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Television Advertising: An Irreversible Decline?

"In good times, people want to advertise; in bad times they have to."

Bruce Barton, member, Advertising Hall of Fame

Generator Research's report "Television Advertising: An Irreversible Decline?" shows that revenue from traditional broadcast TV spot ads will account for just 25 percent of TV advertising by 2019. The result will be a market worth $13.1 billion in the United States, down from $57.8 billion in 2008.

Depending on strategic choices made by broadcasters, these dramatic losses could be offset by three new types of customer-specific advertising that would be delivered over the Internet to PCs, portable devices and to Internet-connected TV sets.

The report begins by explaining how the internet is transforming the television industry by looking at how distribution is changing, the emergence of new sources of content and how the television proposition itself is changing.

Next the report explains how commercial television broadcasters view the internet, both tactically level and as a strategic threat. The report clearly describes how commercial broadcasters could leverage the internet to their advantage by detailing three key benefits.

The report then provides a very clear definition of what television advertising means in the internet age. The report shows how a single revenue stream from spot ads will give way to a more complex picture where broadcasters will need to manage four parallel sources of advertising revenue.

A clear analysis and explanation is provided as to why the broadcaster's traditional model, which relies on delivering the same content at the same time to very large audiences, will continue to be successful in the future even when internet television has reached a mature phase. The report explains how the internet could be used to enhance the broadcaster's traditional model.

The latter sections of the report provide a detailed explanation of the key assumptions used in the forecast. The report concludes by summarising the key findings and displaying the results of an in-depth forecasting exercise graphically for both the U.S. and the U.K.


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