Ad Spend Stabilizes in 4th Quarter of Broadcast Year 2019-2020

Performance during the July to September quarter is key for the media industry, with the transition from Summer into Fall; and in some markets, it represents the conclusion of a broadcast season and the start of a new one. This year’s third quarter was even more interesting, as the media industry across all Anglo markets attempted to recover from a disastrous second quarter as a result of the Covid-19 lockdown. The good news is that SMI’s comprehensive ad spend data is showing a normalization in 3Q for many countries. Here are some highlights.

In 3Q, the ad spend in all four Anglo markets (the U.S., U.K., Canada and Australia) had picked up when compared to the gloomy 2Q. Collectively, the ad market in 3Q trended -15% year-over-year, compared to -38% in 2Q.

By Market

Canada, which was hit hard in 2Q (-47%), bounced back strongly to -10% in 3Q. In the U.S., ad revenue recovered from -32% in 2Q to -5% in 3Q, the lowest year-over-year decline of the four markets. In both markets, the 3Q ad spend drop-off was closer to 1Q than 2Q. The ad revenue rebound in North America, was led in part by the return of the NBA and NHL. In Australia (-26%) and the U.K. (‑20%), the ad spend rebound was not as strong, with several top-tier sporting events delayed to 4Q.

By Media

Throughout the pandemic, digital media ad spend has been stronger than traditional media. Over the last two quarters, across all four markets, digital media has increased its share of ad spend. In the U.S., digital ad spend in 3Q was actually +8%, driven by video and search. In 3Q, U.S. digital ad spend grew to 49% of total ad spend. For the three remaining markets, the decline in digital ad spend was under -10%. In Canada, digital media accounted for 55% of ad spend, while the U.K was at 50%. In Australia the ad spend share of digital media was much lower at 35%.

With top-tier sports returning, the TV ad revenue rebounded quicker in the U.S. (-8%) and Canada (-7%). Also driving TV ad revenue in the U.S. was the record high ratings of news networks with the pandemic and upcoming 2020 election coverage. This helped to offset the delay of the upfront ad market and 2020-21 broadcast season, as TV studios were closed delaying the production of new entertainment programs. In Australia (-22%) and the U.K. (-21%), year-over-year TV ad revenue decline was steeper.

The ad revenue for other media (outdoor, radio, magazines, newspapers, etc.), remained sluggish across all four markets. The ad spend declines ranged from -49% in Australia to -37% in the U.K. market. In Australia, other media accounted for 20% of all ad spend, the highest of any market. In the U.S., other media accounted for 8%, the lowest share.

Product Category

In the four markets, the product categories that reported the largest year-over-year increase in ad spend during the pandemic were considered essential. In the U.S., pharma (+19%) has been a strong category as consumers seek information. In Canada, household supplies had the largest increase (+146%). General organization had the biggest increase in the U.K. (+73%) and Australia (+11%).

In three of the four markets, the product category with the sharpest declines in 3Q were auto vehicles and dealers. In Australia, the year-over-year decline was the highest (-45%), followed by Canada (-23%) and the U.S. (-19%). In the U.S., carmakers were promoting flexible leasing terms early on, but with the pandemic and the economy, consumers have been reluctant for big-ticket products. In the U.K. travel services had the biggest decline in ad spend at -65%.

The pandemic has accelerated consumer behavior impacting media consumption and offering opportunities for advertisers.  Additional advertising intelligence from SMI – including significant monthly shifts in share of ad spend with digital sub-categories and OTT, dramatic changes in spot pricing, and total TV investment in the sports and news genres – will be included in future reports. For inquiries please contact info@standardmediaindex.com