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U.S. ad market ticks up in January, but TV remains soft

March 2 nd 2015

While TV is experiencing a slow start to the year, SMI’s latest numbers show that digital spend jumped +30% from the same time last year, and now commands 27% of all national ad spend. This is up dramatically from only 19% share just two years ago. A key driver of this growth is digital video, which has emerged as the fastest-expanding segment of the digital market, thanks to leading networks making more of their inventory available to consumers through their digital platforms. This trend is only set to accelerate as media owners focus on tapping into new audiences and the advertisers trying to reach them.

Unfortunately, while digital continues to accelerate and attract new advertisers, the month of January continued the sluggish start to the TV broadcast year. SMI’s figures show upfront spend down in the mid-single digit range from this time last year, and while the scatter market is relatively strong, it is not yet making up for those lost upfront dollars.

In January, we saw the scatter market grow a healthy +39%, an upswing that helped the cable sector deliver +5% growth from the same period last year. This gain was primarily driven by ESPN, which grew +29% year-on-year, thanks to the ratings bonanza they experienced for the first ever college football playoffs. The biggest spender in scatter was the automotive sector, with advertisers spending over four times more than they did in January last year. Other key categories driving the scatter market were toys and telecommunications, both more than tripling their spend. We have also seen CPG come back strong in the scatter market, and we expect category spend to increase in the coming months as the economy continues to strengthen. A number of the top networks have successfully leveraged these insights to target advertisers and increase revenue.

On the broadcast TV front, things have not been too rosy. Overall, the sector fell -6% from the same period last year.

General softness in ratings and a move from January to February of the Grammy’s on CBS drove this result.

Hispanic broadcasters bucked this trend, with Telemundo performing very strongly and Univision also posting a solid increase on their 2014 numbers. Our data is showing a much stronger February and we expect the broadcast networks overall to post substantial year on year gains.

The magazine market was flat over the same period last year, but solid growth was delivered by Time Inc. and Hearst. These two market leaders not only experienced nice growth over 2014 results, but also managed to grab solid market share increases off the back of their strong performance.

Newspapers were down -4% over January last year, but the Wall Street Journal bucked this trend by delivering a solid double-digit gain. These strong results helped them continue the share growth they have been enjoying over the past three to four months.

It will be exciting to see how the market fares in February and March as the TV networks prepare for the all-important spring upfront. A robust scatter market, coupled with increased spending from auto and CPG, will set some up some very interesting market dynamics as we head into this busy trading period. Stayed tuned for SMI’s February data release and marketplace results in mid-March.

James Fennessy

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