Digital video continues double-digit growth; OTT spend rises
TV ad spending will continue its decline this year, according to eMarketer’s latest US advertising forecast.
With cord-cutting accelerating and over-the-top (OTT) viewing on the rise, outlays on TV ads will slip 0.5% in 2018 to $69.87 billion. As a result, TV’s share of total US media ad expenditures will drop from 33.9% in 2017 to 31.6% this year.
TV ad spending will see a slight uptick in 2020 (due to the US presidential election and Summer Olympics in Tokyo), but it will sink back to negative territory in the following years and fall to less than a quarter of total ad spend by 2022.
“The shift of audiences to OTT viewing is changing the climate of the TV ad market,” said eMarketer senior forecasting director Monica Peart. “As ratings for TV programming continue to decline, advertiser spending will also continue to see declines, especially in years that do not boast major events such as presidential elections and Olympic games.”
Meanwhile, total digital ad spending in the US will climb 18.7% this year to $107.30 billion. OTT platforms, which have a small but growing share of the market, will continue to play an important role. This year, Roku’s US ad revenues—mostly video but including some other display formats as well—will surpass $293 million, up 93.0% over 2017. And Hulu’s US ad revenues will increase by more than 13% to reach $1.12 billion. Overall Hulu’s ad business is increasing as well as the company revenue from subscriptions.
“Over-the-top platforms are growing in number and size, and many compete directly with pay TV by offering bundles of live channels at attractive price points,” said eMarketer principal analyst Paul Verna. “Consumers who want to cut or shave the cord now have a wealth of options that didn’t exist a couple of years ago. And we expect the offerings to become even more robust as more players enter the market.”
These advertising trends come as cord-cutting continues to gain momentum in the US. Last July, eMarketer increased its estimates for cord-cutters substantially for 2017 through 2021. This year, the number of TV viewers in the US will drop 0.2% to 297.7 million. Conversely, the number of OTT viewers will grow 2.7% to reach 198.6 million.
