On the cusp of the 2016-17 upfront media-buying marketplace, influential Wall Street analyst Brian Wieser has updated his advertising forecast based on “frothy” first-quarter demand. Wieser’s upgrade comes as so-called “scatter” market conditions had already been tightening, which is always a strong bellwether for the upfront marketplace, which in turn is a leading indicator for ad demand for the year ahead.
“Bottom line: first quarter 2016 was another strong quarter for advertising in the United States, with industry-wide growth among media owners of around +6%, much as we saw during the fourth quarter of 2015,” Wieser writes in a report sent Pivotal Research Group investors early this morning.
Wieser, however, offers a caveat that “underlying economic growth” still indicates that total advertising growth should climb only 1% for 2016, “suggesting an eventual slowdown and the possibility that recent quarters will represent difficult comparables in future periods.”
Even so, Wieser says the ad economy expansion that has taken place during the fourth quarter of 2015 and the first quarter of 2016 was “substantially higher than what we would expect to see” relative to the growth of key economic indicators such as personal consumption and industrial production.
If a “deceleration” of ad spending should occur, Wieser predicts it likely would not happen until “much further into the second half of the year, if at all during 2016.”That bodes well for 2016-17 upfront market conditions, because brands and agencies tend to make greater upfront commitments to TV networks and digital platforms when they perceive there are strong overall market conditions, partly because upfront deals also provide options to cancel ad commitments if market conditions change later in the year.