TV advertising is up, but it’s a Ponzi scheme, like the increased revenue in movie theaters: in both cases, they are losing viewers but charging more.
David Carr via NYTimes.com
According to estimates reported by Reuters, in the coming week the big four broadcast networks and the CW will book some $9 billion in advertising revenue, with the big four up 2 to 4 percent from last year. And cable networks, which surpassed broadcasters for the first time last year in total advertising booked during the upfronts, are expecting a payday of more than $9.6 billion, an increase of 4 to 6 percent.
Part of what keeps legacy television in the game is that it is the last refuge of mass and reach. For retailers who want to flag a sale or an entertainment company with a weekend movie opening, a commercial on a broadcast network or a highly rated cable station can still hammer a message into a lot of noggins. In this targeted age, it’s breathtakingly inefficient — you pay to reach everyone, even the millions not in the desired age group — but making a big television buy is a kind of comfort food, easy and familiar.
Yet by losing audience, networks and cable stations have been able to force advertisers to buy more commercials to reach the number of viewers that they want.
“They have an interesting business model predicated on losing viewers,” observed Brad Adgate, the senior vice president for research at Horizon Media. “It can’t last forever.”
At some point, the laws of both gravity and economics will begin to pull down the upfronts, and with them, the fundamentals of the television business. Jeff Gaspin, who used to head entertainment at NBC, told Bill Carter that he and his son recently decided to catch up on a particular series and so assembled episodes from a variety of sources — iTunes, Netflix and the DVR. They saw all the past episodes in time to watch the final one live on AMC but found that commercials interrupted their experience.
So what show demonstrated to the former television executive that the old way of watching television was losing relevance?
“The Walking Dead.”