Don't expect broadcast TV ad dollars to improve much in 2015.
That was the message from CBS Chief Research Officer David Poltrack at UBS Global Media and Communications Conference in New York on Monday.
Mr. Poltrack predicted ad revenue will remain stable, but not grow through the first-half of the New Year. He estimates advertising will be flat at the onset of 2015 and then grow 2% in the second-half.
This is a much more muted forecast than Mr. Poltrack's prediction for 2014, when he said at the same conference that ad revenue would grow by 4% when adjusted for the Olympics.
But that prediction proved to be way off. "I missed the call for 2014 by a wide margin," Mr. Poltrack said. "The advertising market never gained any momentum in 2014."
Instead, broadcasters will ultimately post 1% uptick in ad revenue, or down 1% when adjusted for the Olympics, Mr. Poltrack said.
One way CBS is looking to boost ad spend is by further monetizing viewing that takes place in the seven days after a program airs. To this end, CBS will begin testing next month on-demand commercial ratings with Comcast for "Madam Secretary." ODCR allows advertisers to buy commercial time on the current week's episode of "Madam Secretary," and have the ads run not only in that episode, but in all episodes viewed in video-on-demand that week.
Viacom CEO Philippe Dauman also called out VOD as a key opportunity. Mr. Dauman said dynamic ad insertion, which allows advertisers to swap out messaging that runs in VOD, will be a growth driver moving forward.
When it comes to ad dollars shifting from TV to digital, Mr. Poltrack said that's certainly happening, calling out consumer-packaged-goods category, which he said continues to reduce its TV ad budget in favor of digital alternatives.
But Mr. Poltrack said advertisers shouldn't be using TV budget to fund digital-media spending.
"Should advertisers be investing in a full array of new digital media options? Absolutely," he said. "Should they be funding these investments from their TV advertising budgets? Absolutely not."
Mr. Poltrack went on to ask rhetorically why a marketer would fund experimental ad buys with money from marketing programs that have proven to lift return on investment higher than other parts.
Mr. Poltrack and Mr. Dauman also tackled the subject of ratings erosion, arguing that viewers weren't missing so much as not being counted. As has been the argument within the TV industry, Mr. Poltrack pointed out the absence of measurement of platforms like over-the-top devices, streaming services and mobile phones. The lack of Nielsen measurement, he said, is one of the biggest culprits in the supposed decline of TV viewing. It isn't that people aren't watching, they are just watching in ways that aren't currently being measured.
Mr. Dauman also fielded questions on ratings erosion. Echoing comments he has made in recent months, Mr. Dauman called for better measurement of digital platforms. Until then, the company is investing in non-Nielsen measured platforms, like new mobile products.
Netflix, in particular, has cut into TV viewing, and the streaming platform does not provide data on its viewership. Netflix households have grown to 35% from 22% last year and the service accounts for the 3% drop in households watching TV as reported by Nielsen, Mr. Poltrack said.
Still, Mr. Poltrack believes Netflix and other SVOD services continue to be a good business opportunity for TV networks, by allowing them to build a viewer base for series and fund new shows with the money it receives by licensing content. Plus, CBS does not compete with Netflix for ad dollars, he added.
And Netflix's original series only account for 6.6% of total Netflix viewing by adults, according to Mr. Poltrack's research. In comparison, "NCIS" accounted for 800 million hours of viewing last year on CBS alone, he said.
Overall, Mr. Poltrack said despite previous patterns broadcast networks are performing better than its cable counterparts. Outside of Fox, he said no networks should have significant audience deficits.