Advertising cost and spend data specialist Standard Media Index (SMI) has unveiled results for December 2016, Q4 2016 and the full 2016 calendar year. SMI total market closed December 2016 with +0.7 per cent YoY increase, +4.3 per cent YoY for Q4 2016 and +6.8 per cent for 2016 over 2015. While the total ad market continues to grow, the rate of growth has slowed slightly (-0.8 per cent) even though 2016 was an Olympic and Election year.
Digital – 2016 in Review
Over the past four years (2012 – 2015), Digital has seen a compound annual growth rate of 19 per cent. When you look at the growth rate from 2014 – 2015, that number skyrockets to 26.2 per cent. By contrast, the year-over-year growth rate for Digital in 2016 was only +13.3 per cent (down almost 50 per cent vs. prior year). This slowdown was evident throughout 2016 with Q4 seeing a +7.1 per cent single digit digital growth YoY. This trend was most apparent in Retail and Telecommunication Companies cutting spend by mid-single figures.
“Brands today are marketing in a digital world and we have seen the rapid growth in the sector in the past several years. With that being said, the trajectory of digital spend has recently hit a major speed bump as brands question the efficacy of the medium,” said James Fennessy, CEO of SMI. “The big story we saw in Q4 was a re-commitment to television for a number of big categories of advertisers. Retail, Telco’s and Consumer Electronics have not seen the outcomes they expected from digital and have moved back to the medium they have trusted for decades. Retailers, in particular flooded back to TV over the holiday period after moving way too much to digital in 2015.”
When you remove Facebook and Google spend from the rest of Digital, the sector’s growth drops to +8.7 per cent, illustrating the dominance that the two tech giants maintain over the ad industry, particularly in mobile. Facebook continues to perform well above the growth rate of digital, jumping +83 per cent for the year. The other shining star for 2016 was Snapchat. The messaging app saw +356 per cent growth from 2015 – 2016, and received more than double the ad spend by volume as Pinterest.
While some brands have slowed digital expenditures, the only two categories to decrease digital spend for the year were Telecommunications at -2.4 per cent and Department Stores at -3.5 per cent. Consumer Electronics was not far behind with +0.6 per cent growth. These categories dialled back spend after a very significant shift into digital in 2015. If you look at just Q4 the categories decreased digital spending by -23.4 per cent and -7.8 per cent respectively.
Motion Picture companies, on the other hand, have been steadily moving spend toward digital due, in part, to the realisation that the consumer movie going journey now starts and ends on the digital platform. Looking at the compound annual growth rate since 2012, Movie Studios have allocated +33.6 per cent more spend to digital. When isolating just 2016 you hit a high +40 per cent compared to 2015. Other top digital growth categories for the year include Food, Produce and Dairy which increased digital spend by +36.5 per cent, Alcoholic Beverages grew by +33 per cent and Prescriptions grew by +26.7 per cent in 2016.
Television – 2016 in Review
Overall, the 2016 television market saw a +4.4 per cent increase in spend. Both Broadcast and Cable saw similar increases delivering +4.6 per cent and +4.0 per cent growth, respectively. When you exclude sports, however, the story changes. Without live sports, the overall television market only grew +1.4 per cent, Cable grew +3.9 per cent and Broadcast declined -2.4 per cent compared to the same period in 2015. Entertainment was the only genre to see revenue fall, dropping -1.8 per cent while sports grew +16 per cent, due to the Olympics, with news growing +14.1 per cent, thanks to the elections.
By network, NBC saw +20 per cent growth for the year, benefiting from the election news cycle, the 2016 Olympics and an increased number of NFL games broadcasted. CBS grew by +3.2 per cent, ABC declined by -2.2 per cent and FOX fell by -4.6 per cent. Univision also declined by -3.4 per cent.
Looking at the top cable networks by revenue for the year – ESPN declined -2.9 per cent (despite the sports boom on Broadcast), TBS grew by +1 per cent, TNT fell -1 per cent, USA Network also declined -2.8 per cent. Cable News channels CNN and FOX News saw huge increases – +57.8 per cent and +25.7 per cent respectively, due to the election, and continued interest in US politics that followed. Lifestyle channels HGTV, Bravo and Food Network showed that there were some real bright spots in cable as many viewers looked to escape the election coverage. Respectively they grew +13.8 respectively, +14 respectively and +4.9 respectively.
As digital growth slows, some larger brands are putting money back into TV. For example, in 2015 Paramount Pictures decreased their TV spend by -3.8 per cent they reversed this strategy in 2016 by increasing spend on TV by +24 per cent. Similarly, Target reduced TV spend by -20 per cent in 2015 but increased spend by +12 per cent in 2016 and Progressive Insurance went from -5.5 per cent on TV spend in 2015 to +6.2 per cent in 2016.
Television – December and Q4
In December 2016, the overall TV market was up +5.5 per cent YoY. Broadcast spend was mostly flat at +1 per cent while Cable grew +9 per cent YoY.
The four major broadcast networks saw mixed reviews in December – NBC saw +16.6 per cent growth, due in part to new Thursday Night Football programming. CBS saw a -11.3 per cent decline in ad spend, mainly due to showing one less NFL game than in December 2015. FOX grew slightly with +1.3 per cent increase, and ABC saw a decline of -13.4 per cent with losses in the coveted primetime entertainment category with the programming change of Scandal.
Looking at Q4 Television tells a slightly different story; the television market saw just +2.4 per cent growth with Broadcast down -2.2 per cent and Cable up +7.4 per cent. The major broadcast networks again had mixed results with NBC up +7.3 per cent, CBS down -12.4 per cent, FOX up +2.9 per cent and ABC down -9.6 per cent.
NFL – 2016 Regular Season in Review
December 2016 brought the end to most of the NFL’s regular season games and an opportunity to reflect on how it fared with ad dollars. Overall, the average unit cost of a regular season: 30 second spot across all networks increased +6 per cent over the 2015 season from $471,017 to $499,095. NBC’s Sunday Night Football led the pack with highest average cost per: 30 second spot at $614,972, a +6 per cent increase in unit cost over 2015. Of the three broadcast networks to air NFL games, CBS’ Sunday afternoon games brought the lowest price tag at $406,405, but still saw an increase of +4 per cent over the average unit cost in 2015. When you combine spend for all networks that aired NFL games (except NFL Network) overall revenue was up +1 per cent.
Magazines, Radio, Newspaper and OOH:
For Q4, Magazines (-7.2 per cent), Newspapers (-19.9 per cent) and Radio (-1.0 per cent) all lost revenue compared to Q4 2015, while OOH saw a tremendous +8.9 per cent increase for the quarter. A +16 per cent increase in spend on Billboards is the bulk of OOH’s increase, this is compared to a -1 per cent decrease in Q4 2015. A significant portion of the increase can be attributed to spend around local and national elections.
Looking at 2016 in total, Magazines (-9.1 per cent), Newspapers (-13.9 per cent) and Radio (-0.5 per cent) saw overall declines but OOH grew with a +6.9 per cent increase in spend.