NEW YORK: As TV networks, digital channels and advertisers prepare for the latest "upfronts" ad sales season, there are encouraging signs that adspend commitments could increase 3% to 5% this year.
According to early estimates from industry insiders who spoke to the Wall Street Journal, TV is expected to be a winner this time after suffering three consecutive years of upfront declines as a proportion of total adspend.
This will come as a relief to the TV industry, which witnessed a particularly weak upfronts market in 2015 when both broadcast and cable witnessed falls in spending.
Warc expects US TV ad revenue to increase 4.8% to $66bn in 2016, buoyed by major events such as election spending and the Olympic Games in Brazil.
It appears there are two main reasons for this reversal of fortune. There are concerns among advertisers about how best to measure return on investment (ROI) from digital campaigns, and many also ended up losing out in last year's upfronts and scatter markets.
Many advertisers held back from making spending commitments in the upfront marketplace last year only to find that they ended up paying more in the scatter market.
Some found themselves paying premiums of as much as 20%, leaving Jeff Lucas, head of ad sales at Viacom, to observe that anybody who held money back in the last upfront "got burned".
Ad buyers also told the Journal that some advertisers who concentrated their budgets on digital subsequently found their ROI did not live up to expectations.
In addition, concerns linger about the viewability of digital ads and the prevalence of fake web traffic generated by computerised bots.
While Procter & Gamble, the FMCG giant and biggest advertiser in the US, is continuing to devote budgets to digital, its TV adspend has shot up this year.
According to Jon Swallen, chief research officer at Kantar Media, P&G spent $1.4bn on TV ads in the US in 2015, down 12% from 2014, but its TV adspend jumped 13% in January compared with the same period last year.
Preliminary data suggest that trend continued into February and, if replicated by other big spenders, could make 2016 a more promising year for TV networks.
According to early estimates from industry insiders who spoke to the Wall Street Journal, TV is expected to be a winner this time after suffering three consecutive years of upfront declines as a proportion of total adspend.
This will come as a relief to the TV industry, which witnessed a particularly weak upfronts market in 2015 when both broadcast and cable witnessed falls in spending.
Warc expects US TV ad revenue to increase 4.8% to $66bn in 2016, buoyed by major events such as election spending and the Olympic Games in Brazil.
It appears there are two main reasons for this reversal of fortune. There are concerns among advertisers about how best to measure return on investment (ROI) from digital campaigns, and many also ended up losing out in last year's upfronts and scatter markets.
Many advertisers held back from making spending commitments in the upfront marketplace last year only to find that they ended up paying more in the scatter market.
Some found themselves paying premiums of as much as 20%, leaving Jeff Lucas, head of ad sales at Viacom, to observe that anybody who held money back in the last upfront "got burned".
Ad buyers also told the Journal that some advertisers who concentrated their budgets on digital subsequently found their ROI did not live up to expectations.
In addition, concerns linger about the viewability of digital ads and the prevalence of fake web traffic generated by computerised bots.
While Procter & Gamble, the FMCG giant and biggest advertiser in the US, is continuing to devote budgets to digital, its TV adspend has shot up this year.
According to Jon Swallen, chief research officer at Kantar Media, P&G spent $1.4bn on TV ads in the US in 2015, down 12% from 2014, but its TV adspend jumped 13% in January compared with the same period last year.
Preliminary data suggest that trend continued into February and, if replicated by other big spenders, could make 2016 a more promising year for TV networks.
Data sourced from Wall Street Journal; additional content by Warc staff
