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US TV ad revenue slides

News, 27 February 2015

NEW YORK: Media investment agency Magna Global says 2015 will be a worse year for TV advertising in the US than it had previously forecast as spend continues to leak to digital.

In August 2014 it was predicting a decline of 0.9% but it has now revised this to a more significant decrease of 2.9%, the Wall Street Journal reported.

"TV will get a smaller piece of the pie than we previously thought based on our analysis of what happened in 2014," said Vincent Letang, Magna Global's director of global forecasting.

Stripping out events like the Winter Olympics, US ad revenues grew 1.6% in 2014, in part because of an economic slowdown in the first quarter. On the same basis, TV ad revenues fell 0.4%.

Magna Global pointed to ratings declines as one factor at work in TV's poor showing. Letang added that the continued growth of digital media was no longer capable of being fuelled by diverting money from print and radio, so TV budgets were now having to contribute.

Further, some advertising categories with a traditional focus on television had increased their digital investment in 2014 and were expected to carry on doing so in 2015.

Digital media spending rose 15% to $49bn in 2014 to take a 30% share of total ad expenditure and Magna Global predicted that digital and television would have equal shares worth $68bn by 2016.

It also observed the effects of "digital deflation" on US ad growth generally, as digital investment leads to productivity gains and a focus on channelling subsequent budget savings into optimisation rather than further investment.

That was a factor in Magna Global cutting the projected growth of media owners' ad revenues in the coming year from 4.9% to 2015.

Data sourced from Wall Street Journal; additional content by Warc staff