Personalisation driving advertisers from TV to online

The US TV industry is losing advertising dollars, because a lack of data about viewers means it cannot compete with Facebook and Google when it comes to personalisation. The revenues of so-called big four TV conglomerates, Disney, CBS, 21st Century Fox and Comcast were dwarfed by Google's Q2 figure of $13.1bn, while Facebook is closing fast with 64% growth.

Ad revenue in the U.S. TV industry is enjoying a brief rebound thanks to higher pricing in the upfront and scatter marketplaces. But while the Big Four TV conglomerates celebrate single-digit ad-revenue growth, they may want to look outside their sector for a reality check.

Over the past few months, has managed to surpass the domestic ad revenue of Comcast, CBS Corp., Disney, and 21st Century Fox. The $13.1 billion that the social-media company and Google brought in together in the second quarter dwarfs the Big Four’s combined take. (Facebook’s domestic data includes Canada, while

Google considers the U.S. alone.)

Google has always had many times the ad revenue of Facebook, but Facebook is closing the gap at a rapid rate. In fact, it’s the growth rates here that are the most striking. At a 64% trajectory, Facebook grew eight times more than CBS Corp., the fastest-growing entertainment company.

At that rate, it won’t be long before Facebook gets to Google’s current scale in the U.S., far surpassing the major TV companies combined. And Facebook’s global ad revenue is twice its domestic take-up.

sources: Company Reporting, jackdaw research Analysis

One of the big reasons for Facebook’s spike is advertisers’ response to the personalized nature of its advertising. Whereas Facebook can individually target its monthly and daily active user base

(226 million in the U.S. and 175 million in Canada at the end of June) based on a granular understanding of their personal characteristics, the major TV companies know far less about their audiences, relying on broad demographics.

The Big Four’s online offerings do a little better in this department. But with an audience fragmented across pay TV, branded sites, apps, and third-party online services like Hulu and Sling TV, it’s impossible for buyers to get a real sense of who TV viewers are, or what their interests might be.

Facebook now generates an average of $50 of revenue per year from its users in the U.S. and Canada, up from $34 a year ago and $21 the year before that. But there’s no comparable metric for the TV companies.

Another big advantage Facebook enjoys is that some of its ad units generate revenue only if they lead to specific consumer actions. Known in the industry as “attribution,” it’s a feature TV still can’t offer.

So while the TV industry toasts itself on a slightly better quarter, Facebook and Google will continue to walk away with a growing slice of the overall ad revenue pie. Put in that context, it’s harder to celebrate the TV industry’s modest achievements.

Jan Dawson is the founder and chief analyst at Jackdaw Research, an advisory firm for the consumer technology market.