While there is some good news in the fourth-quarter update for the U.S. ad economy, IPG Mediabrands' Magna unit paints a tale of two media marketplaces -- traditional and digital -- with most of the former declining, especially the major broadcast networks, which already have been facing their first ad price deflation in decades, and as well as what looks to be protracted Hollywood writers' and actors' strikes.
"National TV networks are facing a double challenge on pricing, with almost zero CPM inflation for the first time in 20 years, and on supply as the writers’ strike may lead to a lack of fresh content for the first half of 2024," Magna Director of Global Market Intelligence Michael Leszega said on the eve of this week's update, adding that the strike likely will have long-term effects, accelerating the long-term decline in network TV viewing.
The problem, adds Magna Executive Vice President of Global Market Intelligence Vincent Letang, is that the gains the networks have been making in nonlinear TV advertising sales, are not enough to offset their traditional sales declines, something that is equally true for most traditional media that also sell digital advertising formats. In fact, the only traditional medium to see any material ad demand growth has been out-of-home (see table below).
“Q2 was marginally better than Q1, but most of the formats continue to suffer declines in sales year-over-year," Letang said, adding: “The ad revenues of traditional media owners continue to stagnate or decline, despite the fact that their digital formats are doing well.
"In the first half, nonlinear TV ad sales, for instance, grew by 7%, podcasting advertising grew by 14%, and digital out-of-home grew by 9%. But so far, the growth and success of their digital formats is not enough to offset the long-term decline of traditional linear formats in audience and in ad sales."