Cable television networks' advertising revenue growth is slowing down in terms of percentage gain, but still improving. Cable TV networks totaled $22.1 billion in 2011 -- a nearly 8% gain over 2010, per the Cabletelevision Advertising Bureau. Results in 2010 were up 18.1% from the $18.7 billion level in 2009. Overall, including local cable spot advertising sales, the CAB notes on its site that 2011 totals were up 4% to $28.7 billion. It says English-language cable networks made up a 32% share of all TV advertising revenue -- some $90.7 billion, up 4% from a year ago. The CAB also notes that Spanish-language cable TV advertising sales gained 21%, totaling $766 million for 2011. Cable networks gained -- as did broadcast networks -- from a healthy improvement in upfront and scatter markets. Estimates were that cable networks that participated in the upfront pulled around $8 billion for deals contracted last summer. Both broadcast and cable networks pulled in major increases on the key selling metric -- the CPMs. Media executives say top-flight networks grabbed increases of 11% to 15% and more. By contrast, it says English-language broadcast TV gained 2% in 2011 to $26.2 billion, with spot television up 5% to $26.3 billion, and syndicated TV up 8% to $2.4 billion, according to the CAB.
The availability of TV programming online has gone from being a nice-to-have to an expect-to-see option in the minds of most Americans, raising major implications for networks and potential new opportunities for advertisers, according to the most recent installment of an ongoing tracking study of the Internet’s effect on TV viewing. The study, Knowledge Networks’ annual “TV Web Connections” report, will be released today and shows that in the four years since their online TV viewing attitudes and behaviors have been tracked, Americans have shifted from thinking of it as a novelty to an expectation. “I think it’s similar to what we went through with print newspapers putting stuff online,” says David Tice, director of the Home Technology Monitor at KN, and author of the new report. Tice says the dilemma for TV networks appears to be similar to the one confronting newspaper publishers whose initial freely available online content publishing models trained consumers to expect total access to their content and to get it for free. While newspaper publishers have been trying to shift their online publishing models by establishing so-called “pay walls,” Tice says the jury is still out on the success of those efforts, and that TV programmers need to pay careful attention, because the consumer backlash could be significant. “It’s a big question for television networks,” he says, adding: “How do they monetize the digital side without cannibalizing the mother ship?” The good news is that TV programmers seem to have strong demand from advertisers for their digital ad inventory -- and so far, reasonable acceptance from users to view it -- but the amount of ad inventory online is still a fraction of what they get with conventional television. Tice says that in the short term, television programmers can look at online access as an opportunity to expose viewers to shows they might not have otherwise seen, so there is a promotional value. He noted that data from KN and other sources such as Nielsen show that the growth in online viewing of TV programs has not hurt conventional TV viewing levels -- and said it’s possible the online access has been a factor in that, although he said KN’s data does not explicitly show that. Nielsen, meanwhile, has begun to integrate online viewing of TV shows into its core TV ratings services, and expects the behavior to become an increasingly important factor in total TV viewing levels. One thing that does not yet appear to be occurring due to the availability of online access to TV shows is so-called “cord-cutting,” or people cutting their conventional TV subscription services, because they can access some or all of the same content online. Tice says KN’s data indicates that there is no difference among people who watch TV online and the total population in terms of cord-cutting behavior. Tice says online viewing tends to be a bigger factor with young adults. He also says that mobile devices -– both smartphones and tablet computers -- increasingly are becoming a factor for viewing TV programs online, but the No. 1 source still is an Internet-connected personal computer. The biggest developing factor, he says, is the shifts in consumer expectations surrounding social sharing. Tice says apps that enable consumers to share TV shows they are watching with friends have become a significant factor -- and that consumers increasingly expect those features too. “That turned out to be a relatively highly used feature,” Tice says, noting: “Over half the people used it, and said it increased their involvement with the program.” Of the features that consumers use most when watching a TV show on a network’s site, Tice says “schedule information” is still No. 1, followed by watching full episodes and watching preview clips. After that, he says, social sharing has become the biggest factor. “The more people watch TV online, the more they want to share those programs with other people,” he says.
