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US report warns of ‘existential crisis’ for traditional broadcasters

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Traditional TV could be facing an “existential crisis,” according to a report on the ad sector from Brian Wieser, principal at Wall Street insights provider Madison and Wall, published today.

The report is broadly optimistic about the advertising sector’s future, and predicts that in the US, where a market-specific spike in ad revenue around the presidential election is likely ahead of the 2024 vote, total advertising revenue will hit $363 billion in 2023, up two percent, and grow 8.1 percent in 2024, adding that it expects “a return to normalized growth for US advertising.”

National TV, however, is an area of concern for Wieser, who reports issues that will likely be familiar to broadcasters on this side of the pond too: “Significant challenges get worse from here,” the report’s section on national TV warns. “The television advertising sector is experiencing what might feel like an existential crisis at the moment. At the start of this year, we had a situation where cord-cutting was accelerating into high-single-digit levels of decline, enabled (if not outright encouraged) by traditional TV network owners’ shift of resources and programming budgets into streaming platforms, which have been and are likely to always be ad-free or ad-light at best.

“And then we had the Hollywood strikes, which increasingly look like they will have a meaningful impact on the production of what’s left of ad-supported entertainment programming, and thus the availability of inventory to meet marketer goals in the latter part of this year as well as the early part of next.”

The report goes on: “Shifts to streaming make it almost certain to me that the tonnage of advertising [consumers] are exposed to will go down significantly as a result. The practical challenges of managing reach and frequency – still the key metrics large brands [that] dominate national TV care about – in this world make this medium far less desirable than it once was, especially as pure-play digital platforms are increasingly capable of satisfying nearly every marketing goal as well or better than any alternative.”

Wieser’s did offer some hope for legacy broadcasters, however: “If there is an upside opportunity for today’s owners of television networks, it will occur if they redefine what they have historically sold. To the extent that they can capitalize on what are still-sizeable relationships with marketers to offer a wider array of media products – for example, by creating common identifiers that allow for integrated sales of traditional TV, streaming video, and other digital inventory – I think there are opportunities for growth ahead.”

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