- Affluents are more receptive to TV ads than any other traditional ad types. (Ipsos. 9/12)
- Local TV is the primary driver throughout the purchase funnel, from awareness through purchase.(TVB, 9/12
In June of last year, a TVB survey found that when asked the advertising medium they find most influential in making a purchase decision, 37.2% of American adults singled out TV – almost quadruple the proportion who pointed to the nearest competitor, newspapers (10.6%). In addition, TV’s influence held true across all age groups, and was in fact highest among the 18-34-year-old set. Indeed, despite older consumers watching more TV on average, TV’s purchase influence appeared to wane with age, although it still far outpaced newspapers among those over 65 (32.7% vs. 18.5%).
Skeptics might point to these results as coming from an industry body, yet a survey released a couple of months earlier – from a more “independent” source (ExactTarget) – found similar results. Limiting the respondent pool to online consumers, the study found 53% saying a TV ad had influenced them to purchase a product or service in the past 12 months. The next-closest medium, newspapers, was a purchase driver for just 32%. Of note, the ExactTarget study also found TV’s influence highest among younger consumers, and lessening with age. TV influence was highest among the 15-17, 25-34, and 45-54 age groups, with 59% of each demo reporting being swayed to make a purchase on account of a TV commercial. Among the 55-64 and 65+ age groups, though, TV’s influence was edged out by newspapers (45% vs. 47%, and 40% vs. 46%, respectively).
The effect of TV advertising on youth is also brought into focus when looking at college students. A survey released in August 2012 by Barnes & Noble College Marketing found that despite the popularity of digital technology and media among college students, a leading 42% named TV ads the most effective form of advertising, more than double the proportion (20%) who said that ads don’t impact their purchase decisions, and far outstripping their next-most effective advertising medium, magazines (10%). Not only are TV ads effective, but they are also a viable way to reach this demographic. TV commercials ranked as one of the top ways for a company or brand to reach students: 19% of respondents chose TV, slightly behind email (20%), but ahead of coupons (14%), Facebook ads (9%) and on-campus word-of-mouth (9%).
One reason for TV’s influence on product purchases could be the trust that consumers place in these ads. And on this front, TV scores highly, per Nielsen and NM Incite research. Interestingly, among online consumers, TV ads are trusted by almost half, with TV program product placements slightly behind, but also solid – at 36% of online consumers.
To put this in perspective, this means that online consumers are more trusting of TV ads and TV program product placements than ads served in search engines results, online video ads, ads on social networks, and online banner ads, to name but a few. Indeed, online consumers are more trusting of TV ads than ads served in any online channel save for branded website ads (46% vs. 52%).
Of course, not all studies find TV to be the most influential medium. A recent Nielsen report recommended that advertisers move 15% of their TV budgets to online video, using results showing that ads viewed during TV shows were more effective when viewed online than on a traditional TV set. A Software Advice study found traditional media – including TV – to be fairly ineffective in generating B2B leads, even as a separate analysis from BtoBonline.com revealed that TV ads constitute the biggest ad spend for B2B companies. Additionally, research has shown that TV ads don’t spur many shoppers to try new retailers, are middle of the pack as an influence on household shoppers, and while they contribute to mobile purchases, they have less of an impact than online content for driving mobile commerce, per an Interpret report, reported by MobileMarketer.
Growth Segment: Spanish-Language TV
Still, advertisers obviously continue to see the value of advertising on TV. But some segments are seeing greater demand than others.
An analysis of Nielsen data and publicly released Kantar Media figures indicates that while Spanish-language network and cable TV accounted for only 5.9% of total expenditures in 2011, this overall segment has grown far more rapidly than TV media overall (8.3% vs. 2.4%). That continued into 2012, with Spanish-language TV seeing double-digit growth rates in each quarter, finishing up 15% for the year.
In fact, US advertiser spending in almost all traditional media targeted at Hispanic audiences (Spanish advertising mediums) increased between 2010 and 2011, reflecting the potential of this young and growing market, which is forecast to reach $1.5 trillion in buying power by 2015, according to an April 2012 report from Nielsen. TV spending (Spanish network, spot, and cable TV combined) accounted for 76.5% share of all traditional media spend directed towards Hispanic audiences. Among the TV segments, Spanish cable TV (7.9% of Hispanic ad spend on traditional media) grew the fastest, at 21%, followed by Spanish network TV (57% of spend), which grew by 13%, and Spanish spot TV (20% of spend), which grew by 1%.
Sending ad dollars to Spanish-language media appears to be a wise way to target Hispanic consumers: data from Nielsen’s 2012 “State of the Hispanic Consumer” indicates that Hispanics like TV ads 51% more if viewed in Spanish rather than English, and that hiring Spanish-speaking talent to deliver the script resonates 30% better with this group. In fact, although Hispanics remember English language commercials as well as much as the general population, the same commercial shown in Spanish can bump up ad recall by as much as 30%.
Looking Ahead: Ad Spend to Be Seasonal, But Stay Strong
Using publicly released figures from Nielsen, Kantar Media, and PricewaterhouseCoopers (PwC), the chart above compares reported TV ad spending growth rates in the US with overall entertainment and media ad spend for 2008 through 2012, as well as PwC forecasts for TV and overall growth rates reaching out until 2016. As with the non-public data provided by Kantar Media, the comparison finds that from 2008 through 2012, TV ad spend growth rates generally outperformed overall growth rates for the media and entertainment (M&E) sector. (Note that the 2012 figures are forecasts issued last year by PwC and actuals released this year by Kantar Media.) For example, in 2009, while PwC shows a 14.4% decline for overall M&E advertising spend, Kantar Media (-9.5%), Nielsen (-7.9%), and PwC (-8.7%) all found a more muted decrease for TV ad spend. The growth rate for TV ad spending in 2010 was roughly double that of overall (E&M) spending, although in 2011, the gap was much narrower.
The E&M segments included in the PwC data are: internet (wired and mobile); TV; cinema; video games; consumer magazines; newspapers; radio; out-of-home; directories; and trade magazines.
Looking ahead, the same biennial swings in TV ad spend are forecast by PwC, largely due to the influence of political and Olympic advertising. While estimates for the upcoming season vary (see here, here, and here), this year and 2015 will see those ad dollars leave the market, and TV ad spending growth should trail the overall E&M rate, per the PwC forecast. (In 2014 and 2016, the opposite is true.) All told, PwC predicts continued solid growth for US TV ad spending, with each year growing from the last, for a compound annual growth rate of 6.7% for 2012-2016, outpacing the 5.9% projected figure for overall E&M spend.
