JC Lupis | Marketing Charts | Mon, 06 Feb 2017 15:30:44 +0000

In many ways, the final ad spending figures for 2016 demonstrated a continuation of previous trends, although there were some intriguing results mixed in, according to a review of figures recently released by Standard Media Index (SMI). Digital kept growing and print kept declining, but there were some indications of a shift away from digital and towards TV.

Overall, the US advertising market grew by 6.8% year-over-year in 2016, a slightly slower growth rate than observed the year before despite it being a P&O year (Politics and Olympics). Growth rates seemed to slow towards the end of the year, with ad spending up by 4.3% in Q4 but by just 0.7% in December.

A quick word on methodology before moving forward: SMI’s figures are sourced from advertising agencies’ billing systems and aggregated to show a combined picture of direct agency spend across media types. It does not capture advertising dollars spent directly with media groups.

The following are some brief highlights, by medium, according to the SMI report.

TV

It was a relatively healthy year for TV advertising, as evidenced by a 4.4% year-over-year gain in ad spending, with broadcast seeing slightly more growth (4.6%) than cable (4%).

Yet much of this was due to sports, without which the TV advertising market experienced an increase of just 1.4%. Sports clearly affected broadcast more than cable: excluding sports, broadcast ad spend actually declined by 2.4% (as opposed to its overall 4.6% gain). By contrast, cable ad spend increased by 3.9% when excluding sports (as opposed to its 4% gain when sports are included).

This disparity shows up in the individual networks’ growth rates, too. NBC – which broadcast the 2016 Olympics cycle and also benefitted from the election cycle and more NFL games – enjoyed a 20% year-over-year increase in ad spending. That was a far more buoyant result than seen by other networks: CBS (3.2%) was the only other to grow, with ABC (-2.2%), Univision (-3.4%) and FOX (-4.6%) all seeing declines.

With regards to the NFL, SMI says that the average cost of a 30-second spot across networks rose by 6% to almost $500,000, with NBC’s Sunday Night Football again topping the charts with an average price of almost $615,000. Overall revenues for NFL games aired on networks climbed by 1%.

As for cable networks, ad spending on ESPN decreased by 2.9%, signaling that the sports boon was felt on broadcast. Political coverage showed up more on cable, with CNN (+57.8%) and FOX News (+25.7%) recording large increases.

Interestingly, SMI reports that some large brands returned to TV last year. Among them:

  • Paramount Pictures, which turned from a 3.8% decline in 2015 to a 24% increase in 2016;
  • Target, which shifted from a 20% drop in 2015 to a 12% hike in 2016; and
  • Progressive Insurance, which swung from a 5.5% decline in 2015 to an increase of 6.2% last year.

Digital

Those larger brands returning to TV did so amidst a climate of slower growth for digital. Indeed, the year-over-year growth rate of 13.3% for digital, while faster than all other media, was about 50% lower than the 2015 growth rate of 26.2%.

In Q4, digital’s increase was limited to 7.1% year-over-year. SMI comments that advertisers categories such as retail, telecommunications and consumer electronics re-committed to TV in Q4 after moving too far into digital the prior year and not seeing the outcomes they had expected.

Still, telecom (-2.4%) and department stores (-3.5%) were the only two categories to decrease their spending on digital advertising for the year, though consumer electronics was almost there (+0.6%). By contrast, growth categories included movie studios (+40%), food, product and dairy (+36.5%), alcoholic beverages (+33%), and prescriptions (+26.7%).

Reports have suggested that Facebook and Google are hogging virtually all of the growth in online advertising, and SMI does reveal that digital’s growth rate drops when removing those two from the equation. Yet excluding Facebook and Google, digital advertising still grew by 8.7%.

Facebook advertising spend surged by 83% last year, while Snapchat, with 356% growth, soared the most, doubling Pinterest in ad spending volume.

Print, Radio, and OOH

The changes in spending on traditional media other than TV generally follow past-year trends and are mostly in line with forecasts for the coming few years (with the exception of magazine advertising).

According to SMI, 2016 brought more declines in print advertising (despite its continued impact as a strong purchase influencer), as magazine and newspaper ad spending declined by 9.1% and 13.9%, respectively. The result for magazines is noteworthy given forecasts that it should maintain current levels of ad spend in the next few years.

Meanwhile, radio ad spend was mostly flat (-0.5%), per SMI’s data, while out-of-home (OOH) continues to be a bright spot, up 6.9%. Indeed, the latest release from the Outdoor Advertising Association of America indicated out-of-home revenues grew again in Q3 2016, which would mark the 26th consecutive quarter of year-over-year growth.

NOTE: If you’re interested in media consumption and advertising, you may want to check out our latest premium reports:

– (3rd Edition) US Media Audience Demographics – offering a look at the composition (by age, income and race/ethnicity) of various media audiences, including broadcast TV, cable TV, and online TV viewing.

– (3rd Edition) Advertising Channels With the Largest Purchase Influence on Consumers – provides insights as to how various advertising channels rank as stated purchase influencers among Millennials and other demographic groups.

About the Data: Standard Media Index data is sourced directly from advertising agencies’ billing systems and then aggregated to show the combined picture of direct agency ad spend across all media types. It includes all media bookings from the participating agency groups and covers up to 80% of total agency spend across 15 global markets.