Demand for TV ads 'has never been higher,' and it could give the TV business one last windfall

Jimmy kimmel

Live-TV viewing is in decline. But the TV industry is expected to enjoy robust advertising demand this year.
In fact, TV networks are expected to garner higher ad pricing this year, despite ratings declines and the growth of ad-free streaming.
A new UBS report points to a strong economy, digital media's ongoing problems, and an enduring belief in the power of TV among marketers as buoying the TV business.

Streaming is eating TV. Ratings for live, ad-supported shows continue to plummet. Netflix is set to make 1,000 original shows and movies this year.

And the TV advertising business is set to have a killer year.

Counterintuitive it may be, but the just-kicked-off TV upfront selling period, that annual spring ritual during which TV networks sell the majority of their ad space, is expected to be robust. That's in spite of a growing number of Americans ditching scheduled-TV watching.

"Panelists were bullish on the TV Upfront," says a new report from UBS, which quizzed 40 major advertisers on their media spending plans for 2018. "Demand for high quality TV inventory has never been higher."

Those advertisers "do not expect a sudden inflection point in TV share losses in the near/medium term," the report says. "Eventually advertisers cannot keep paying more and getting less, but for now there is no better alternative for the majority of TV budgets."

In other words, that TV-advertising tipping point you've been waiting for isn't happening this year.

In fact, while volume, or the sheer number of ads sold, is expected to be flat, TV ad prices are expected to jump over the coming year.

A unique set of short-term conditions is helping prop up the TV ad business for now

A strong economy and President Donald Trump's tax cuts.
Brands realizing that TV advertising helps buoy other ad channels, like search advertising.
Digital media's numerous issues with data and brand safety have made marketers skittish.
There's simply a lack of better alternatives. "Where else are these brands going to go?" the ad-industry veteran Eric Bader said.

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It's hardly all good news for TV, which may be enjoying a short-term blip

UBS did splash some cold water on what is otherwise a strong moment for TV advertising. For example:

TV ratings in homes with subscription video services like Netflix are generally much lower than in homes without, representing an alarming long-term trend for marketers.
Brands definitely want more data and targeting options for TV. That's an area of clear strength for digital platforms.
Over the next two years, half of the advertisers surveyed plan to shift some budgets from TV to digital outlets, while 40% expect to maintain their current balance and about 10% plan to shift budgets from digital to TV.

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