Commentary
Pandemic Registers Intense Effect On Media
- by April 22, 2021
Several indicators suggest that advertiser demand is bouncing back. The U.S. ad market expanded by 25% from a year earlier in March -- the biggest increase Standard Media Index has ever observed,
Media Daily News reported. Of course, the prior March set a low hurdle
with its 11% decline in ad spending during the first month of the pandemic.
Comparable numbers for the second quarter will be even easier to beat, given declines of 35% in April,
31% in May and 17% in June last year. That gradual recovery finally turned positive in August with a 5.9% gain. It really picked up steam by the holiday season with an 12% jump in November as many
marketers finally let loose after suspending campaigns during the second and third quarters.
It will be interesting to see what the recovery means for publishers, which have
faced secular pressures on ad revenue amid the longer-term shift in media spending to digital platforms, including internet search, social media and the fast-growing category of influencer marketing.
That shift has led many publishers to
focus on growing their subscription revenue, which has led to greater
scrutiny of consumer spending habits, including how much they're willing to pay each month for content. Their household budgets not only include subscriptions to magazines and newspapers, but also
ad-free streaming video services like Netflix.
The streaming media company this week provided more insight into video subscription trends in its quarterly report, which disappointed investors. The
company had forecast it would add 6 million subscribers in the first quarter, but recorded only 4 million new subscriptions.
The forecast had looked like a safe bet,
considering that the company had seen strong results for years. Subscriptions had surged by 15.8 million in the first quarter of last year -- a sign that people were hungry for content while stuck at
home during the onset of the pandemic.
The health crisis likely pulled demand forward, sapping the prospects for stronger growth this year, as Netflix noted. The company also
blamed the pandemic for interfering with studio production of movies and bingeworthy seasons of fresh shows that would appeal to subscribers. The disappointing results also may indicate that people
are going back to their pre-pandemic routines after getting vaccinated, leaving less time to spend consuming media.
As publishers report their results for the first quarter,
I'll be looking to see if there are similar dynamics at work in their subscription growth. The pandemic may have pulled demand forward for them, too. Also, there are signs that some news outlets,
especially cable TV, saw a slump in ratings without Donald Trump driving the news cycle. The "Trump
slump" may also show up in web traffic and subscriptions for publishers.
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