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Football Continues To Control Television Market Volatility, Low Ratings Finally Catch Up With the NFL

December 21st 2016

New York, 20th Dec 2016 – Standard Media Index (SMI), the company providing the only complete and clear picture of real advertising cost and spend, today unveiled updated figures for November 2016. SMI total market closed November 2016 with -1% decrease on a year-on-year basis, driven by a decrease in the number of Football games, and an extremely strong November 2015. When compared to November 2014, the SMI total market for November 2016 was up +21%.

NOVEMBER – FOOTBALL

The 2016 NFL season has been rocky to say the least, and November was no exception. This is the first time we’re seeing the effects of the low ratings start to actually hit the bottom line with decreases in revenue, which had still been increasing in September and October 2016.

Overall, November 2016 saw 4 less football games than November 2015, which immediately brings gross spend for the month down. What’s more prominent, however, is the increase in ADUs, or makegoods they’re starting to pay back to advertisers who have not been receiving guaranteed impressions thanks to low ratings:

  • NBC lost -17% in football revenue YoY. The network was the only one who had the same number of games (6) in both 2016 and 2015 and saw a +10% increase in average unit cost for the month to $720,949. It’s the 20% of inventory given as ADUs, which helped with the decline. That’s compared to just 5.2% in November 2015.
  • CBS did see one less game in November 2016 (8) compared in November 2015 (9) – but its loss in revenue, -26% is also due to an increase in ADUs – nearly 20% of inventory in November 2016 compared to 11% in November 2015. The network also had a slight decline, -1% in average unit cost YoY.
  • While FOX saw the largest overall decline, a -34% decrease in gross spend, this is mostly due to the number of game as the network had three more games in November 2015 (9) than in November 2015 (6). FOX’s average unit cost for the month rose nearly +21% to $642,559, with the percentage of given ADUs growing more moderately, from 20% to 25%
  • Across all three major networks with NFL games, on average, a 30-second spot would have cost $590,060. This does include Thanksgiving games, which would have cost you about a million dollars – $1,096,295 (FOX), $942,391 (NBC), and $860,095 (CBS).

NOVEMBER – TELEVISION

In November 2016, the overall TV market was down -2.4% YoY. Broadcast spend declined -10.6%while Cable grew +6.3% YoY. However, when you exclude Football the national TV market is up +5.3%, highlighting how much the national pastime and live sports influences the TV industry. Similarly to the overall market, if you compare the November 2016 TV market to November 2014, you see a +8.4% two-year growth, even broadcast is up +5.2% for the two-year period. The extremely high spend from 2015 gives an unfair picture of how the November 2016 television market did.

NOVEMBER TELEVISION – BROADCAST IN DEPTH

All four major broadcast networks saw a YoY decline for November 2016 – CBS is down.

-18%, NBC is down -5.8%, FOX is down -14.5% and ABC is down -7.6%. FOX and CBS took the biggest hit this month due to football declines – which saw a -26% decrease on total ad spend across all broadcast channels. When you exclude football from broadcast, the medium is up +.8% YoY for November 2016.

Other key insights include:

  • When you exclude sports, Primetime revenue fell by -8.3% across all four major networks; the average unit cost during the primetime daypart was $104,906 down -3.1% YoY from November 2015.
  • NBC saw the greatest YoY increase to its average primetime unit cost when you exclude sports, going from $99,000 to $110,900 but ABC still had the highest overall at $112,899 for the daypart in November
  • Without Scandal, ABC’s Thursday night primetime lineup has taken a hit seeing a -5% drop on its average unit cost and -26.6% drop on its gross spend for the evening
  • When ABC hosted the American Music Awards on Nov. 20, 2016 the average 30-second spot would have cost you around $225,723. Though, the night brought in less gross spend than ABC’s normal lineup would have, begging the question of whether some award shows are worth the change in regularly scheduled programming.
  • FOX’s hit show Empire continues to bring in big spend with an average unit cost of $311,000 throughout Nov. 2016
  • The Thanksgiving Day Parade proved to be lucrative for NBC, with a +12% increase in gross spend and +4% increase on the average unit cost to $368,025

“November was a fascinating one for the sector with a lot of moving parts. The final days of election coverage, a challenging football season, and a revitalized retail sector all contributed to the market delivering a modest gain,” said James Fennessy, CEO of Standard Media Index. Poor football ratings earlier in the season, combined with fewer games this month, finally caught up with the major broadcasters whose revenue dropped more than 10% in November as they were forced to give inventory back to advertisers. Without sport the major networks were slightly up as major retailers moved big money back into TV after some questionable experimentation with digital last holiday season.”

NOVEMBER TELEVISION – CABLE IN DEPTH

  • Scripps’ HGTV continues to see double digit YoY growth with a +15.1% YoY, despite a month focused on the election on football – highlighting the demand for its inventory.
  • After nearly 7 quarters of decline, Viacom is starting to recover and deliver YoY growth. In November, the company saw a little under +10% increase on month YoY.
  • Solidifying cable’s entertainment and lifestyle success, E! also saw extensive growth with +24.1% increase in gross spend YoY
  • ESPN, on the other hand, saw an -8.4% loss on month

ELECTION SPEND

In the last week of the election, both candidates put their national TV spend toward America’s heart – football. Hillary’s campaign spent over $2.2 Million during Week 9 NFL games trying for a last minute push. President-Elect Trump, on the other hand, only spent $1.2 Million the last week of the election.

Election night is one of the only nights in history when a cable news network can bring in more for a 30-second spot than one of the big broadcast companies. Both FOX News and CNN had higher average costs for the night than CBS.

“Cable continued to perform strongly with the news networks taking big dollars in the lead up to the election and the ensuing aftermath, while networks like Scripps also posted big gains as others tried to escape the election coverage,” said Fennessy.

NOVEMBER – RETAIL SPENDING

November usually means big ad buys from retailers, toy companies and consumer electronics, as they try and get people’s attention ahead of the holidays. While the election curbed some of that, there were still some gains on TV advertising spend in those categories:

Specialty Retailers increased spend by +7.6% compared to November 2016 and Department Stores increased TV spend by +16.6% But, the news certainly isn’t all good –

  • Toy and Video game companies decreased spend by -9%
  • Clothing and Fashion companies decreased by -16.7
  • And, most drastically, Consumer Electronics decreased by -25%
  • Digital didn’t fare well in the retail section either, Department Stores decreased its spending on digital by -36% and Consumer Electronics decreased spend by -34%.

NOVEMBER – DIGITAL, MAGAZINES, RADIO, NEWSPAPER AND OOH:

During the month of November 2016, digital platforms grew by +3.4% YoY – the second smallest margin of growth recorded since SMI started collecting data in 2009. Advertising on social sites (+23%) and video sites (+15%), delivered the largest YoY gains in the sector for November. The lower than expected YoY growth is due to a really high November 2015. When compared to 2014 you see a +43% growth for the two-year period. The market continues to decline due to the high spend in August for the 2016 Olympics.

“Digital has really slowed in the past months and we saw another period of tepid growth from a sector that was on fire at the same time last year. We saw that major advertisers moved money into digital too quickly in 2015 and this holiday season they have rebalanced the mix to get closer to the ARF recommended split of 78% TV and 22% Digital,” noted Fennessy.

The best performing digital advertiser categories for November 2016 were Food, Produce and Dairy (+52%%), Alcoholic Beverages (+26%), and IT & Software (+50%).

All other media types, including Out-of-home (OOH) (-14.46%), Radio (-8.7%), Magazines (-10.6%) and Newspapers (-18.9%) saw large decreases YoY in November 2016.

SMI Team

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