During a Strong Upfront, Q2 National TV Ad Revenue Flat
The Trump Era of Television continues as News Helps Keep National TV Market Afloat; Digital Ad Revenue Ends on High Note as Questions Linger Around Effectiveness
Standard Media Index (SMI), the advertising intelligence company bringing clarity to the ad industry, today unveiled updated advertising revenue figures for Q2 2017. The total advertising market closed the quarter up +3.8% compared to Q2 2016, due to a strong showing by Digital which ended the quarter up +11% following modest single digit growth in Q1 2017. The National TV market ended the quarter flat compared to Q2 2016, with -0.8% decrease in spend. Radio, Magazines, Print and Out-of-Home all saw year-over-year declines for the quarter with -4%, -16%, -20% and -1%, respectively.
NATIONAL TV DELIVERS A FLAT Q2
In Q2 2017, the National Television market was nominally flat, with a -0.8% year-over-year dip. Cable networks saw a -4% decrease while Broadcast networks registered a +4% increase compared to Q2 2016. The 4% swing between Broadcast and Cable can be largely attributed to the airing of the final three games of the NCAA tournament in April. This year, these games were carried on CBS at the expense of TBS and Cable.
In June, specifically, the story was slightly different, with Broadcast registering a -2% decrease, while Cable was flat with a +0.4% bump. This left the national TV market flat at -0.5% for the month. Much of the decrease in Broadcast can be attributed to Univision, which saw a -35% decline in ad spend without the Copa América Centenario tournament, which it aired in June 2016. Absent Univision, Broadcast overall grew by +2% in June 2017, with FOX seeing the biggest increase of +9%, courtesy of increased spend around the U.S. Open.
NEWS PROGRAMMING CONTINUES TO DELIVER BIG TIME
In Q2 2017, ad revenue in News programming jumped +16% across both cable and broadcast networks, compared to the same period last year. Other genres did not fare as well, with Entertainment coming in flat, and Sports seeing a -8% decrease in spend.
When drilling into Cable News networks for Q2 2017, news programming across the big three broadcast networks surged by +18%. Individually, FOX News saw an increase of +11%, CNN leapt +21% and MSNBC saw a jump of +40%.
Tucker Carlson Tonight received the highest average unit cost across all Cable News shows at $13,779, up +13% compared to The O’Reilly Factor’s unit cost in Q2 2016. Hannity saw an ad revenue increase of +53% and unit cost increase of +59% at $11,237 compared to a year ago.
On CNN, for Q2 2017, The Situation Room saw an increase in revenue to the tune of +33%. The Lead with Jake Tapper boosted revenue by +46%, and AC 360 saw its average unit cost increase by +19% to $5,975 per :30 spot. On MSNBC, Rachel Maddow continued to see gains, with +74% more ad revenue Year-Over-Year, and +60% increase in unit cost to $4,193. The Last Word with Lawrence O’Donnell also saw an increase of +82% in revenue from ads in Q2 2017, compared to Q2 2016.
On the network News side, CBS This Morning increased ad revenue for Q2 2017 by +32% due to an increase in average unit cost by 28% percent to $20,400. NBC Nightly News saw the largest evening news increase with +8.4% and, also had the largest overall revenue by volume in Q2 2017. Amongst Sunday morning political shows, Face the Nation had the largest increase with +28% more ad revenue.
“Despite some ratings challenges, the national TV market continues to hold up strongly. The results we are seeing demonstrates that national TV continues to command the dominant position for major brands as they look for guaranteed, quality, and engaged audiences, as well as the return on investment these deliver,” said James Fennessy, CEO of SMI. “The standout performers for the quarter continue to come from the News genre, jumping 16%, which is hardly surprising given the fodder Washington serves up on a daily basis.”
THE VOLATILITY OF SPORTS STRIKES AGAIN
The year-over-year decrease in spend around Sports for Q2 2017 can be directly attributed to fewer games in both the NBA Playoffs and Finals, as well as the Copa América Centenario tournament which attracted many advertisers, and viewers, in 2016. For the NBA Finals, ABC saw -9% less revenue, due to two fewer games in the series.
