By Bill Harvey, January 13, 2022

Three sets of competing forecasts — by GroupM, Magna and Zenith — are all equally bullish for the expansion of the advertising industry in 2022. GroupM forecasts out to 2025 the ad market rising to $1 trillion.

From Zenith’s point of view, it’s digital that’s driving all that. I would add, largely by making advertising affordable to smaller businesses. The recent COVID-triggered cultural switch to leave another’s employ to start your own enterprise is going to feed that SMB (small and midsized businesses) fire. It looks good for agencies.

How does it look for larger advertisers and for media companies?

Media companies, having invested in a huge and successful distribution platform, had hoped to be able to milk those investments for a few decades. Streaming and to come ATSC 3.0 — both forms of digital — have made distribution efficient enough for individuals to stream their own shows if they wanted to. This means the period planned for milking has to turn into yet another period for sowing.

During the shift into streaming by the media companies, anything can happen. It’s not like during normal times, when the shares of audience can be expected to change relatively slowly when looked at from the network level (not from the series level). No, now the shares could look quite different on the streaming side vs. the linear side because of the consumer sitting in judgment of how the big media companies handle the transition. And that depends on a host of factors, mainly the content. But consumers are also leaning into SVOD to avoid ads. Netflix, Amazon Prime Video and Disney+ are SVOD. Observers predict that the portion of the video audience accessible to advertisers is going to shrink. And it appears likely that ad-supported TV in its current form will eventually shrink to people whose pocketbooks don’t have a lot to spend.

Return to sponsorship

At TV’s birth and for its first decade and a half, sponsorship was the dominant form of TV advertising. It was also such a powerful sales medium, mostly using both the power of demonstration in ads and cast-presented commercials, that the expression “cans flying off the shelves” was oft used to describe the medium.

In the early 1960s this began a rapid seismic shift to scatter plans, as media researchers (a new breed) advised brands about the importance of dispersion for reach. Now 60 years later we have pods of up to 20 ads on some channels. The original social contract has been, ahem, breached.

Sports is the One Big Thing that is growing on linear TV

Standard Media Index (SMI) reports that between January and November 2021, TV sports was at its highest level since January 2014 when SMI began fully operating in the US. Sports media experts opine that it’s the historic top level ever.

“The importance of sports to linear TV has never been more prevalent than in 2021,” notes media consultant Brad Adgate. “Of the 50 top-rated primetime telecasts of the year, 43 of them were sporting events.”

Key findings courtesy of SMI

• You are indeed correct that sports’ share of national TV ad dollars indeed hit a new high during the latest year-to-date period. (i.e., Jan – Nov 2021)
  • Total Sports = 28% of ad spend
    • Live Sports = new high 22%
    • All Other Sports (e.g., Sports Talk, Sports Docs) = 6% of ad spend
  • Live sports stood out with a CAGR of +3% during the period
    • Live sports also hit a new high of $8.3bn during Jan – Nov 2021. This surpassed the $8.2bn level last seen in Jan – Nov 2016.
  • Entertainment (61%) is still the genre leader during the year-to-date period, but share has waned over time.
  • News (10%) maintained its newly established double-digit share but receded vs. last year’s election period (12% share).

Footnote: News also grew its share 2014-2021, from 7% to 10%.

Twenty-eight percent share of ad spend — but only 9% share of content costs?

Twenty-eight percent sports share of total TV ad income compares with only 9% of content investments ($220B for total content vs. $20B for sports content). Likely this portends that the rights costs to distribute the video for live sports and other sports related programming will be going up.

This is relevant because it is a pivot point of history. If those who control linear TV keep the sports rights, the core audience to the original television companies will always be there, and not limited to downscale audiences willing to watch (or ignore) long pods of commercials.

If the SVODs win over some of the big sports rights (Amazon made a $1 B NFL play recently), linear TV will shrink faster, and the marketing people at the networks will be key to keeping the old audiences through the transition into the new technology. And winning new audiences. The last to leave the old distribution platform will of course be the older and less affluent segments. Sponsorship and branded entertainment will probably become more automated and scalable because it will need to be.

IRI independently confirmed that almost double ROAS for Sports in CPG.

Sponsorship will parallel ad growth within sports as more and more advertisers discover the real sales impact of sports — watching something alive and real, viscerally engaged, the next moment is totally unknown and will be a surprise to everyone. It’s the oldest form of public entertainment in the world and the most survivable.

Sports could be 30% of the content investments by 2030

Beyond the live games, the athletes themselves are the next wave of social media influentials, now that the NCAA has blessed NIL — college players are now allowed to receive monetary compensation for licensing the rights to their name, image, and likeness. There will no doubt be a stream of new programs of all kinds involving athletes of all sports and at all levels — with a backend of eSports, videogames and VR/AR (what they are now calling XR). Virtual Reality and Augmented Reality will mesh with video content in the next ten years in ways beyond those I’ve novelized.

Making this next transition will demand the best of all of us. Listen to your kind and wise inner voice. Listen to everything. Choose a path that is inclusive and empathetic.