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McKinsey: TV Selling Power Significantly Less by 2010

By 2010, traditional TV advertising will be one-third as effective as it was in 1990, according to a study from Mckinsey & Co. 

AdAge reports that the statistic assumes a 15 percent decrease in buying power driven by CPM rate increases; a 23 percent decline in ads viewed due to switching off; a nine percent loss of attention to ads due to increased multitasking and a 37 percent decrease in message impact due to saturation.

According to McKinsey, real ad spending on prime-time broadcast TV has increased over last decade by about 40 percent even as viewers have dropped almost 50 percent.

A drop in teen viewing is a major reason why the future looks bleak. Teens spend less than half as much time watching TV as typical adults do. Teens also spend 600 percent more time online, surfing the web. But a lack of online-ad supply and the web’s generally fragmented nature will keep TV in booming business for the next several years.

Instead, Tom French, director at McKinsey, said don’t take standard reach metrics at face value. He advises to consider evaluating media on an “adjusted reach” basis.