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Signs of Gold in the Year Ahead

February 10th 2016

The year 2016 is still in its infancy, but there are already strong signs that it will be a winner on several fronts for media companies. Our fourth quarter 2015 data is now available, and together with full-year results, there are some strong indicators that TV network ad spend will rise by mid-single digit percentages this year, compared with 2015.

That’s assuming that NFL games will continue to flex their ratings muscle; the Summer Olympics will capture broad attention, and political advertising – which traditionally flows most liberally into spot – will have a halo effect for broadcast and cable channels, and most definitely for digital.

I’m also betting that TV networks will enjoy growth in upfront dollars this year, given the huge increase in scatter spend during the last quarter. And the strong magnetic pull of digital will gain even more momentum, as many cable networks continue to face ratings challenges and advertisers scout out even more alternative opportunities.

Television

Almost without exception, ad spend results for both the broadcast and cable networks in December 2015 was slower than earlier months in the fourth quarter, as advertisers washed through their make-goods after robust October and November spending.

However, scatter spending was still extraordinary both for the month of December and full quarter, when compared to the same time in 2014. Consider that:

  • Among the broadcast networks, scatter grew a whopping 47% in Q4 and 36% in December.
  • Cable channel scatter rose 13% for the quarter, although in December it was down 2%.
  • Averaging cable and broadcast networks together, scatter was up 28% in Q4 and 14% in December.

Six of the top 20 cable networks, ranked according to ad expenditure, bucked an overall cable trend of declining dollars in the fourth quarter.

The strongest ad spend performers included:

  • ESPN, which was up during the quarter and in December, undoubtedly buoyed by Monday Night Football and college football;
  • ABC Family and Discovery, which found gold with Gold Rush, was up in the double-digits for December and Q4;
  • AMC (the only network to post a rise in December over the quarterly results) up 16% and 17%;

The biggest winner in the broadcast network comparisons was Fox, home of the Empire series phenomenon. The second highest ad-spend winner in the fourth quarter was ABC.

Newspapers, magazines and outdoor media

The immediacy of newspapers and their continuing success as digital news sources really started to pay off throughout 2015, and the media category was a standout during the last quarter as well: up 14%, compared with 7% for the entire year.

By way of comparison, magazines lost 1% ad spend for the quarter, and were down 5% for full year 2015.

Out of home posted stronger results than newspapers for the quarter: up 18%. However, it was down 4% in December.

Digital

We’ve come to expect nothing but stellar results for digital ad spend growth, and the final chapter of 2015 provided no surprises. The category enjoyed an overall rise of 35% in Q4 and hardly any slowdown in December, up 34%. That’s better than the category’s performance for the entire year, up 26%.

There were some excellent stories among the digital media as well. For example:

  • Social media sites nearly doubled in ad spend during the fourth quarter, up 94%, and they averaged 71% growth for the entire year.
  • Pureplay video sites, like Hulu and YouTube, collectively gained 77% in the fourth quarter, an improvement over 52% for the year.
  • Internet radio sites were up 63% for the fourth quarter and 42% for the year

The digital radio (i.e. podcasts) results are in stark contrast to broadcast radio’s results: up 4% in the fourth quarter, but down 2% for full-year 2015.

It remains to be seen if the bright beacons of light in the fourth quarter will cast a glow over 2016 overall. But with huge waves of political dollars crashing to shore and the strength of live Summer Olympic and NFL games on the schedule, chances are it will include some outstanding results.

James Fennessy

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