In the ongoing race between national broadcast and cable
networks to show advertising revenue growth, the latter has
decidedly outpaced the former. Since TV ad spending started
emerging from the crater caused by the 2009 recession, according to
Kantar Media data, total annual ad spending on national broadcast
and cable networks has recovered from its nadir by about 18%. But
from January 2010 through March 2013, ad spending on cable networks
increased by 25% whereas ad spending on broadcast networks
increased by just 11%.
During those stretches when broadcast has the advantage of
airing the Winter or Summer Olympics, it sees a predictable,
cyclical surge of incremental ad spending that causes its growth
rate to briefly edge out cable's. Those stretches are temporary,
however, and the effects fade in the following non-Olympic years.
Over the long term, the pattern is clear and obvious.
Conventional wisdom attributes this gradual redistribution of
advertiser budgets to the drift of viewers from broadcast programs
to cable channels. While this migration certainly contributes to
the story, it's not the extent of it.
The underappreciated fact is that cable has been padding its ad
revenue by steadily inserting more paid commercial time into its
programming. ("Paid" time excludes pro bono PSAs and network
promos.) The volume of paid ads on cable has been rising between
2-3% each year; this basically translates into the annual addition
of one more 20-second spot per hour. Ultimately, this added volume
accounts for more than one-third of the total growth in cable ad
spending since the recession.
By comparison, ad time on the broadcast networks has been
trending flat to slightly lower, ranging from drop of 1.0% between
2010 and 2011 to a 0.2% increase from 2011 to 2012.
Between Q1 2012 and Q1 2013, cable increased its available paid
ad time by 2.0%, whereas broadcast shrank its available paid time
It's not just that cable is selling more commercials to paying
advertisers-promotional messages from the cable networks have been
multiplying at a comparable rate. The total amount of ads per hour
on cable is rising. Cable network advertisers may want to take note
that while they're buying into an environment that may be
efficiently targeted to their audiences, it's also increasingly
Source: Kantar Media