Digital Video Ads Eclipse Traditional TV as Viewing Habits Shift

Digital video advertising is projected to reach $62.9 billion in US ad spending in 2024, surpassing traditional TV ad spending. Media companies are adapting by developing new advertising tools and partnering with tech giants to capture a share of the shifting ad dollars.

Aqsa Younas Rana
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Digital Video Ads Eclipse Traditional TV as Viewing Habits Shift

Digital Video Ads Eclipse Traditional TV as Viewing Habits Shift

The media landscape is undergoing a seismic shift as digital video advertising surges past traditional TV ad spending. A recent report from the Interactive Advertising Bureau and Gartner projects that digital video advertising will reach a staggering $62.9 billion in U.S. ad spending in 2024, accounting for 52% of the total video advertising expenditure this year.

Why this matters: This shift in ad spending has significant implications for the future of media consumption and the business models of traditional TV companies. As digital video advertising continues to grow, it may lead to a decline in the quality and diversity of content produced by traditional TV companies, ultimately affecting the viewing experience for audiences.

This monumental change is attributed to the evolving viewing habits of audiences, who are increasingly gravitating towards digital platforms such as Netflix, TikTok, and YouTube TV. The competition from tech giants like Amazon and Netflix has further intensified the battle for ad dollars, putting immense pressure on traditional TV companies.

The impact of this shift is evident in the latest quarterly earnings reports of media behemoths. Walt Disney, Warner Bros Discovery, Fox, and Comcast's NBCUniversal have all reported declines in domestic television ad revenue. "We've definitely seen that audience erosion in linear TV in certain pockets, especially more so in entertainment," said Nicole McCurnin, director of advertising insights at Gartner.

To adapt to the changing landscape, media companies are developing innovative advertising tools that allow marketers to follow their target audiences across different platforms. NBCUniversal's global advertising chairman, Mark Marshall, highlighted the company's ability to track ads across live network TV, streaming services, and social media. "Regardless of where that person is, who's in your target, you can go follow them wherever they are," Marshall said.

The annual Upfronts presentations this week will showcase the media industry's response to the digital disruption. Amazon is making its debut at the Upfronts, aiming to capture a larger share of the shifting ad dollars with its Prime Video ad-supported tier. Netflix and YouTube are also presenting, underscoring the growing clout of digital platforms.

As the battle for ad dollars intensifies, media companies are also forging partnerships with tech giants to sell more ads. Google has announced that brands will be able to buy ad space with media companies like Paramount and Warner Bros Discovery through its automated tech tools. This collaboration signals a new era of convergence between traditional media and tech.

The digital video advertising boom is transforming the media industry, with far-reaching implications for content creators, advertisers, and viewers alike. As traditional TV companies grapple with declining ad revenues and tech giants make inroads into the ad space, the future of video advertising hangs in the balance. The Upfronts this week will provide a glimpse into how media companies are navigating this uncharted territory and redefining the advertising landscape in the digital age.

Key Takeaways

  • Digital video ad spending to reach $62.9B in 2024, surpassing traditional TV ad spend.
  • Shift in ad spending may lead to decline in quality and diversity of traditional TV content.
  • Audiences increasingly gravitate towards digital platforms like Netflix, TikTok, and YouTube TV.
  • Media companies develop innovative ad tools to track audiences across platforms.
  • Partnerships between media companies and tech giants emerge to sell more ads.