Downright boffo first quarter for ad spending
U.S. media economy grows 12 percent to start the year
June 3, 2014
It’s been 10 years since the media economy had a quarter this strong.
But before anyone declares advertising is finally healthy, there are a few caveats attached to the numbers released today by MoffettNathanson, a research company.
Its report found that U.S. ad spending grew by what it termed “an amazing” 12 percent during the January to March reporting period, double the growth rate at this time last year.
The bulk of that growth was sparked by two things, the Winter Olympics and a big surge in digital spending.
“So on the face of it, overall U.S. advertising demand looks strong,” notes the report, but it goes on to add a note of caution.
“However, we think it is worth putting an asterisk next to that conclusion given the accelerating pace of online spending combined with benefits from the Sochi Winter Olympics.”
In fact, the Olympics contributed $850 million in advertising, giving a huge boost to broadcast television, which grew by 27 percent during the quarter.
Digital was up by 22 percent, and it accounted for a third of all ad spending during the quarter.
Still, even when digital is removed, traditional ad spending was still up 8 percent during the first three months of the year.
That’s a much-needed positive for the media economy, which had a fitful 2013. While digital continued to grow at a rapid rate, other media stalled or declined, including magazines, newspapers and radio.
Even television had a lackluster year, with the lack of political ad spending hurting spot TV and broadcast suffering from steep viewership declines that limited the number of ratings points available for sale.
MoffettNathanson says there is still strong demand for television, but it’s more limited than in the past.
“We think TV ad spending trends will remain in focus as money continues to move to both digital and must-have, live events,” says the report.
“As such, the risk is that scatter volumes for non-essential opportunities continue to disappoint in the future.”
The picture is less rosy for other traditional media. Radio and outdoor had decent gains of 2.6 percent and 1.3 percent during the quarter.
Meanwhile, print continued to struggle. Consumer magazines were off 3.3 percent in first quarter, according to the report, while newspapers fell 4.5 percent.
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