Digital Spend Slowed in 2016 But TV Saw An Increase

The latest figures from Standard Media Index are out and they show digital ad spend slowing while television spend remains strong. The figures cover December 2016, Q4 2016 and the full 2016 calendar year. In total the findings (all spend, all categories) reveal December 2016 with a 0.7% year-over-year increase, 4.3% year-over- year for Q4 2016 and 6.8% for 2016 as compared to 2015.

While the total ad market continues to grow, the rate of growth has slowed slightly (-0.8%) even with the
Olympics and the election.

Over the past four years, digital saw an annual growth rate of 19%. During 2014 to 2015, that number was 26.2%. However, in 2016 it was just 13.3%, down almost 50% versus the prior year. This slowdown was
quite noticeable in 2016 with Q4 realizing just a 7.1% single digit growth for digital.

When Facebook and Google spend are removed from the rest of digital, the sector’s growth drops to 8.7% percent, clearly illustrating the dominance that the two maintain, particularly in mobile. Facebook continues to perform well above the growth rate of digital, jumping 83% percent for the year. And then there was Snapchat. The messaging app saw a 356% growth from 2015 to 2016 and received more than double the ad spend by volume as Pinterest.

While some brands have slowed digital expenditures, the only two categories to decrease digital spend for the year were telecommunications at -2.4% and Department Stores at -3.5%. Consumer Electronics was not far behind with 0.6% growth.



Movie studios, however, are all in. The annual growth rate since 2012 has seen 33.6% more spend allocated to digital. The increase from 2015 to 2016 was 40%. Other top digital growth categories for the year include Food, Produce and Dairy which increased digital spend by 36.5% and alcoholic Beverages grew by 33%.

For television, 2016 saw a 4.4% increase in spend. Both broadcast and cable saw similar increases delivering 4.6% and 4.0% growth, respectively. When sports are excluded, however, things look a bit bleak. Minus live sports, the overall television market grew just 1.4%. Cable grew 3.9% and broadcast declined 2.4% compared to the same period in 2015.

As digital growth slows, it seems larger brands are putting money back into TV. In 2015 Paramount Pictures decreased their TV spend by 3.8% but reversed this strategy in 2016 by increasing spend on TV by 24%.
Similarly, Target reduced TV spend by 20% in 2015 but increased spend by 12% in 2016 and Progressive Insurance went from -5.5% on TV spend in 2015 to an increase of 6.2 percent in 2016.

What does this all mean? According to Standard Media Index CEO James Fennessy, “Brands today are marketing in a digital world and we have seen the rapid growth in the sector in the past several years. With
that being said, the trajectory of digital spend has recently hit a major speed bump as brands question the efficacy of the medium."

Which just seems odd, right? After all, digital is supposed to be the nirvana of precise measurement, right?

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