April 30, 2019 Dan Wilson

Where have all the ads gone?

I recently had the pleasure of watching Jana Eisenstein present in Amsterdam. She quoted a stat from Neilsen that 9 trillion linear TV ads will disappear from TV screens in five years in the USA. This is an interesting stat – basically it is half of all linear TV ads in the USA.

That is a lot of ads. This is predominantly driven by falling viewership as people turn to services like Netflix etc. for content, but the implications for this are unclear. On the one hand, the remaining linear TV viewers may be lower income households with less disposable income for OTT services. On the other, fewer viewers means scarcity which drives higher yields.

I think the former is more likely. A smaller, potentially less desirable (from an advertiser perspective) audience should mean that the cost of media goes down dramatically, which is at odds with the current push by broadcasters everywhere to secure higher rates. According to Media Post TV upfront revenues are forecast to climb 2.5% in the USA to over $21 billion. Emarketer claim that this is due to the scarcity of viewership – which doesn’t make much sense from my position, I’d take the opposite view that a less desirable in smaller volume against something with a fixed output means prices fall.

The ability to take positions on media is a key part of LMX. Whilst we don’t dictate the price we do allow trades to be made in media – TV is a great market to speculate on: It’s large, liquid and isn’t going away anytime soon. I may be right on where the price goes, I may not – this isn’t an investment thesis, but it is a reminder that there is a better way to buy and sell advertising. And that way is on a market based on a financial market.


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