As television executives prepare lavish stage presentations in New York this week to dazzle advertisers during the annual TV upfront sales season, a harsh economic reality looms offstage \u2014 digital video advertising now eclipses spending on traditional television ads.
\nThe shift in spending and competition from tech players like Amazon AMZN.O has taken a toll on media companies\u2019 financial results, raising the stakes for the annual showcase of TV content to attract spending commitments from advertisers.
\n\u201cWe\u2019ve definitely seen that audience erosion in linear TV in certain pockets \u2014 especially more so in entertainment,\u201d said Nicole McCurnin, director of advertising insights at ad tracking firm Guideline. \u201cBut I do see, broad strokes, ad companies\u2019 attention is just going more so towards those digital platforms.\u201d
\nDigital video refers to a broad category of TV alternatives that includes paid streaming services like Netflix NFLX.O, social video platforms such as TikTok, free ad-supported TV offerings like Pluto TV and cable replacement services including YouTube TV. It will account for an estimated $62.9 billion in U.S. ad spending in 2024, according to an April report from the Interactive Advertising Bureau and Guideline.
\nThat represents 52% of the projected spending on video advertising this year, reflecting a change in viewing habits nearly two decades in the making.
\nWalt Disney DIS.N, Warner Bros DiscoveryWBD.O, Fox FOXA.O and Comcast\u2019s CMCSA.O NBCUniversal all reported declines in domestic television ad revenue in the most recent quarter, though NBCU\u2019s exclusive streaming of an NFL Wild Card game on its Peacock service helped fuel revenue, offsetting those declines.
\nMany of the streaming services launched to capitalize on changing consumer viewing behavior \u201care still bleeding cash while declines in the traditional television business accelerate,\u201d said Richard Greenfield, media analyst at LightShed Partners. \u201cThey simply pivoted too late.\u201d
\nThe fragmenting of the video landscape is well understood \u2014 and media companies like NBCUniversal have developed new advertising tools that let marketers\u2019 messages ride along with their content, wherever it appears. For example, a T-Mobile ad featuring U.S. TV show \u201cSaturday Night Live\u2019s\u201d Chloe Fineman could air during the live network TV broadcast of \u201cSNL,\u201d appear the next day on NBCU\u2019s Peacock streaming service and show up on social platforms like X, TikTok and YouTube.
\n\u201cRegardless of where that person is who\u2019s in your target \u2026 you can go follow them, wherever they are,\u201d NBCUniversal global advertising chairman Mark Marshall told Reuters. \u201cThe technology and capability just wasn\u2019t available until this year.\u201d
\nAhead of the upfront advertiser presentations, Disney and Warner Bros Discovery announced they would combine their Disney+, Hulu and Max streaming services this summer in a bundle of programming reminiscent of cable television. Such a combination might reduce subscriber cancellations and perhaps coax money-losing competitors to follow suit, analysts said.
\n\u201cWe view a re-bundling of traditional media content on streaming platforms as a key to making the space investable again,\u201d wrote TD Cowen\u2019s Doug Creutz.
\nMeanwhile, digital rivals Amazon and Netflix are hosting their own advertiser presentations in New York \u2014 the Seattle retail giant, for the first time \u2014 to capture shifting ad dollars.
\nAmazon launched ads within Prime Video for all customers in January, requiring users to pay for a higher-priced tier to remove ads. The move will boost Amazon\u2019s revenue and likely come at the expense of traditional TV companies\u2019 revenue, said Brian Wieser, a longtime ad industry analyst, in a March report.
\nMedia companies are also tying up with tech giants to sell more ads. During a presentation to advertisers last month, Google announced that brands would be able to buy ad space with media companies like Paramount and Warner Bros Discovery through Google\u2019s automated tech tools, rather than working with salespeople.
\n\u201cI think we\u2019re going to hear more about programmatic \u2026 particularly as consumption shifts to the digital and streaming ecosystem,\u201d said Samantha Rose, strategic investment lead at Horizon Media, referring to the upfront presentations.
\n(Reuters)Digital video advertising. digital video advertising, traditional television ads, TV upfront sales<\/p>\n","protected":false},"excerpt":{"rendered":"
Digital video advertising now surpasses spending on traditional television ads, with tech players like Amazon impacting media companies’ financial results. Ad companies are shifting their focus towards digital platforms like Netflix, TikTok, and YouTube TV, with digital video expected to reach .9 billion in U.S. ad spending by 2024. Traditional media companies are experiencing declines in television ad revenue, prompting them to develop new advertising tools to reach consumers across various platforms. Disney and Warner Bros Discovery are combining streaming services to compete with digital rivals like Amazon and Netflix, while media companies are partnering with tech giants like Google to sell more ads programmatically.<\/p>\n","protected":false},"author":5,"featured_media":11670,"comment_status":"open","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[2290,3258,246,8625,186,1512,5663,3348,33,426,2021,8696,3471,4612,9850,3761,207,1876,8903,2658,250,3762,1991,2753,8036,7776,2952,2628,9597,1045,393,6132,4620,5612,6106,4441,1806,335,3480,6543,3763,8470,3764,4347,1682,1875,9851,9849,9852,2389,6305],"class_list":["post-11669","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-other","tag-advertising","tag-air","tag-amazon","tag-april","tag-business","tag-cash","tag-chairman","tag-change","tag-companies","tag-competition","tag-consumers","tag-consumption","tag-customers","tag-digital-platforms","tag-digital-video-advertising","tag-disney","tag-entertainment","tag-financial-results","tag-follow","tag-fuel","tag-google","tag-hulu","tag-industry","tag-investment","tag-landscape","tag-march","tag-media","tag-money","tag-move","tag-netflix","tag-new-york","tag-platforms","tag-report","tag-revenue","tag-sales","tag-service","tag-services","tag-space","tag-spending","tag-spending-commitments","tag-streaming","tag-streaming-platforms","tag-streaming-service","tag-summer","tag-technology","tag-tiktok","tag-traditional-television-ads","tag-tv","tag-tv-upfront-sales","tag-video","tag-who"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\n