After a weak first quarter in which traditional media ad spending fell 2%, analyst Michael Nathanson is raising concerns about a possible ad recession.
Nathanson said that between weak rating trends and modest volume in the scatter market, he’s lowering his projection for 2017 total TV ad revenue to -4% from -3.5%.
In a research note Wednesday entitled "Are We Entering An Ad Recession," Nathanson adds that he participated in the annual IRTS Media Buyers Newsmaker Breakfast on Tuesday. His takeaway is that this upfront “lacked the urgency of last year’s market. As such, unlike last year, given the current scatter environment and uncertainty in key verticals like retail and autos, buyers appeared to be in no rush to lock in deals.”
Nathanson said last year the scatter market was very hot, but now we are seeing deceleration during the second quarter. He adds that cable networks are no longer able to increase ad loads to bolster revenue because media owners are looking to rebuild ratings by improving the viewing experience.
“We expect 2Q broadcast and cable networks to be each roughly flat, which could prove to be too optimistic depending on the extent of deceleration in scatter pricing,” he said.