Television’s somewhat surprising ability to claw back advertising dollars appears to be weakening.
Over the past year, TV advertising has been stronger than expected, particularly in the upfront market, in part because of some marketer disappointment with what digital was delivering.
However, in the second quarter, Michael Nathanson, analyst at MoffettNathanson Research, says digital gained share against TV.
Nathanson says that digital advertising jumped 27% in the second quarter, 1.7 percentage points more than the first quarter increase. TV ad growth was 3.1%, 1% point below his forecast.
As a result TV lost 3.5 share points to digital.
Digital growth doesn’t necessarily come at the expense of TV, Nathanson notes.
“Digital advertising is boosted by small- to medium-sized business owners who can’t afford or opt not to buy TV plus previously unmeasured dollars (in other words, coupons, trade support, co-op ad dollars) moving into the measured world,” he said. “While these two factors help online without hurting TV, at some point continued 20%+ digital growth rates will have to come out of traditional advertising budgets.”
Nathanson raised his forecast for 2016 ad spending to 8% from 7%, driven by strong results in TV and online. For 2017, after the Olympics and the election, ad spending will rise 3%, he said. Most of that growth is coming from the internet, he notes.
For TV, he sees 6.6% growth in 2016, with the Big 4 broadcast nets up 9%, national cable up 3.5%, syndication down 1%, local stations up 9.5% and local cable up 13%.
In 2017, Nathanson forecasts TV down 3.7%, with the broadcast nets down 4.6%, national cable down 3.6%, syndication down 1%, local stations down 8% and local cable down 3.6%.
Nathanson also asks if NBC’s underdelivery during the last few days of the Olympics will mean the network needs to use other sports inventory as makegoods, which would make scatter inventory tighter.