Does television advertising still work? Advertisers must think so because they are expected to spend about $61.3 billion on US cable TV and broadcast networks by the end of this year. Who are the top industries pumping so much money into showcasing their products or services and how will promotional efforts continue to survive when viewership continues to drop?
TV Advertising Top Spenders
Television advertising still works much the same as it did thirty years ago, for viewers at least. Commercial breaks were opportunities to grab goodies from the kitchen, make a phone call, or to carry out other little tasks while we waited for the program to resume. But just as often, we watched the promotions and found things we couldn’t do without. This concept still works today, which is why companies continue to budget millions of dollars to get their products and services in front of you.
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Nielsen listed the top ten companies and their industries that put up the dough for advertising for the month of June. This is an important month; a lot happens. There are high school graduations and plenty of weddings. Plus, it’s halfway through the year and folks are gearing up for summer. One might think TV ads would be flooded by consumer goods such as sunblock and graduation promotions. While those industries did spend quite a bit, the top of the list was pharmaceuticals, with a combined $178 million tag.
To break that down further, Abbvie Inc spent $81.4 million, GSK forked out $52.8 million, and Novo Nordisk spent $44.4 million. Abbvie Inc is the sixth largest biomedical company for revenue, and its primary product is Humira, an injection treatment for rheumatoid arthritis. GSK is based in London and, according to its website, is a “global biopharma company with a purpose to unite science, technology and talent to get ahead of disease altogether.” And yes, it helped develop a COVID vaccine. Located in Denmark, Novo Nordisk focuses mostly on medication for the treatment of diabetes.
The consumer packaged goods industry was the second largest spender at $143 million. This included Procter & Gamble ($109.3 million) and PepsiCo Inc ($33.7 million). Coming in third was the media/entertainment industry with a combined price tag of $113 million for June. This included Walt Disney CO, Warner Bros Discover Inc, and Amazon, although Amazon’s expenditures included retail and technology as well as media.
The top companies include Procter & Gamble in first place ($109.3 million), Walt Disney in fourth ($47 million), and, surprisingly, Amazon came in tenth place with a total $31.9 million spent. But will this trend of spending millions on television advertising continue?
Changing Trends in Advertisement
The live TV audience today is made up mostly of viewers 65 and older who spend nearly five hours a day watching the tube, according to Visual Capitalist (VC). This type of old-school entertainment viewing is quickly evaporating, though, as more people turn to online and streaming platforms. Customers between the ages of 25 and 35 spend only about an hour and 12 minutes each day watching TV, VC reported:
“Furthermore, in 2022, fewer than half of U.S. viewers paid for traditional TV services for the first time. By year-end 2027, this proportion is projected to fall to just over a third of households.
“Yet due to its scale of available media inventory, traditional TV may continue to bring in the bulk of TV advertising spending over the near future. One reason is that advertising makes up 20% of time spent on traditional TV but just 3% on streaming platforms.”
According to Strategus, people tend to trust TV ads more than any other type of advertisement. This is good news for the companies hawking their wares on television.
Still, advertisers suggest they will start allocating their funds to streaming services. “By year-end 2027, ad spend on streaming platforms is projected to jump to $40.9 billion, a 63% increase from 2023,” explained Visual Capitalist.
The digital world is ever growing and the traditional way of getting news and entertainment is turning away from television and newspapers. With choices such as CTV advertising (Connected Television), which streams content onto smart TVs, and streaming services where viewers pay a lower fee to have commercials included, companies are finding easier ways to reach their target audiences. The method of advertising might be changing, but the money being forked out is still astronomical.