Global advertising will slightly improve in 2012, thanks to the U.S. presidential elections, major sporting events and Japan's economic recovery. Advertising spending will climb 4.9% to $465.5 billion in 2012, predicts the Global Advertising Forecast from Strategy Analytics. This follows a 3.8% hike in 2011 over 2010. The big gainers? Online advertising -- still on a strong growth trajectory -- will rise 12.8%, to $83.2 billion, and will account for 18% of overall global ad spending. TV, still the biggest category, will be up by 5% to $188.5 billion, which is 40% of all global spending. Global print advertising will improve slightly by 0.5% $122.9 billion. Ed Barton, director of digital media strategies for Strategy Analytics, says that conditions will be even stronger in two years. "We expect that total ad spend will surpass half a trillion ($500 billion) dollars in 2014.” But the U.S. ad economy will slightly lag results in contrast to other global ad economies. U.S. advertising spending is expected to increase by less than the global rate, at 2.7% this year, to $152.1 billion. The good news is that this is almost four times the gain -- 0.6% -- in 2011. Europe is expected to climb a bit faster than the U.S. -- up 3.7% to $136.3 billion in 2012. U.S. online advertising is estimated to grow 6.7% to $27.4 billion; with TV improving 3.7% and print declining 1.5% Online advertising business in Europe is expected to improve -- up by 11.7%, with TV, gaining 3.4% and other traditional media up 2.4%. Print will slip 0.1%. The U.S. continues to be a leader in terms of share of TV advertising -- 41% compared to Europe's 35%, and the UK's 24%.
MDC Partners, the Toronto-based agency holding company, generated 2011 revenues of $943.3 million, up 37% from 2010. But the company posted a nearly $85 million net loss for the year versus a $15 million loss in 2010, due largely to continued acquisitions and other expansion-related investments. Much of the revenue percentage was acquisition-driven, although organic revenue growth was also up a healthy 17% for the year, and nearly 7% for the fourth quarter. That’s higher than MDC’s holding company competition, albeit from a much smaller revenue base. Last week, for example, the Interpublic Group of Companies said it grew 8% for the year to over $7 billion, with organic revenue growth (ORG) of 6.1% for 2011 and 2.8% for the fourth quarter. Meanwhile, MDC will hit the $1 billion revenue mark for the first time in 2012, CFO David Doft told analysts on a conference call to discuss 2011 results Monday afternoon. And it’s possible, said Doft, that revenues could reach $1.025 billion. Company officials said net new business for 2011 totaled $104 million, and that the new business pipeline remains “robust” so far in 2012. Recent wins include Arby’s, Dick’s Sporting Goods and Under Armour. MDC has expanded aggressively over the last two years, spending $150 million on 20 acquisitions, said company CEO Miles Nadal. This year the company will ease up somewhat on acquisitions and focus on organic revenue growth and reducing debt levels. It recently reduced its headcount by 300 positions. That said, MDC won’t stop acquisitions completely. Nadal told analysts he felt the company was at a “strategic disadvantage,” given its lack of scale on the media side of the business. The company has indicated that it intends to bulk up in that sector. Earlier this year, MDC purchased New York-based independent media shop R.J. Palmer, saying at the time the holding company’s goal was to reach $10 billion in billings over the next five to 10 years. The RJP acquisition added billings of over $800 million and nearly doubled MDC’s total, bringing it to nearly $2 billion. But Nadal also said that continuing to add agencies to the MDC portfolio with digital, social media and analytic capabilities would also help the company win new business more rapidly.
Scotts Miracle-Gro Company has opted to retain WPP’s MEC as the company’s media agency after a review that began last fall, according to sources. The lawn and garden products company spent nearly $94 million on ads in 2010, according to Kantar. From January through September of 2011, the latest data available, the company spent a little more than $60 million. The review kicked off shortly after the arrival of a new chief marketing officer at the client, Jim Lyski, who came to the company with an eye toward changes in the marketing game plan. Lyski spent more than a decade at FedEx before joining Scotts. He told Advertising Age shortly after his arrival last year that he intended to shift from a regional and weather-based targeting strategy to a more individualized communication plan, ramping up digital, social and educational spending in order to grow markets. The Marysville, Ohio-based Scotts posted net sales of about $2.84 billion in fiscal year 2011, down about 2%. It blamed the decline, in part, on poor weather conditions throughout the U.S. during the lawn and garden season. Net profits for the year were down about 18% to $168 million. MEC initially won the account in 2003, after a review that included the incumbent, New York-based independent R.J. Palmer. Agency reps could not be reached for comment. A client rep said the selection was still being “finalized,” and that it would issue a press release when the process was complete.
