Buoyed by strong demand for digital and broadcasting, the advertising market grew 7% in May, according to the latest data from the Standard Media Index. Digital media increased ad spend 16% in May, while national TV ticked up 2%, with radio up slightly, increasing its market 0.5% compared to a year ago. Out-of-home, magazine and newspaper, however, were down year-over-year.
Both broadcast and cable networks posted increased ad revenue in May, the SMI reported, with broadcast networks up 1% and cable networks up 2%, compared to May 2016. In an unusual turn, ad spending on sports programming dropped 5% in May, largely due to fewer NBA and NHL playoff games. “Shorter series in 2017 had a negative effect on year-over-year revenue,” the report noted. “With six less games, the networks lost out on approximately $24 million compared to 2016.”
Despite the lost revenue, the SMI noted that spot pricing did increase for NBA playoff games, with TNT’s unit costs up 13% and ABC’s increasing 12%, although NBA ad revenue was down 9% for the month, SMI said.
After experiencing slowed growth for the early part of the year, SMI says digital is now on the upswing, with spending up 16% in May, compared to a year ago. Year-to-date, the medium’s growth rate is averaging almost 9%, with social up 59%, Facebook ad revenue up 83% and Google’s search business up 19%, the report detailed. In one notable decline, YouTube’s video ad spend was down 23%, likely a result of many brands pulling their ad dollars over concerns that spots were running alongside objectionable videos. (Google, which owns YouTube, has since announced plans to put new systems in place meant to safeguard against such problems in the future.)
“May results show a definite pick-up in the overall market with digital spend rebounding solidly after a slow start to the year following concerns from advertisers around brand safety. The national TV market is being kept in the black by cable news and lifestyle programming, both of which racked up some big year-on-year gains in May,” James Fennessy, CEO of Standard Media Index, said in the report. “On the flip side, the major networks will be very concerned at the continued softness in broadcast primetime. Live sports programming also didn’t deliver with shorter playoffs series, thanks to the dominance of [the NBA’s world champion Golden State Warriors], really impacting year-on-year comparisons.”
Among the largest TV advertising categories, the SMI says entertainment spending was down 24% in May compared to a year ago, with entertainment companies spending $60 million less on cable and broadcast ads. At the same time, entertainment brands increased their digital ad spends by 25% or $13 million. Auto advertising fell 5% in May and 13% so far this year, with auto dealers spending about $238 million less in the first five months of 2017 than they did for the same period in 2016.
Several key categories are increasing their spending though, including pharmaceuticals (+19%); quick service restaurants (+11%) and telecommunications (+10%). These three categories are also increasing their digital ad spend, which points to overall rises in marketing budgets, SMI notes, rather than dollars shifting from one medium to another.
However, with major advertisers still pulling back, SMI is bracing for more volatility in the ad market.
“Pharma, QSR and Telco’s have all piled into national TV in recent months but the big categories of movies and auto continue to pull money out of national TV and experts in the space are questioning at what point does this start impacting sales,” said Fennessy.
The SMI represents 70% of total national U.S. agency spending from top global media agencies and independents.