Ad Market Expands 5% In Q2 Despite Mass Market Weakness, Declines Among Major Media

by Joe Mandese @mp_joemandese, August 15, 2017

The U.S. ad market expanded more than 5% during the second quarter, despite “mass market weakness,” and declines in some major national media, according to a quarterly update released early this morning by Pivotal Research Group analyst Brian Wieser.

He notes that the market expansion continues to come primarily from digital media, as the national TV ad marketplace eroded 1% and other major media experienced “double digit declines.”

“Digital advertising captured more than all of the industry’s growth in the quarter, and marketers who are organized around digital media appear to be driving these trends,” Wieser writes, adding: “While the full year 2017 now looks set to grow between +4% to +5%, these advertising growth trends are not far removed from where our historical model predicts they should be.”

Wieser said the quarter’s expansion is “more notable” considering the relative tepid results reported by some of the biggest mass marketers.

Despite digital’s continuing expansion, Wieser wrote that the medium’s growth “must eventually plateau,” raising “significant implications” for its bellwether duopolists: Facebook and Google.

advertising, media measurement

3 comments about "Ad Market Expands 5% In Q2 Despite Mass Market Weakness, Declines Among Major Media".

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Ed Papazian from Media Dynamics, August 15, 2017 at 10:27 a.m.
Joe, as I am sure you and Brian realize, these overall "ad spending" figures which keep showing huge gains by digital media but not much for traditional media include many types of "ad budgets"---direct response, search, sales promotion, etc. as well ad branding. I realize that the sources for these figures have no way to draw the required distinctions, however, if a level playing field was available, I doubt that branding ad dollars are rising significantly and whatever the real tally, TV remains the dominant medium by a huge margin when it comes to this type of activity. Perhaps this is something that the TV folks need to look into as the barrage of articles on ad spending trends is being misinterpreted by some as TV ad dollars shifting dramatically to digital. Certainly that was not the case----to a najor degree----in the recent primetime upfront.
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Joe Mandese from MediaPost Inc., August 15, 2017 at 10:58 a.m.

Ed, Brian Wieser utilizes a proprietary model for estimating advertising volume based on a bottom's up approach analyzing a variety of data, including revenues reported by media companies. It's highly regarded by a number of sources. Re. your sense of distincitons, they're valid. I have my own too, as I'm sure do others. There's no perfect way to define a universe for measuring anything, but what's important is that you have a solid rationale, and stick with it until you learn something better. Personally, I think there are many forms of advertising that are not properly accounted for, and that we've probably put too much weight on things that are easily identifiable and measurable -- like television.

Alvin Silk from Harvard Business School, August 15, 2017 at 11:21 a.m.

An unfortunate consequence of the replacement of the database on aggregate U.S. ad spending that Bob Coen curated at McCann-Ericson/IPG for half a century with Magna Global's current data for media supplier receipts is that we no longer have media price indices. Such time sereis of media prices could be used to estimate of the pattern of substitutabilty (and complementarity) among "new" and "traditional" media. Shouldn't the industry mount an effort to remedy this deficiency?