Billions in ad spend are coming to Creators

(2 min read) How 20+ billion in ad spend have shifted from TV monopolies to online video platforms.

Author

Avi Gandhi
April 23, 2024

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Back in 2013, when I was a first-year talent agent at WME representing some of the earliest YouTube Creators, Hollywood didn’t want to work with Creators.

The senior agents in our department - people who had been monetizing digital media since before “YouTuber” was a word - came up with a brilliant pitch to sell our TV producer clients…

By essentially scaring the living shit out of them.

I’ll break down the pitch for you and then explain why we were right and why that’s awesome for you!

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2013 WME Digital Pitch

  • TV is a ~$60 billion ad market today (in 2013)

  • That ad spend is split into 3 roughly equal segments targeting 3 age groups:

    • 25-34 - Millennials and young Gen X

    • 35-44 - Gen X

    • 45-54 - Older Gen X and Boomers

  • The buzzword of the day (in 2013) is “cord-cutter”. Everyone is talking about how young people are “cutting the cord” and canceling their TV subscriptions. 

  • The cord-cutting trends we’re seeing currently (in 2013) by demo are:

    • 25-34 - almost all are cord-cutting

    • 35-44 - some are cord-cutting, but the trend is accelerating

    • 45-54 - few are cord-cutting, they are used to cable

  • But there’s an age group we’re not paying attention to: 15-24 aka Gen Z and young Millennials. They are not even signing up for cable. They are digital-native, what we call “cord-nevers”, and they’ll be meaningful advertiser targets over the next 10 years.

  • Ten years from now (2013), in 2023, the target age demos will be the same, but the generations will have changed:

    • 25-34 - Gen Z and younger Millennials

    • 35-44 - Millennials

    • 45-54 - Gen X

  • Guess what TV subscribership is going to look like then?

    • 25-34 - Many will never have cable in the first place (cord-nevers)

    • 35-44 - Many will have cut the cord and not have cable anymore (cord-cutters)

    • 45-54 - Some will have cut the cord and not have cable anymore (cord-cutters)

  • So…if $60B in ad spending is currently going to network and cable TV (in 2013) to target people 25-54, but 10 years from now a quarter to half of the people in those demographics won’t have cable and probably won’t watch network, where’s the corresponding ad spend going to go? 

  • Probably to digital, where consumers are actually going to be spending time consuming content.

Fast-forward to today, and the pitch was fairly prescient.

TV ad spend in 2023 was $43.7 billion - just two-thirds of the $66.3 billion spent in 2013. 

It’s decline has closely approximated the decline in pay TV (i.e. cable) subscribership:

If eMarketer’s prediction here is accurate and TV ad spend follows the cord-cutting trend line, then we’re looking at another $10B - $15B leaving the TV ad ecosystem - probably for digital video.

Statista is even more bullish, expecting ~$20 billion to flow into digital video. While streamers like Hulu and Roku will take a good chunk of that, a huge amount will inevitably flow to YouTube, Instagram, Facebook, TikTok, Snap, and others - and my hope is that a good portion of it will end up being revenue-shared with Creators.

Influencer marketing dollars are also projected to rise alongside those ad dollars. After all, the best performing ads feature Creators.

So why does this all matter to you?

If you’re creating content…or building for Creators…

Keep going.

That money will be coming our way.

The only question is - how soon?

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Written by Avi Gandhi, edited by Melody Song,
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