Broadcasters, The Wolf Is At Your Door

Looking ahead to a downturn in 2023, TV stations have more to fret about than a standard-variety recession. Most ad categories are cutting spending; competition from all sides, including streaming, is fiercer than ever; and TV’s lack of reliable measurement is tying a hand behind its back.

We’ve all seen the forecasts: Television ad sales for the second half of this year should ensure record 2022 revenues. S&P Global Market Intelligence’s Radio & TV Annual Outlook puts 2022 TV station ad income at $24.15 billion. That’s almost 18% better than in 2021.

Naturally, analysts expect 2023 to be down a bit. It’s an odd year with no political advertising or Olympics to boost sales. But there’s more at work than just the normal two-year cycle. We are already hearing about a possible slippage from what was sold in the 2022-23 upfronts. Growth projections for later years seem to be below the Federal Reserve’s 2% inflation target. Factors at work now mean television needs to plan for a changed selling environment or resign itself to becoming irrelevant.

Recession is obviously the first concern. MoffetNathanson reportedly predicts that, when it comes, the downturn will span five quarters. Recessions are a normal part of the economic cycle. While we always seem surprised by them, media has survived them before and can do so again. What’s of more concern are the changes that cannot be managed by good fiscal stewardship alone.

Political Advertising — Friend Or Foe?

Consider political advertising. Forecasts show more dollars being spent in more concentrated areas — some stations see a windfall, others get nothing. AdImpact estimates $9.7 billion in 2022 political advertising; this surpasses the $9 billion spent in 2020, which included a presidential race. The 2022 estimate is more than double the $4 billion spent on the last mid-term elections in 2018. The accepted wisdom is that more money is spent during presidential election years than for mid-term elections. If that holds true, what does this trend mean for 2024 and 2026?

A 2012 article in The Broadcast Law Blog explains that TV stations must provide “reasonable access” to ad time for all candidates for federal office and at the lowest unit rate. Stations are not obligated to sell time to candidates for state or local races, but if they sell to one, they must sell to all candidates in that race (with some very limited exceptions).


Research shows that television advertising is still the best way to educate voters about a candidate or issue; social media’s strengths lay elsewhere. With so much political advertising money being spent to influence local votes in target areas, how long will it be before other advertisers are crowded out and look elsewhere to transmit their messages?

Most Advertising Categories Are Cutting Spending

While political advertising spending has been on the upswing, other traditional categories have reduced their advertising investment. Standard Media Index’s “Core Release Note” for July 2022 shows that month’s advertising expenditures were 12% lower than those in July 2021.

To explain part of the change, the authors cite differing circumstances including the absence of Olympics programming and the shift of the NBA Finals back to June. Regardless, what caught my eye was that the majority of the ad categories tracked by the group showed a year-over-year (YoY) decline in advertising spending. Of the 12 “Product Group Categories” identified, only four grew: Consumer Package Goods were up 1.0%; Travel increased 28%; and Apparel & Accessories advertising rose by 4%.

Keep in mind that, with the exception of Consumer Package Goods, which accounts for 22% of measured advertising spend, the other categories’ contributions are significantly smaller. Retail comes in at 8% of the total, Travel (which saw the largest YoY increase) accounts for 3% of the advertising dollars, and Apparel & Accessories only contribute 2%.

Brain Wieser, Group M’s global president of business intelligence, noted a similar trend during his summer podcasts. In one he warned of slowed spending from what he calls “Digital Endemic” advertisers. These are digital companies, such as Amazon, which spend disproportionately more of their total revenue on advertising.

Increased Competition

Television is seeing new competition from all sides. First there’s the explosion in options for watching video content. This means both a flood of content from creators with all levels of experience and more bidders for the highest quality content. Marquee live events, like sports, command premium prices because they can all but guarantee the largest audiences.

This is leading to a shift in distribution outlets — see NFL’s Thursday Night Football move to Amazon Prime. It’s no longer even notable when a series relocates from a television network to a streaming service — The Mindy Project transferred from Fox to Hulu; Unbreakable Kimmy Schmidt left NBC for Netflix; Futurama went from Fox to Comedy Central to Hulu; and the list goes on.

At the same time, other video businesses are positioning themselves as viable alternatives for advertisers. Anyone who’s clicked on a YouTube link has seen at least one commercial for Airbnb, VBRO or another national advertiser. Netflix, which famously backtracked on its no-ads stance earlier this year, now plans to have its ad-supported option available in November. Despite the negative observations about planned pricing and the company’s ad sales strategy, the bottom line is that clients are asking that Netflix be included in their advertising mix.

It’s not just OTT and streaming companies going after ad dollars. Amazon recognized about $31 billion in 2021 ad sales revenue. Walmart reported $2.1 billion for ad sales in the same year and has a deal to sell Paramount+ through its Walmart Connect offering. Even electric vehicle charging stations are getting into the act. Since the largest charging operators target retail locations for their devices, they can offer advertisers the opportunity to reach consumers at the point of sale. One automotive-related business mentioned using the tactic to tell customers that his company offered products and service for all types of vehicles; that’s a message that could be communicated in a TV spot.

Measurement Matters

All of this is exacerbated by the measurement problem. Amazon knows a lot about the consumers to whom they are serving ads. Walmart has “122 million unique users in the U.S.” along with 5,335 Walmart and Sam’s Club stores; there’s a lot of potential value to advertisers if the company can offer them combined ecommerce and in-store purchase information.

Netflix says it won’t be providing viewership data to advertisers, but it’s early days. Even the charging stations can provide targeting and behavioral data. TV is still, primarily, relying upon Nielsen, a system which lost its accreditation, has just delayed the use of its big data solution for “transaction purposes” and expects its recent acquisition by an investment group to close in October.

The Wolf Is At The Door

The outlook for 2023 and beyond is bleak if companies don’t figure out how to address these issues. The only television group that seems to be taking the threats seriously is NBCUniversal. It has already announced a new measurement currency and new ad formats, all intended to give advertisers what they want most — a way to engage potential customers. The jury’s still out on which, if any, will prove successful, but at least it is innovating.

Yes, new technologies and offerings cost money. The alternative is relying on the whims of political campaigns, selling to advertisers looking for a bargain without good measurement, and spending eye-popping sums on live sports programming.

When making plans for 2023, you need to know that the wolf is at the door.

Former president and CEO of the Media Financial Management Association and its BCCA subsidiary, Mary M. Collins is a change agent, entrepreneur and senior management executive. She can be reached at [email protected].

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