Traditional television advertising revenue will fall by 75% within ten years, as broadcasters lose control of their monopoly on distribution. That is the alarming projection from a British research company. It suggests that these losses could be offset by targeted interactive advertising delivered over the internet.

Analysis carried out by Generator Research suggests that traditional television spot commercials will account for just a quarter of television advertising revenue by 2019.

“This could be the beginning of a slippery slope for the television broadcasters who are about to experience what it means to lose control of a distribution monopoly, just like the music industry,” said Andrew Sheehy, head of research at Generator. “The biggest losers will be the terrestrial networks who have no way of delivering their own ads over the internet to television sets. This problem is solvable, but it will take a big effort.”

It is suggested that dramatic losses could be offset by three new types of targeted advertising that would be delivered over the internet to personal computers, portable devices and to internet-connected television sets.

The future for advertising funded commercial broadcast television lies in delivering three types of targeted advertisements over the internet, according to Generator Research.

Targeted commercials delivered to internet-enabled television sets or set-top boxes could account for 30% of all television advertising by 2019, representing $1.8 billion in the United Kingdom and $17.6 billion in the United States at current values.

Advertising delivered to personal computers or portable devices that can be used to view television programming could account for 24% of all television advertising revenue within a decade.

Hybrid services, where scheduled programming is provided over conventional broadcast channels with targeted commercials delivered over the internet to broadband connected displays, could account for 21% of television advertising revenue by 2019.

A fall of 75% in traditional television advertising revenue within a decade sounds dramatic, but informitv notes that in the United Kingdom revenues from television commercials are down around 20% in the last year alone. This might be partially attributable to the general economic recession, but online advertising revenues continue to rise.

The value of commercial broadcasters is now lower than ever. ITV and Channel 5 are now worth half what they were a year ago. Legacy broadcast businesses face an inevitable managed decline unless they can successfully address the opportunities presented by new forms of digital distribution.

Television Advertising: An Irreversible Decline? is published by Generator Research.