The rise of digital advertising will continue to threaten traditional media channels through 2023 and could cost television as much as $5 billion.
That’s according to MoffettNathanson, which says TV’s eroding market share is due to the continued growth of small and medium-sized businesses that are opting for digital platforms.
The research firm shared its finding in a report released last week that also said e-commerce has grown at an “astounding” pace during the six-month pandemic.
MoffettNathanson expects digital advertising to grow by $94 billion through 2023, according to a report by MediaPost. Some of those gains will come at the expense of traditional media. In addition to a $5 billion decline for TV, the firm sees print, radio and outdoor collectively losing $14 billion.
“Digital’s gains are primarily coming from attracting new money into the market rather than eating away from TV ad budgets in absolute terms,” says the report, which sees total U.S. advertising climbing 33% to $302 billion in 2023 versus $227 billion last year.
The absence of advertising from national traditional has taken a substantial bite out of television, MoffettNathanson says. “We believe traditional retail is just one example of traditional businesses likely to cut back on TV ad spend due to top-line pressures from COVID-19,” the report says.
If there’s a saving grace for TV, it could be technology titans like Amazon, Alphabet, Netflix, Apple, Microsoft, eBay and Facebook. Those companies spent an estimated 20% of their media budgets on TV last year.
“On the structural health of TV’s core advertiser segments, we believe that weakness among retail may in fact be offset by strength in technology,” MoffettNathanson says.
Last year U.S. digital advertising reached $104 billion — with television at $77 billion, print at $20 billion and other media at $25 billion.
MoffettNathanson says that by 2024, digital advertising’s share of the U.S. ad market will reach 69%, up from 46% last year. During that period, television’s slice of the pie is expected to shrink to 22% from 34% last year.