Ad market ends 2015 on a high note
January 25, 2016
Advertising spending delivered strong gains in December as US consumers’ opinion of the economy improved to the highest level since July. The total market rose by 9 per cent for the month, helping cement positive growth for the overall quarter, according to new Standard Media Index (SMI) data.
Following two vibrant months in the fourth quarter, television ad volumes dipped -3 per cent year-on-year in December. The decline was primarily caused by challenging ratings seen across many networks, and potentially affected by advertisers’ decision to ‘front-load’ their spend at the beginning of the holiday season.
In the digital sector, the market jumped by 34 per cent in December compared to the same time last year– a result that echoed growth rates seen consistently throughout 2015. SMI said the key drivers were content sites (21 per cent) sites and programmatic spending (40 per cent), which together made up the majority of digital ad dollars.
“Rising consumer confidence and a positive start to the new broadcast year delivered a strong fourth quarter, which lifted the total market into positive territory following a lacklustre first nine months of the year,” said James Fennessy, SMI’s chief commercial officer. “The overall market results were definitely underpinned by excellent NFL ratings and the new dollars from fantasy leagues. On the downside, we see that soft ratings, especially in cable, combined with challenges around digital’s effectiveness causing concerns and this impacted December’s results.”
SMI’s latest data showed that ad investment remained in line with US consumer sentiment figures recently released by the University of Michigan, which showed that sentiment rose in December to its highest level since July 2015. It was lifted in part by low inflation, modest gains in income and cheaper gas, which has boosted Americans’ purchasing power. The figures reinforce that as consumers spend more, advertisers are chasing them in the hope of capturing more of their hard earned dollars.
Other report highlights:
– Reporting on 80 per cent of national ad spend, SMI data showed that broadcast ad spend grew by 1 per cent in December 2015 and cable shed – 4 per cent in a year-on-year comparison.
– Television delivered strong results in the fourth quarter; total bookings were up 9 per cent YoY for the period. Broadcast rose by 13 per cent compared to the same time last year and cable jumped by 8 per cent on a YoY comparison.
– There was robust spending in the scatter and upfront markets. The markets closed out the fourth quarter with a 28 per cent and 6 per cent YoY increase respectively.
– A look at the top six broadcast TV networks showed that ad revenues increased by a combined 2 per cent YoY in December. Ad revenues for the same group of networks ended the fourth quarter up by 14 per cent, when compared to Q4 2014.
– Cable networks ESPN, AMC and Discovery Channel were standout performers in December, all attracting double-digit percentage increases in December. Other major cable networks fared less well due to poor ratings in the month which resulted in double-digit percentage declines for many of the leading networks.
– Ad spend volumes were strong across digital media. Investment in the sector was up 34 per cent for December, beefed up by increasing advertising spend on video sites (74 per cent), internet radio (64 per cent) and social media sites (75 per cent). The digital market holds a 40 per cent share of the total advertising pie in December.
– SMI’s data showed that ad dollars flowing to the out of home sector dropped by -4 per cent year-on-year in December.
– Radio ad revenues decreased by -1 per cent YoY in December when compared to the same time last year, despite growth on the medium’s digital platforms.
– The top growth categories for December on a year-on-year performance basis were prescription pharmaceuticals (41 per cent), food, produce and dairy (28 per cent) and telecommunications (19 per cent).