Linear TV Ads to Grow 4% in 2022 Before Declining Again: EMarketer

U.S. linear TV ad spending will grow 4.1% to $68.4 billion this year, then trail downward over the next few years to $64.9 billion in 2026, with a slight bump in 2024 due to the presidential election and Summer Olympics, said a June eMarketer report. TV ad spending won’t return to pre-COVID-19 pandemic levels through the 2026 forecast period “and most likely it never will," it said. "The golden age of traditional TV advertising is behind us."

Connected TV (CTV) advertising, meanwhile, will reach $18.9 billion this year, doubling to $38.8 billion by the end of 2026, eMarketer said. Both linear and CTV feature mostly 30-second commercials “that bear the imprint of brands people have known for generations,” eMarketer said, saying that's an indication “TV is healthier than the traditional advertising figures indicate.”

Losses in U.S. pay-TV viewers -- adults with access to cable, satellite or telecom live TV -- will be “even steeper” than the loss of ad revenue, said eMarketer, projecting 118.8 million traditional pay-TV viewers in 2026, down 42.6% from the peak of 206.8 million viewers in 2013. Cord cutters and cord nevers combined will outnumber pay-TV viewers for the first time in 2024, eMarketer said. Connected TV’s user base isn’t growing at the pace of its ad spending, said the report.

Linear TV advertising is heading into “retirement mode,” after peaking in 2018, but connected TV ad spending is “going gangbusters” and will offset losses on the linear TV side, eMarketer said. Networks have “fully embraced the digital evolution of television,” more than making up for the “anemic” state of traditional TV, eMarketer said, calling the transition “less a sea change than a channel flip from analog to digital.” Connected TV ad spending will grow by double digits through 2026, when it will exceed half of traditional TV ad spending.

Decisions by subscription VOD streaming services like Netflix and Disney+ to launch ad-supported tiers are likely to boost an “already vibrant CTV category,” eMarketer said. An increasing amount of linear inventory is being transacted in “data-rich” environments such as addressable and programmatic, which gives marketers more visibility into their campaigns, it noted.

To date in 2022, U.S. TV advertising has been “resilient to inflation,” supply chain disruption, global conflict and stock market volatility, said eMarketer, which factored economic uncertainty into Q2 TV projections for linear addressable and programmatic TV figures. Trends buoying TV advertising are consumers’ return to theaters and travel, while financial services, insurance and healthcare have bumped up ad spending during the pandemic, offsetting cutbacks in hard-hit sectors, the report said. Though appliance vendors have been hampered by semiconductor shortages and other essential parts, they haven’t measurably cut ad spending, eMarketer said.

A worsening of current market conditions could derail ad spending in the second half, the report warned. The TV industry could benefit from struggles at Meta and Snap resulting from privacy changes at digital media companies, eMarketer said. TV has been “generally impervious” to the privacy changes, and legacy media could benefit “if advertisers shift budgets away from social platforms and back into tried-and-true formats in the advent of a more restrictive identifier landscape."

TV networks are entering a “post-Nielsen” era, said the report, noting the industry is shifting from a single currency to multipartner measurement frameworks that rolled out early this year from NBCUniversal, Disney and Warner Bros. The alternative methods of audience measurement and verification arose after Nielsen came under fire for undercounting TV audiences by up to 6% early in the COVID-19 pandemic; the Media Rating Council voted to strip Nielsen of its accreditation for local and national TV measurement last year.

Video Advertising Bureau CEO Sean Cunningham called this period “an urgent pivot to non-Nielsen measurement and currency alternatives” driven by a need to “quantify every ad impression on every screen: linear TV, CTV, streaming, digital, mobile, VOD, out-of-home and over-the-air," eMarketer said. Networks continue to use Nielsen as the primary currency and are locked into long-term contracts with the company, it said.