Two Slides That Tell The Remarkable Story Of How Doomed Television Ads Are
I left advertising five years ago to take a deep dive into designing and building products. Back then, the media and technology world was changing, and the radio and newspaper industries were in trouble.
Over the last five years that disruption has spread. The money is going digital in a significant way. Ad dollars are going from ATL to digital, or said differently, from TV to social. Meanwhile, TV audiences are declining (even for NFL was -9% in the most recent season) and cable tv subscribers are cutting the cord (down 3.7% in 2017).
TV Ad Slash and Burn
When the audience disappears so does the money. Proctor & Gamble, the big brand advertising cheerleader, is cutting analogue and even digital budgets in a significant way. They recently announced over $400M in ad agency cuts.
Since the Mad Men era, several industries built themselves around the advertising model. None more so than automotive. So what's fascinating is that if Television is hurting, so is Detroit.
The USA Net Sales as a % of USA GDP for GM and Ford have fallen in concert with the decline of TV. Since 1995 their net sales as part of the economy has been slashed by half.
During that same time TV ad spend as declined by a third. Perhaps there's still more pain to come for Madison Avenue.
No Love for Ad Interruptions
Of the declining TV ads that remain, it's pretty clear that we hate them. A recent All Flick's survey found that more than 70% of Netflix users would quit if advertising were included on Netflix. Given the boom in Hulu, Netflix and Amazon Prime it's inevitable that these subscription-based services will dominate the traditional ad-supported model.
I recently watched a talk that captures so much of the change in the ad world. The speech is from 2016 and so much as accelerated since then. However, you should enjoy Scott Galloway and his spot-on talk Death of the Industrial Advertising Complex.