Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) may prove a threat to some of the players in the pay-TV industry, which is already witnessing declining subscriber base. A report from Macquarie Capital says that both the internet giants are reaching more people than ever, which may prove costly for those making money in the TV advertising ecosystem.
Google, Facebook catching up
Though television is still the most dominating mass medium, reaching 294 million Americans, Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) are also catching up with 200 and 235 million, respectively. Actually, if we combine the share of both the internet firms the number becomes much more menacing, though there will be plenty of overlaps.
Last month, a report from FT reported that Google Inc (NASDAQ:GOOG) signed a million dollar deal with Publicis’ MediaVest media buying agency, allowing the latter to acquire advertising across Google sites. In another deal announced last week, Advertising Age made a $100 million upfront agreement that allows Publicis’ digital marketing agencies DigitasLBi and Razorfish to avail ad inventory across Google platforms including video (YouTube) and social (Google+).
Like Google Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB) is also investing in making its sales process simpler for television advertisers along with developing its analytics/measurement platforms. The report believes that as the efforts gain more ground, and Facebook gets the right types of video ad units, “we believe Facebook is among the key beneficiaries of the shift online.”
Trends may change
The report also notes that U.S. marketers are spending around 50% more money on televisions when compared to all digital media. Digital media gets 27.9% of ad dollars while TV gets 42.1%, according to Macquarie.
According to the report, mobile accounts for 20% of the time spent with media, but only accounts for 4% of total ad spending. Such a difference between time and ad spend may be due to the “enormous inventory available on mobile,” and “inaccessibility of handheld devices,” which pushes the price down. However, the report opines that online video on smartphones and tablets could work in favor of mobile devices, and recently a survey from Adap.tv’s found that 70% of agency video buyers are buying mobile video.
Such developments, according to report, signal a long-term bond between the internet companies and media buying agencies, and also supports the view that “quality scaled media buyers will always have a seat at the table with internet and mobile players.”