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This is a sneak preview from our TV Dimensions 2020 Alert service, which is included in your purchase of TV Dimensions 2020 or MDI Direct. TV Dimensions 2020 will be released digitally later this week, and the print edition ships next week.
Many people in the media business remain perplexed at linear TV’s ability to attract significant ad revenues compared to alternatives like OTT, ad-supported SVOD (AVOD) and digital video venues. After all, linear TV’s viewing time among young adults has decreased significantly in the past decade, as is also the case with middle aged and affluent adults, who have turned increasingly to SVOD. So, what’s behind linear TV’s appeal to advertisers?
To answer this, we must look at how linear TV’s distinct programming segments affect its ad revenues. First, in terms of tonnage, is non-news/sports entertainment fare, including dramas, sitcoms, reality shows, game shows and talk shows. These are seen in almost every daypart, and account for approximately 70% of the time Americans spend with linear TV content. While the broadcast TV networks’ primetime entertainment shows are part of the mix and command high CPMs, they represent only 7-8% of all viewing, and 12-13% of ad spending. The remainder, with the exception of a few basic cable channels, is bargain basement TV, featuring extremely low CPMs. Indeed, such programming represented about 62% of all viewing in 2019 but earned only 31% of all ad dollars.
This brings us to the other category of programming, news, sports and specials, which is the mainstay of TV’s advertising revenues, not because of its audience, but because of intangible factors like merchandising values, celebrity/athlete tie-ins, brand image and so on. In the case of news, we count all of the content produced by the network and station news departments, so programs like Today, The CBS Evening News, 60 Minutes and Face the Nation are all included, as are the 24/7 cable news and business channels and local station newscasts. Sports of all kinds, both regional and local, are another major component, as are one-shot specials like The Academy Awards. All three genres comprise a form of premium content that is not available on alternative platforms.
The accompanying table demonstrates the importance of linear TV’s premium content. In 2019, news, sports and specials accounted for only 30% of linear TV’s audience tonnage but generated nearly double that in ad revenues. Clearly, the type of advertiser who wants to be in such venues is willing to pay nearly twice the normal cost-per-viewer for the privilege.
Until OTT/AVOD is able to offer news, sports and specials on par with linear TV, it will not be able to capture a significant amount of premium ad dollars. This is the case even if linear TV’s average minute ratings continue to erode at the current pace (5-7% annually). While the broadcast networks’ primetime fare is much more vulnerable to defections, it’s not the main ad revenue draw it once was. Until critics realize that it’s more than just about eyeballs, linear TV is hardly the endangered species that some make it out to be.
Nielsen recently posted a look back at the year that was in its article, “Tops of 2019: Television.” In it, we see once again see the importance of TV specials and sports. Aside from the series finale of The Big Bang Theory, all the top 10 single telecast programs of 2019 were specials (e.g. The Academy Awards) and sports events. The only cable channel to break into this list was ESPN with the CFP Championship game.
In terms of the top 10 regularly scheduled programming, the networks again dominated with nine of the programs that made the list. The only exception was HBO’s final season of Game of Thrones. Otherwise, football continued to hold its lead among American viewers, with four top 10 slots.
Interestingly, we see that cable has much more of a presence when it comes to time-shifted viewing. Here, six of the top 10 programs featuring the largest increases from time-shifted viewing are on cable. While this boost to viewership is undoubtedly good news for the networks on which they air, it also reinforces the fact that while such series may be personal favorites, they’re hardly the must-see TV that dominates the actual top 10.
