There's no question that digital advertising is on fire. New data out Thursday from Standard Media Index reveal that while the total U.S. ad market was relatively flat in April, digital media spending exploded as traditional TV advertisers shift their dollars into new media. (
Total digital ad bookings grew 21 percent in April—driven by 70 percent growth in social media ads, a 44 percent increase in video, to sites such as YouTube and Hulu, a 35 percent rise in ad networks and exchanges, and 32 percent growth in Internet radio ads.
Where is the growth coming from? television. SMI says that spending on cable TV ads fell 7 percent in April, while broadcast spending dropped 8 percent. SMI reports that food, dairy and produce advertisers spent 14 percent less on TV ads, retailers spent 12 percent less, and financial services spent 4 percent less, while each of those categories recorded double-digit growth in digital.
But it's not all bad news—last-minute ad buys continued to recover from a weak upfront ad sales period in 2014. So-called scatter advertising buys were up 16 percent in cable and 19 percent across broadcast networks in April. And it's worth pointing out that TV companies' story is less dire when you strip out Olympics-related spending. Pivotal Research's Brian Wieser says spending on national TV ads rose nearly 3 percent.
The big question is what this surge in digital will mean for spending on new digital content and ad products showcased at recent "Newfront" presentations. Will a slew of new premium digital shows, from the likes of Amy Poehler and Vice, eat into broadcasters coffers.
The tide in digital video is exactly why Spotify launched its new video service—tackling the $7.8 billion advertisers are projected to spend on digital video this year, according to e-Marketer. The company hasn't yet spelled out its video ad strategy, but it's already posting ads along with the videos on the service.
And that value Spotify sees in digital—and video ads in particular—is why Hulu's former CEO Jason Kilar launched Vessel. It's why Facebook launched its own video ad player, as has Twitter, and YouTube, the behemoth in the is ramping up tools for advertisers to target the most popular "premium" content.
These digital players are looking to take bigger bites out of a growing pie—we'll see which of the broadcasters comes out on top this ad-buying season as they battle over one that's more stagnant.
(Standard media Index captures 80 percent of the national U.S. agency spending from the booking systems of five of the six global media holding groups.)