1Q Ad Recap: Local And National TV Both Up

The first quarter of 2016 was another strong quarter for U.S. advertising, with local broadcast TV up by low single digits (excluding political).

That’s one of the findings of a new research report from Pivotal Research Group that studied results of major media companies. 

“On our preliminary analysis, we think the U.S. media owners collectively grew their ad revenues by around 6% during 1Q 2016 on a normalized basis,” it found (“normalized” excludes the impact of political and Olympic advertising to better correlate the state of the advertising market to the economy).

By medium, the study estimates that:

• “Local broadcast was up by low single digits (excluding political).”

• National television “grew 5%-6% during 1Q, slower than the 7% growth rate we think occurred during 4Q 2015, but still quite rapid — especially considering the permanent secular decline that many observers believed the medium was experiencing around this time last year.

• “Local cable likely performed similarly” to national TV.

• “Internet advertising was by far the fastest growing major medium, seemingly slowing by a couple of percentage points during 1Q16 vs. 4Q15’s faster pace, but still rising by around 20% year-over-year.

• “At the other extreme, newspapers’ print advertising revenues appeared to fall by low double digits once again, both at national and local levels, while national magazines likely declined by mid to high single digit rates.

• “Outdoor advertising and radio both likely came in flattish for the quarter.

• “One notable ‘traditional’ print medium was direct mail, as the USPS’ standard mail revenues rose by 3.2% during the quarter.”

The study also focused on the 200 largest marketers in the United States which consistently publish marketing-related expenditures in their quarterly filings (yielding 43 total companies).

From this group, Pivotal reported that while revenues generally increased in the first quarter, “advertising-related line items (including sales and marketing expenditures when advertising-specific line items are unavailable) increased as a percentage of revenue, likely producing much of the spending increases that media owners benefitted from.”

During the first quarter, the median advertiser allocated 9% of revenues to a marketing-related line item vs. 8.4% during 1Q 2015, 8.3% during 1Q 2014 and 8.1% during 1Q 2013.

In addition, the study said, said, “We have previously noted the presence of new marketers outside of this group, including app developers and pharmaceutical advertisers as well. Newer advertisers such as Google, Amazon and Apple are also large marketers to note, as each promotes new products and drive a significant share of the industry’s growth.”

Looking forward, the report said that while marketers may continue to increase the share of revenues they allocate to marketing going forward and new categories may continuously emerge, “we do not consider the rates of growth observed during 1Q 2016 or 4Q 2015 to represent anything like a ‘new normal’ for advertising.

“We continue to expect low single-digit growth rates to remain as a long-term rate of growth for paid media advertising on an ongoing basis.

“While growth during any given period may randomly be above or below such levels, our overall assessment is that recent rates will likely produced difficult comparables for the industry during future points in time.”

Read the full report here.