LONDON: Changing viewer habits mean fewer people are watching linear TV and more are going online to consume video content with $25bn of advertising expenditure set to follow them in the next five years a new report has said.
The Future of TV, from digital marketing agency Distilled, said the TV ad market had been "remarkably resilient" in the face of declining viewership, but argued that the current situation could not be sustained.
It pointed out that 80% of US households already had some form of internet-connected device paired with their TV and said OTT (Over The Top) content from providers such as Netflix and YouTube was driving the disruption of traditional viewing patterns.
The report noted that analysts had long been predicting this revolution but said that the industry was finally achieving a critical mix of hardware, software and connection speeds that would enable OTT to break through. It was, said Will Critchlow, chief marketing officer at Distilled, "a significant turning point for the future of television advertising".
As the market starts to look increasingly digital, the report said media buyers' relationships would become less important and digital opportunities would be much larger.
"The internet is doing what it does best, it is unbundling and making television shows available online to be watched at any time," said Critchlow, with viewers getting more choice and more convenience in the process.
"In the near future, adverts will be shown based on who's watching what content at that moment," he added.
The report stated that the number of different channels, shows, services and device combinations would reach a scale where negotiating each individual deal will be impossible.
There was therefore an opportunity for a business to establish itself as the "AdWords" of brand advertising by creating a self-service, market-priced platform, with the most likely candidates being Facebook and YouTube.
"Whoever it is, we believe that the creative will be crucial, particularly the ability to tell stories and create marketing people will love," said Critchlow.
Data sourced from Distilled; additional content by Warc staff