TV Ad Gains For 2014 Modest, Slight Improvement Forecast For 2015
- by Wayne Friedman , December 5, 2014
U.S. advertising will see a slight improvement in 2015 from 2014 -- but not by much. The Internet will continue to climb, while TV will have it tough.
Brian Wieser, senior research analyst for Pivotal Research Group, expects growth of 2.2% this year and 2.5% the next. “Unfortunately for the industry, the year is turning out to be a relatively weak one versus last year,” he writes.
He anticipated “some modest deceleration in the fourth quarter to — 1.5% year-over-year growth.” Wieser says what was unexpected “was the degree to which TV-focused 'traditional' marketers would reduce spending at the same time as digital-focused Web endemics accelerated spending.”
TV is now expected to see only a 1.4% gain in 2014 — with 1.9% growth for national cable and 0.4% decline or broadcast networks. Wieser expects a 1.7% decline in the fourth quarter of 2014.
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Looking at 2015, Wieser previously forecast 4.1% growth for national TV, but he now expects growth of only 1.4% — with cable up 3.3% and network down 1.7%.
TV audience declines are not helping the situation. Wieser is concerned that inventory guarantees paid to advertisers will go unmet.
Still, Internet-related advertising will outperform in 2014 — at a 15.4% growth rate. For 2015, Wieser forecasts 13.2% growth versus 10.3% previously.
Internet-related advertising will gain around $6.6 billion in revenue this year, exceeding a $4 billion gain for 2014 over 2013.
Other media will have it tough going for 2014: newspapers look to decline by 9% this year, directories down by 21%; magazines falling 7%; and radio, off 3%. By contrast, outdoor will grow by 3% for the year.
Pivot's report is a bit alarming for broadcast networks. Brian is still defending a cyclical view versus secular although the stats on the millennials begs to differ.
It states:
“Exacerbating negative audience momentum, which probably influence marketers’ thinking about budgeting towards the medium on the margins, we think the television industry itself is generally failing to create the conditions whereby large brand marketers or agencies willingly champion the medium publicly. This has circular repercussions on different levels. First, if advertisers tend to be self-referential inside of their categories (essentially benchmarking how much they spend on a given medium vs. direct competitors), marketers are able to maintain share of voice within the medium with less spending.
Second, recent conditions have produced a genuine willingness among most marketers to at least consider placing their TV budgets with the Googles, Facebooks, Yahoos and AOLs of the world, even if they aren’t doing much at this point in time.”
The problem for the broadcast TV networks is that their ratings are fragmenting at a faster pace than was anticipated. While cable is also seeing rating attrition on a per-program or per-channel basis, there are so many cable viewing options that, collectively, the audience tonnage continues to shift in this direction. In other words, the prognosis is for cable to win an ever increasing share of national TV ad dollars, primarily because of the diversity of its program menu. Meanwhile, as the broadcast nets continue to program for what they think is the mainstream or "mass" audience taste, they are, in effect, becoming old folks' networks, with the younger, better educated segments going elsewhere with ever increasing frequency. It's amazing that they don't see where their programming strategies are leading them.