National TV Ad Revenues Dip Amid Ongoing Concerns

National TV advertising revenues were down 1% in the second quarter -- an improvement from the 3% decline in the first quarter. Yet challenges remain.

The estimates came from Brian Wieser, senior research analyst for Pivotal Research Group, and were based on recent second-quarter earnings results from major media companies.

“The traditional medium is unlikely to return any time soon,” he writes in a recent note, estimating a drop of 1% to 2% for the remainder of 2017.

Although TV networks say there is “strong” pricing in scatter markets, near-term quarter-by-quarter buying of TV time proves “pricing does not necessarily reflect changes in demand.”

Scatter deals with higher pricing come mostly from scatter-only advertisers -- which have higher cost bases -- and can account for a higher percentage of spending. Changes in demand for TV ad inventory will not cause all advertisers to alter how they budget for the medium.

Wieser is critical of media companies that did not provide specific details about the health of the major TV advertisers. He said “many of the large advertisers that dominate TV are relatively weak at present — and not enough new advertisers are emerging to replace older ones.”

The largest marketers on television -- about 200 -- account for around 90% of national TV revenues and about 60% of all TV.  

“They are losing market share to companies that are smaller and structurally better positioned to spend money on digital media rather than TV,” he adds.

Although there are opportunities for growth -- when it comes to new TV metrics, 35 days of time-shifted viewing versus three or seven days -- Wieser doesn’t believe this will have a strong impact on TV networks.

“If a new form of measurement adds, say, 5% more audience on average, an advertiser is unlikely to accept a new measurement standard without at least a 5% discount to historical prices.”

3 comments about "National TV Ad Revenues Dip Amid Ongoing Concerns ".
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  1. James "Buff" Parham from Parham & Associates, LLC, August 11, 2017 at 11:13 a.m.

    Traditional TV's challenge at both the national and levels, is to hang on to its share of the overall growth in ad spending. If TV ad revenues remain relatively flat, then the overall share of ad spending will decline precipitously.  At the same time, content providers and producers are being pursued by "non-linear" distributors such as Netflix, Amazon, YouTube, and now Facebook.  Daunting challenges in both the revenue and content spaces...

  2. Ed Papazian from Media Dynamics Inc, August 11, 2017 at 12:35 p.m.

    James, we must bear in mind that almost all--like 95% --of national TV ad spending consists of branding campaign dollars, whereas the reported figures for digital are vastly inflated by non-branding spending---direct response, search, sales promotion, etc. This is what creates the impression that TV is losing share to digital in ad spending. However, if there was a way to properly define spending by type of campaign quite a different picture would probably emerge. At present, TV remains the 800- pound gorrila when it comes to branding campaigns and is out pulling digital by roughly a four-to-one basis for such spending--maybe more. I do agree, however, that those who rule TV should keep a sharp eye on this while continuing their drive to enlarge their non-advertising revenue streams which, so far, has produced very impressive results.

  3. Ed Papazian from Media Dynamics, August 14, 2017 at 9:57 a.m.

    Just one additional comment. Most of the TV ad dollars that are being talked about were placed over a year ago in the 2016-17 upfront, so why does a slight decline in spending reflect current uncertainties?

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