U.S. Ad Demand Begins Seasonal Decline, Digital Continues Secular Expansion

Madison Avenue’s media spending declined in June, a month that historically begins a seasonal dip for the ad industry. If history continues to repeat itself, July and August will continue to erode until ad spending begins to expand again in September. The U.S. Ad Market Tracker fell three points to a 191 in June from a 194 in May.

On a year-over-year basis, the index is even with June 2014, but the number masks volatility among media sectors as digital spending continues to expand and television erodes. The index for digital media jumped 26 points to a 540 in June from 514 in May, while the national TV index fell 14 points to 141 in June from 155 May.

More significant than seasonal fluctuations, TV lost 11 index points on a year-over-year basis, declining from 152 points in June 2014. Conversely, digital gained a whopping 68 points, jumping from a 472 index in June 2014, reflecting a long-term secular shift in media spending.



TV’s erosion, by contrast, likely reflects some tough year-over-year comparisons due to the absence of the World Cup soccer tournament, which generated incremental ad demand in 2014.

“June’s overall numbers were negatively impacted on a year-on-year basis by last year’s World Cup. However, there are some underlying factors that are contributing to a deeper malaise,” notes James Fennessy, Chief Commercial Officer of Standard Media Index, which powers the Ad Market Tracker published by MediaPost. Secular factors, Fennessy says, include, “Soft ratings and ongoing measurement issues,” while digital’s expansion continues to benefit from “marketers focusing more closely on return on investment.”

On a quarterly basis, June’s results reflect a 14% overall expansion for digital ad spending among Madison Avenue’s major agency holding companies during the second quarter of the year vs. the same period in 2014. That was enough stimuli to expand the overall U.S. ad marketplace 2%, according to the SMI, despite the languishing global ad economy. TV, conversely, eroded 6% during the second quarter -- and that pattern should continue into the third quarter, as SMI estimates the loss of more than $500 million in incremental TV ad revenues from June and July 2014.

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