Cable's edge over broadcast: more ad time

Tech // TV 08.11.2013

Jon Swallen

Chief Research Officer, Kantar Media Intellig…

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  • 25% Cable ad spending increase since Jan '10
  • 11% Broadcast ad spending increase since Jan '10

Cable has basically added one more :20 ad per hour annually since January 2010

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 by 2.4%.

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 cluttered.

Source: Kantar Media

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