2019 Year in review
Each year we look back at the media landscape of the previous year. We do this to review what happened so we can brief partners on strategies that reflect what’s changed, and what’s new in the Television media landscape. The most significant development for 2018 was, of course, the 2018 mid-term Elections which resulted in a considerable jump in Political advertising activity, compared to the Presidential election of 2016. Our brief communicates these key points:
- Total Direct Response Advertising inventory increased 8.4% for the year despite a 7.6% decrease during the fourth quarter
- Political advertising was just one of many headwinds facing Spot DRTV advertising this year
- A new-generation of DRTV advertisers challenged Cable TV inventory
- National DigiNet TV emerged solidly as a vital DRTV media platform
- We believe 2019 will be a crucial transition into Advertising Year 2020
- We recommend advertisers make the American Target Network® an essential part of their 2019 testing, and their 2020 strategies
We’re now about ten months away from the earliest impact of the 2020 election, the dynamics of which are unknown. It could be a re-election campaign by the incumbent President, or it could be another land rush Primary season by both parties. There could be a well-financed Independent candidate or any combination of the above which might intensify the 2020 campaigns. All this will strongly impact how much affordable, efficient media airtime is available for response, and performance-based advertisers.
Given that, our focus this year is testing, and improving strategies and tactics. DRTV campaigns will have more flexibility and more efficient media rates. Election campaigns and third-party spending will not stress 2019 inventory as they did last year.
1. Total Direct Response Advertising inventory increased 8.4% for the year despite a 7.6% decrease during the fourth quarter
During the first three broadcast Quarters of the year (January through September 2018), DRTV advertising was up 14.1%. During the final Quarter (October through December), DRTV was down 7.6%. Spot TV avails fell 10.6%, primarily because of the elections. Cable TV fell 12.6%, but for other reasons.
Nielsen Ad Intel Competitive Media Reporting shows Television inventory used by Direct Response Product advertisers increased by 364,055 30-second units compared to 2017. Nielsen defines this category, Direct Response Products, as advertising using clear and distinct calls-to-action and response devices (either phone number, or URL, or both).
They measure inventory by 30-second equivalent ad units, which have traditionally been the common stock-keeping unit used by TV Stations, Broadcast and Cable Networks, and local cable Multi-System Operators.  They also track the total number of commercial units and use that number, in combination with the 30-second measure, to estimate the average length of those commercials.  We have noticed an industry-wide transition from the traditional 30-second ad to shorter commercials which, in turn, increases the amount of clutter surrounding all TV ads.
2. Political advertising was just one of many headwinds facing Spot DRTV advertising this year
Political campaigns running in the top 50 Spot TV markets took 1,668,311 advertising 30-second units during 2018; 900,812 during the first three quarters, and 955,370 during the fourth. Add in third-party buys supporting ballot issues and campaigns, and the resulting inventory available for advertisers fell by 3.5% or 1,404,861 units throughout the year, and 8.4% during the fourth quarter.
Complicating the situation was significant year-over-year growth of the Truck Dealer Association category (up 52.9%, or by 366,350 30-second units), advertisers like AT&T, Comcast, Spectrum, and Verizon Wireless classified as Internet Service Providers (up 27.9%, or 245,060 units), and Legal Service advertisers (up 5.5%, or 186,191 units). Add to those Truck Manufacturers, Warranty Services, and Auto Insurance category advertisers. All told, ten advertising categories, including Direct Response Products, raised 2018 demand for Spot TV by 3,434,403 30-second units, or 33.2%.
3. A new-generation of DRTV advertisers challenged Cable TV avails
Nielsen tracked 822,229 more 30-second units on Cable for all product categories during 2018. That was an increase of 3.8% for the year. DRTV was the largest single product category on Cable, taking 1,915,921 units, which is a 3.6% increase for the year. Since there were no national offices up for election this year, 2018 related advertising was limited to political action and advocacy groups, and their campaigns used 11.9% fewer 30-second units than during 2017. It was demand growth from four specific product categories that impacted Cable DRTV, especially during the fourth quarter:
The first category is Website advertisers, brands like Ancestry.com, Rover, and Zola.com, who nearly doubled their 2017 demand, by 101,607 30-second units.
