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Don’t buy the hype: The Internet hasn’t killed TV advertising

For the first time, advertisers spent more on online ads than broadcast television in the U.S., according to a new report prepared by PricewaterhouseCoopers for the Interactive Advertising Bureau. Online advertising as a whole brought in a record breaking $42.7 billion in 2013, a 17 percent increase over 2012, compared to the $40.1 billion spent broadcast television.

That's certainly a significant milestone, and it's meant to be the eye-catching part of a press release. But the details of the report show a much more complicated rivalry between online and broadcast, and tell us more about why tech companies are so eager to get onto television.

As you can see from the chart above, PwC and IAB count broadcast and cable separately. The former includes "Network, Syndicated and Spot television advertising revenue" and the latter "National Cable Networks and Local Cable television advertising revenue." If you combine those categories, you get a $74.5 billion total sum spent on television ad -- which dwarfs total online advertising expenditures.

(Andrea Peterson/Washington Post)

So, yes, television is where the money is. And for good reason: It's where the attention is. According to data from Nielsen published in February, Americans watched 185 hours of television in December of 2013 -- up six hours from December 2012. That was nearly seven times as long as people spent online at their computers, and more than five times as much as they spent using mobile devices like smart phones.

(Andrea Peterson/Washington Post)
(Andrea Peterson/Washington Post)

With that sort of consumer interest, it's no wonder big tech companies like Google, Amazon, Microsoft, and Yahoo are trying increase their presence on most Americans' living room display. Online video has been expanding too -- for instance, Disney recently announced a half billion deal to buy the YouTube-based Maker Studio.

But even though online video ads spending increased slightly in 2013 to make up 7 percent of online ad revenue, that looked meager compared to the 43 percent brought in by search-related advertisements. And it was mobile growth that primarily drove the year-on-year increase. Mobile jumped from 9 percent of the online ad market place to 17 percent and saw triple-digit growth rates.

So what's the bottom line? While the Internet is certainly disrupting traditional advertising models, there's still a lot money to be made selling ads for video content. But almost all of it is in television.

Andrea Peterson covers technology policy for The Washington Post, with an emphasis on cybersecurity, consumer privacy, transparency, surveillance and open government.



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Andrea Peterson · April 11, 2014

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