TV ad spending growth rates in the US are outpacing the aggregate of all media, according to MarketingCharts analysis of figures provided by Kantar Media. This article examines: how TV ad spending has continued to grow in the US despite a nearly saturated audience; the segments that are growing most rapidly; why TV remains the prime medium for ad spending; and projected TV ad spending growth rates up to 2016.

Note: The Kantar Media figures provided below (unless noted) were tabulated on a consistent like-for-like basis that controls for changes in monitoring coverage. Figures are therefore directly comparable across every time period.

TV Doesn’t Need a Surging Audience to Grow Revenue

TV ad spending continues to surpass the national average, according to the figures provided by Kantar Media. In Q1 2012, TV media saw a 7.6% year-over-year rise in advertising expenditures, compared to the overall 2.6% growth in ad spend for the US. TV’s growth rate also surpassed the US average for 2011 overall (2.5% vs. 1.7%), most notably in H2 (3.2% vs. 0.7%), after trailing the average growth rate in H1 (1.8% vs. 2.75%).

Comparing the figures provided by Kantar Media with Nielsen audience estimates reveals that TV revenue growth continues to be solid even amidst a near-saturation in audience size. In fact, as the above chart shows, TV ad spending growth continues to be healthy even as its audience size grounds to a halt. Revenues increased by 3.2% year-over-year in Q3 2011, at the same time as the TV-viewing population declined by 0.2%. The same story was apparent in Q4, when TV ad spend increased 3.1% while its audience size decreased by 1.7%.

Similarly, TV ad spending growth rates appear to excel when compared against in-home consumption data. While average monthly time spent watching TV in the home remained relatively steady year-over-year in Q4 2011 (at 153 hours and 19 minutes), TV continued to command increased spending of 3.1%. (Q4 data from Nielsen is the most current at time of writing.)

Growth Segment: Spanish-Language TV

An analysis of Nielsen data and publicly releasedKantar Media figures for 2011 indicates that while Spanish-language network and cable TV accounted for only 5.9% of total expenditures in 2011, this overall segment grew far more rapidly than TV overall (8.3% vs. 2.4%). And while the table shows that syndicated TV spend grew at a faster rate in 2011 overall than Spanish-language TV, the latter has been coming on more strongly as of late. For example, in Q4 2011, Spanish-language TV ad spend increased 19.1% versus 11% for syndicated TV and 3.1% for TV overall. And in Q1 of this year, that trend continued: expenditures on Spanish-language TV grew by 20.7%, compared to 15.7% for syndicated TV and 7.6% for TV overall.

In fact, US advertiser spending in almost all traditional mediums targeted at Hispanic audiences (Spanish advertising mediums) increased between 2010 and 2011, reflecting the potential of this young and growing market, which is forecast to reach $1.5 trillion in buying power by 2015,according to an April 2012 report from Nielsen. TV spending (Spanish network, spot, and cable TV combined) accounted for 76.5% share of all traditional media spend directed towards Hispanic audiences. Among the TV segments, Spanish cable TV (7.9% of Hispanic ad spend on traditional media) grew the fastest, at 21%, followed by Spanish network TV (57% of spend), which grew by 13%, and Spanish spot TV (20% of spend), which grew by 1%.

Sending ad dollars to Spanish-language media appears to be a wise way to target Hispanic consumers: data from Nielsen’s “State of the Hispanic Consumer” indicates that Hispanics like TV ads 51% more if viewed in Spanish rather than English, and that hiring Spanish-speaking talent to deliver the script resonates 30% better with this group. In fact, although Hispanics remember English language commercials as well as much as the general population, the same commercial shown in Spanish can bump up ad recall by as much as 30%.

TV Is The Most Influential Ad Medium

The reason advertising spend keeps pouring into TV is that it remains the single most influential medium influencing consumer purchase decisions. A recent TVB survey found that when asked the advertising medium they find most influential in making a purchase decision, 37.2% of American adults singled out TV - almost quadruple the proportion who pointed to the nearest competitor, newspapers (10.6%). In addition, TV’s influence holds true across all age groups, and is in facthighest among the 18-34-year-old set. Indeed, despite older consumers watching more TV on average, TV’s purchase influence appears to wane with age, although it still far outpaces newspapers among those over 65 (32.7% vs. 18.5%).

Skeptics might point to these results as coming from an industry body, yet a survey released a couple of months earlier - from a more “independent” source (ExactTarget) - found similar results. Limiting the respondent pool to online consumers, the study found 53% saying a TV ad had influenced them to purchase a product or service in the past 12 months. The next-closest medium, newspapers, was a purchase driver for just 32%. Of note, the ExactTarget study also found TV’s influence lessening among older consumers. TV influence was highest among the 15-17, 25-34, and 45-54 age groups, with 59% of each demo reporting being swayed to make a purchase on account of a TV commercial. Among the 55-64 and 65+ age groups, though, TV’s influence was edged out by newspapers (45% vs. 47%, and 40% vs. 46%, respectively).

One reason for TV’s influence on product purchases could be the trust that consumers place in these ads. And even on this front, TV scores highly, per Nielsen and NM Incite research. Interestingly, among online consumers, TV ads are trusted by almost half, with TV program product placements slightly behind, but also solid - at 36% of online consumers.

To put this in perspective, this means that online consumers are more trusting of TV ads and TV program product placements than ads served in search engines results, online video ads, ads on social networks, and online banner ads, to name but a few. Indeed, online consumers are more trusting of TV ads than ads served in any online channel save for branded website ads (46% vs. 52%).

Looking Ahead: Ad Spend to Be Seasonal, But Stay Strong

Using publicly released figures from Nielsen, Kantar Media, and PricewaterhouseCoopers (PwC), the chart above compares reported TV ad spending growth rates in the US with overall entertainment and media ad spend for 2008 through 2011, as well as PwC forecasts for TV and overall growth rates reaching out until 2016. As with the non-public data provided by Kantar Media, the comparison finds that from 2008 through 2011, TV ad spend growth rates generally outperformed overall growth rates for the media and entertainment (M&E) sector. For example, in 2009, while PwC shows a 14.4% decline for overall M&E advertising spend, Kantar Media (-9.5%), Nielsen (-7.9%), and PwC (-8.7%) all found a more muted decrease for TV ad spend. The growth rate for TV ad spending in 2010 was roughly double that of overall (E&M) spending, although in 2011, the gap was much narrower.

The E&M segments included in the PwC data are: internet (wired and mobile); TV; cinema; video games; consumer magazines; newspapers; radio; out-of-home; directories; and trade magazines.

Looking ahead, the same biennial swings in TV ad spend are forecast by PwC, largely due to the influence of political and Olympic advertising. In 2013 and 2015, those ad dollars will leave the market, and TV ad spending growth will trail the overall E&M rate, although this year, in 2014, and in 2016, the opposite is forecast. All told, PwC forecasts continued solid growth for US TV ad spending, with each year growing from the last, for a compound annual growth rate of 6.7% for 2012-2016, outpacing the 5.9% projected figure for overall E&M spend.