One of the challenges Canoe Ventures faced was building a platform where set-top boxes across six cable operators were in sync, allowing interactive TV ads to be served nationally. The boxes had to be linked with an EBIF technology. But not all operators were able to enable their boxes with EBIF (enhanced binary interchange format) at the same rate. On Monday, Charter Communications, one of the six, said it recently completed its deployment across its system, laying a “foundation” for interactive services and advertising. But with Canoe halting its foray into national interactive advertising last week, Charter will only be able to sell iTV ads in its local markets. The same goes for the other Canoe owners, such as Comcast, which has been aggressive in that arena. Charter made the announcement on an investor call, the first featuring new CEO Tom Rutledge, who formerly led Cablevision. (Cablevision is also part of the Canoe group.) Asked whether he might oversee a rebranding at Charter as he did by ushering in Optimum at Cablevision, Rutledge said: “It is an opportunity, but I haven’t worked through the marketing issues with the Charter team yet on that particular issue.” In the fourth quarter, Charter continued to lose video subscribers (45,500), although that was less than the 62,200 lost in the last three months of 2010. Nearly all of the losses in video customers were those who only subscribed to TV service and not a bundle. Company-wide, total revenue in the fourth quarter was up 2.8% to $1.83 billion. It posted a $67 million loss, down from $85 million in the same period the year before. Ad sales dropped about 5% to $81 million, although political dollars may have helped in 2010.
Gray Television COO Bob Prather said station groups are starting to collect 50 cents a subscriber (or more) each month from operators in carriage payments, but Gray is taking in more in some arrangements kicking off this year. Prather said he expects a certain bifurcation to emerge in the ways that cable/satellite/telco operators pay for carriage, where they will look to moderate fees to “niche” cable networks in order to afford the broadcast stations, ESPN, CNN and other top-tier outlets. At Gray, NBC has asked to postpone renewal of its affiliation deal to at least March. Under the current arrangement, Gray isn’t paying the network any reverse compensation. Gray’s CBS and ABC deals extend at least two years out. It’s not paying either one any rights fees. It does pay Fox a little for its small group of Fox stations. Networks have been inking deals to collect a portion of the dollars that stations garner in payments from operators, and no doubt renewals with the Big Three networks will involve that. At an investor event, on questions whether Gray would look to participate in the government’s intentions to auction off spectrum, Prather indicated that it’s unlikely, but he did not rule it out. “You never say never, but who knows what the price is going to be?” he said. “You hear it all across the board.” “It’s up to us to make sure that we convince the public and Congress and the FCC that we’re good stewards of this spectrum and that we use it the right way and if there is a way to sell some of the spectrum and still keep our TV broadcasting business strong, I think it’s something we’ve got to look at,” he added. Gray, which operates 36 stations, likes to focus on stations in markets where there is a state capital or large university. Its largest market is Knoxville, Tenn., and the smallest is in Grand Junction, Colo.
One of the first newspapers to implement an online pay wall is doing quite nicely by it: Pearson’s Financial Times Group derived 47% of its total revenues from digital sources in 2011, according to owner Pearson, up from 25% in 2007, the year that it launched. Content revenues -- meaning digital subscriptions -- made up most of the digital revenues, at 58%, with the other 42% coming from digital advertising. The proportion supplied by content revenues is up from 41% in 2007, while the proportion coming from advertising is down from 59%. Crunching the 2011 numbers, the FT Group now draws just over 27% of its total revenues from digital subscriptions, and about 20% from digital advertising. In 2011, the FT Group brought in revenues of $675.6 million, up 6% from $637.7 million in 2010. Pearson’s total revenues, including its North American and international education divisions, as well as Penguin, came to $9.27 billion in 2011, up 4% from $8.96 billion in 2010 (converted from pounds using the current exchange rate). The number of digital subscriptions to FT.com increased 29% to 267,000 by the end of 2011, accounting for approximately 44% of total paid circulation of 600,000. In fact, digital subscriptions are now the top source of new subs in some areas, including the U.S., where they surpassed new print subs this year. The total number of registered users increased 33% to 4 million, with an average daily audience of 2.2 million across its print and online properties -- up 3% from 2010. Mobile users now make up 19% of the traffic to FT.com.