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Facebook and Google are eating your TV

Facebook and Google are eating your TV
[Photo: Flickr user Joshua Blount]

Bad news for network television: 2017 seems to have been the first year where digital advertising significantly eroded the growth of traditional TV advertising. That is to say, Google and Facebook–commanding most of the marketplace–grew their ad businesses to new heights last year, as TV ad dollars fell at a higher-than-expected clip.

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This is a pretty important development for the ecosystem. According to a new report from MoffettNathanson, analysts previously thought that both TV and digital ads could continue to grow relatively independent of each other.

“Up until this year, we believed that online advertising’s growth would not come at the expense of TV,” the report says. “This year has caused us to reconsider that assumption.”

Though a decrease in digital ad spends was expected in 2017–since the summer Olympics and the election happened in 2016–the size of the TV drop was much bigger than anticipated. “We are starting to believe it’s possible to see falling TV ad spend [is] due to steep declines in gross ratings points,” writes MoffettNathanson.

Google and Facebook saw ad revenue grow by $5 billion and $5.4 billion, respectively, last year, and clearly the two giants are eating into TV dollars. But the report raises another big question: At what point does the duopoly become too big to continue growing? MoffettNathanson found that, because 2017 saw an overall increase in ad spend–even as TV saw a decrease–this suggests that “digital has captured some incremental dollars from nontraditional spenders.” In other words, there’s more room for growth as marketing spend increases, especially as TV ratings continue to sink.

Overall, this could be a big wakeup call for TV network executives. While digital media companies have long been suffering under the rise of Google and Facebook, the new report suggests that television is being impacted, too.

Prepare for network executive hysteria.

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