Report: The Death Of Network TV Nears

Daryl Simm (WSJ)

Omnicom Group, the global media network that oversees more than $50 billion in annual adspend for clients such as Apple, Starbucks and Pepsi, is advising its clients to shift as much as 25% of their TV advertising budgets to online video, reports Business Insider.

The move is an admission that traditional TV budgets are under direct attack from online sources. Previously, the ad business's official line was online video would grow alongside traditional TV. Now it seems that digital video is eating TV's lunch.

In an interview with the Wall Street Journal, Omnicom Media Group chief executive Daryl Simm explained that online video is such an attractive proposition because there is more ability for clients to measure the effect of their advertising than traditional channels and there is more flexibility about where and when their ads run.

That money will have to be axed from network TV budgets: "Those budgets come from somewhere. They don’t just invent themselves.  They don’t come from the abyss. They come from the media pot," he says.

While Simm's advice could set off alarm bells for some TV networks, he says a “significant portion” of that spend is diverted back to broadcasters because their content still makes up a fair proportion of the premium online video ad market.

Simm said the industry is reaching an “apex” between TV and online video advertising, as there is now more talent — “directors, producers and brands” — wanting to enter the online video space, although the amount of quality video ad inventory is still an issue.