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Study: TV Ads Are on Upswing

6/18/2012 12:01 AM Eastern

The global television advertising pie is
expected to grow by nearly 38% in the next five years, led
by gains in U.S. cable, online and mobile segments and
in emerging markets like Asia and Latin America, a new
study suggests.

Total global TV advertising is expected to grow from
$185 billion in 2012 to $254.7 billion in 2016, according to
the PriceWaterhouseCoopers Global Entertainment & Media
Outlook 2012-2016
, released last week.

The North American market will make up the bulk of
that revenue ($103 billion in 2016), growing at a slower
pace (6.6%) than those emerging nations. PwC said the
Asia-Pacific region will grow at a 6.9% annual rate and
Latin America by 9.8% annually.

$2.1 TRILLION TARGET

Global entertainment and media spending — including on
TV, the Internet, movies, music and radio — is expected to
rise to $2.1 trillion in 2016 from an estimated $1.7 trillion
in 2012, a compound annual growth rate of 5.7%.

In the U.S., E&M spending is predicted to rise 5.2% annually,
about half the rate of emerging markets like China
and Brazil.

Stateside, cable advertising will continue to take ad dollars
away from broadcast, continuing a five-year trend. The
terrestrial, or broadcast, share of overall U.S. ad revenue
has declined from 61.2% in 2007 to 54.6% in 2011, while pay
TV’s share increased from 37.3% in 2007 to 41.7% in 2011,
according to PwC.

For the next five
years, terrestrial advertising
share will dip
from 55.4% to 50.1%,
whi le multichannel
advert ising will increase
from 40.4% to
43.1%, according to the
consulting firm. Online
ad share will rise from
3.1% to 5.1% in that
span and mobile, propelled
by smart phone,
tablet and TV Everywhere
viewing, will increase
its share from
1.1% to 2.1%.

Global advertising
sales will rise about
6.4% annual ly from
$513 billion in 2012 to
$660.9 billion in 2016,
PwC said.

The lead category is
television ($254.7 million
in 2016, rising 6.6% annually). But Internet ads, including
online and mobile, will rise at a 16.6% annual clip,
to $188.1 billion from $105.4 billion in 2012.

PwC sees prime evidence that the entertainment and
media industry is close to “the end of the digital beginning,”
in which online and mobile services become integral
and embedded products.

“Change in consumer behavior is pervasive and accelerating
and the E&M industry is in the front
line of this change,” PwC entertainment, media
and communications U.S. practice leader
Ken Sharkey said in a statement. “The past
uncertainty triggered by the digital migration
has given way to a sharper focus of E&M companies
on executing their digital strategies.”

While the U.S. TV ad market has taken
some hits in recent years, Miller Tabak media
analyst David Joyce said, it is still showing
signs of strength. “The U.S. is actually one
of the safer economic bets,” he said.

While emerging markets Brazil, Russia,
India and China have seen slower growth as
they become more developed, they still have
rapidly rising populations, especially in middle-
income families, which should help drive
consumer spending and therefore ad-revenue
growth.

PwC said companies can address the
changing ad market in three ways: by using
data and analytics to understand consumer
behaviors and motivations while remaining
sensitive to privacy concerns; developing
new business models to redefine the advertising
and content value proposition; and crafting
new organizational models that integrate
digital operations into the main enterprise.

 

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