The NHL, on the other hand, gained a +7% increase in revenue from ads during the Stanley Cup Finals which aired the same number of games in both 2016 and 2017. The U.S. Open, which aired on FOX, also saw an overall increase in ad revenue of +14%, highlighting the fact that interest in Sports is not necessarily wavering, but the length of some series impacted the overall result.
BROADCAST ENTERTAINMENT PRIME TIME STRUGGLES IN Q2 2017, SEES JUNE RESURGENCE
The Broadcast Entertainment Prime Time daypart was down -4% in advertising revenue across the big four Broadcast networks (NBC, FOX, CBS and ABC), compared to Q2 2016. FOX witnessed the biggest decline with -12.2%. ABC saw a -3% decrease in ad revenue, CBS experienced a fall of -6%, and NBC was the only network to see a jump in ad spend during Q2 2017 in the coveted Broadcast Entertainment Prime Time spot with a +3% increase, compared to Q2 2016.
For CBS, the Tony Awards were a big hit, generating +11% more ad revenue than last year. The surge of Hamilton’s success has brought new interest to Broadway, which is paying off for the awards show. The network also saw success around the Academy of Country Music Awards which grew ad revenue by +21% compared to 2016.
In June 2017, we saw the kick-off to the summer TV schedule, which tells a different story than the whole of Q2. ABC saw an incredible +19% increase spend around its Prime Time Entertainment shows and NBC saw a +17% increase. The Bachelorette, specifically, saw +22% more revenue in June 2017 compared to June 2016. Celebrity Family Feud and The $100,000 Pyramid, part of ABC’s summer game-show nights, helped push ABC higher with average unit costs coming in at $116,498 and $111,237, respectively.
Across all four networks June Prime Time Entertainment was up +9%.
OUTSIDE OF NEWS, CABLE IS A MIXED BAG
In Q2, lifestyle channels saw the biggest gains, outside of news, networks. HGTV continues to grow with +15%, Food Network was up +2%, E! saw +8%, and TLC saw an incremental +0.6%. ESPN saw a decline of -10%.
General Entertainment networks like AMC, TBS, A+E Network and USA Network, all saw slight declines during the quarter. A significant decrease of over -25% at TBS is directly attributed to not airing the final three games of the NCAA tournament in April of this year.
SPEND BY AD CATEGORY
Across both Cable and Broadcast, the Entertainment industry decreased its advertising spend by $116 Million, or -16% less than in Q2 2016. SMI observed that Universal Studios and Sony Pictures Entertainment decreased their advertising spend on national TV in Q2 by double digits, -23% and -15%, respectively.
Automotive Vehicles decreased its total advertising spend on national TV by -6%, or $60 Million, during Q2 2017, compared to Q2 2016. Fiat Chrysler led the contractions with an estimated reduction in spend of -21% compared to last year. Ford was one of the few OEM’s to buck the trend, spending +11% more on national TV than the same period last year. In Digital, Auto remained flat, only decreasing spend by -0.5%, illustrating the category is taking money out of the market, as a whole, and not reallocating it.
Prescription Pharma ended the quarter with +11% more advertising spend in the market than in Q2 2016, while Pharma OTC was flat with -0.4% change on the quarter. Looking at key brands, SMI estimates Bayer HealthCare decreased its advertising on TV by -8%, while Merck increased its spend by +13%. In Digital, the category increased spend by +25%. Consumer Electronics also increased spend by +23%. Most of this increase went to Broadcast TV, with +47% more spend on the platform, mostly on Sports programming.
DIGITAL SEES GROWTH RATE REBOUND IN Q2
The Digital sector grew +11% in Q2 2017, following its first only single-digit growth in Q1 2017. That brings the sector’s YTD (Jan – June 2017) growth rate to +9%. Social saw strong growth at +55%, Search saw a +12% increase, and Internet Radio increased by +7%. Non-premium video experienced a decline in Q2, led by YouTube down by more than -15% in non-programmatic revenue. In juxtaposition, Premium video delivered healthy double-digit increases, with Hulu seeing a +30% bounce, and TV network digital putting on +11%.
“The market continues to ask big questions around non-premium video, and the results are now striking. Non-premium video slumped more than -15% for the quarter, while premium content platforms, like Hulu and the TV networks, were able to book significant, double digit gains. Quality and environment is the number one imperative for brands today and the major network groups look like they are successfully swinging this important battle back in their favor,” noted Fennessy.