The next category is Computer Software, where brands like Intuit, Microsoft, NordVPN, and Stamps.com more than doubled their 2017 activity by taking 100,181 more 30-second units than 2017.
Auto Insurance is the next category, which is home for brands like Allstate, Geico, Liberty Mutual, and Progressive. Their year-over-year increase was more modest, only a 19.2% increase, but that represented 92,026 units.
The final category is Truck Manufacturers, and those advertisers increased their collective demand by 83,458 units, a 21.4% increase over 2017.
What’s interesting about this list is, except for Trucks, we’re seeing significant pressure on Cable DRTV inventory from a new kind of advertiser, who has adapted DRTV strategies and tactics to build consumer-direct brands. By the time the fourth quarter came around these four product categories were joined by Motion Pictures (up 18.7% over 2017) and campaigns for new Pharmaceutical products. This squeezed legacy DRTV advertising inventory levels in the fourth-quarter 12.6% below the same period during 2017.
4. National DigiNet TV emerged solidly as a vital DRTV media platform
In 2009, when the United States adopted the ATSC digital television standard, local TV stations got the ability to transmit contents using the digital sub-channels that came as part of their upgraded licenses. We refer to the networks distributed over those sub-channels as “National DigiNet TV.” 
DigiNet media provided 1,991,460 30-second units to all product categories during 2018. That number was up 379,580 units or 23.5% from 2017. Much of that growth is because both the Comet, and the Heroes and Icons networks achieved minimum reporting standards  and were available in Ad Intel reporting.
DRTV advertisers used 423,128 30-second units of available inventory (21.2% of total), making DRTV the largest Nielsen-defined product category in 2018 using DigiNet media. That is an 116,998 unit increase over 2017, making DigiNet media the third-largest source of media inventory used by DRTV advertisers. DigiNet inventory ranked behind Spot TV and Cable, but ahead of the combined Spanish Language Spot, Network, and Cable TV group.
5. 2019 will be a crucial transition into Advertising Year 2020
Given these developments, the question about the TV media landscape becomes what will happen in 2019. The obvious answer is that market conditions will cool off. That view may be too simplistic, however. We noted earlier that a new-era of consumer-direct brands is on the rise, mixing their particular kind of rocket science with close attention to media efficiency. They seem to be the new face of Direct Response TV. The scale of many of these brands allows them to pressure stations and networks for large amounts of airtime, making them another factor to monitor.
The State of California will join the early-season Presidential primaries of 2012. That means the Super Tuesday series of March 2020 contests will add four of the twenty-largest media markets into an already crowded field. Because of that, we anticipate a robust first-quarter (January through March 2020), with local stations declaring inventory restrictions as early as January 15, 2020. Primaries for the general election then will follow throughout the year but at lower intensity levels. Preliminary dates for the Democratic National Convention are July 13 through 16, 2020. The Republican convention follows August 24 through 27, 2020. Then, on September 4, 2020, the 60-day political window opens for the General Election on Tuesday, November 3, 2020.
Based on our preliminary estimate, we expect 2020 Spot TV Political advertising activity to increase by 640,000 30-second avails over 2018.
6. We recommends that advertisers make American Target Network® an essential part of their 2019 testing, and their 2020 strategies
American Target Network ® is a proprietary un-wired cable media asset. By combining inventory from broadband Multi-System Operators and Satellite TV providers serving over 90 million subscribing households, American Target Network® aggregates national, or regional campaigns that run on the same networks and programs as traditional national Cable. We insert like traditional cable buys, with network selection driven by target audience demographics and lifestyles. Moreover, American Target Network® delivers impressions at a fraction of the cost of the national feeds.
We think American Target Network ® can be essential for 2019 testing. The network surfaces cost-effective media and creative measurement, thus mitigating downside risk of traditional media experiments.
The Next Steps
This document presents a survey marketplace conditions that is not complete without a narrow focus on relevant competitors and consumer markets. Our client briefing schedule is underway. Let us know if you’d like to schedule a time to discuss strategies to adjust to this rapidly changing media landscape.