Advertisers Now Spend More On Digital Than TV

New media is slowly and steadily supplanting traditional media sources. Print media has been on a secular decline, as news and information disseminated online has grown. As this paradigm shift continues, another noteworthy development that has been taking place is the shift in ad dollars from TV to digital media. This was confirmed by a Statista report, citing research by Magna Global, a unit of media-buying firm IPG Mediabrands.

In 2017, worldwide digital ad spend finally overtook TV ad spend, with the former estimated at $209 billion (41 percent of the total market) and the latter at $178 billion (35 percent of the total market). The gap is expected to widen further going forward, with digital ad spend estimated to surge to $348 billion in 2022 even as TV ad spend flatlines.

Source: Y Charts

Google And Facebook: The Dominant Duo

Alphabet Inc (NASDAQ: GOOGL)(NASDAQ: GOOG) and Facebook Inc (NASDAQ: FB) are clear beneficiaries of the trend.

Terming the digital market as a virtual duopoly, a Forbes article quoting eMarketer, said these two companies are expected to take half of all digital revenues worldwide and over 60 percent in the U.S. The rest boast a paltry sub-5 percent share.

The Also-Rans

• Twitter Inc (NYSE: TWTR), though having started out with much fanfare, has not been terribly successful in growing and monetizing its user base. The company derives roughly 90 percent of its revenue from ads. The company's ad revenue has been on the wane, as cost per engagement has been declining.

• Video streaming hardware and software company Roku Inc (NASDAQ: ROKU) is touted as a rising prospect that can capitalize on the shift in ad dollars to digital media. Roku is tweaking its business model from a hardware play to one that's more reliant on licensing and ad revenue.

At the outset, companies such as Walt Disney Co (NYSE: DIS), Time Warner Inc (NYSE: TWX), CBS Corporation (NYSE: CBS), Viacom, Inc. (NASDAQ: VIAB) and Twenty-First Century Fox Inc (NASDAQ: FOXA) might seem like stocks that could take a hit due to the declining share of ad dollars going to TV.

Disney, which owns ABC, Disney Channel and ESPN, is aiming to launch its own digital streaming service. It also has exposure to video-on-demand service provider Hulu, along with 21st Century Fox, Time Warner and Comcast Corporation (NASDAQ: CMCSA).

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