US ad-market grows 5% in Q2

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Standard Media Index, the advertising intelligence firm, has unveiled US advertising revenue figures for the second quarter of the year (April – June).

The National Advertising market gained 5 per cent in Q2, despite a modest decline in National TV when factoring out the World Cup.  Looking across platforms, Digital was the strongest performer this quarter, growing 12 per cent. That was followed Out-of-Home at 9 per cent, National TV at -1 per cent, Radio at -1 per cent, and Print at -22 per cent.

National Television revenue declined in Q2 as the average paid unit cost for 30-second commercial fell -3.4 per cent.  That is partially offset by a 2.5 per cent increase in the number of 30-second spots to 3.4 Million and a -4 per cent reduction in the number of unpaid spots – also known as makegoods or ADUs.

“As Upfront Season comes to a close, the industry now needs to quickly move its attention to the Scatter market,” says James Fennessy, CEO of Standard Media Index. “In Q2, revenue from the Scatter market grew by 11 per cent YoY while revenue from Upfronts fell -4 per cent and Direct Response advertising remained flat.”

This quarter, eight TV Network groups had market share of 5 per cent or higher by revenue.  Among them, 21st Century FOX grew the most, gaining 9 per cent revenue. That’s followed by Time Warner, Inc at 8 per cent revenue growth and Comcast at 6 per cent.

Entertainment

Entertainment Television revenue was flat in Q2 at -0.4 per cent but grew in Primetime Original Programming. Specifically, Dramas were up 0.9 per cent, Reality shows were up 2.5 per cent, and Comedies were up 19.5 per cent.  SMI defines original programming as non-syndicated, new episodes for those three subgenres.  All four major broadcast networks gained revenue from Primetime Original Programming this quarter: CBS at 22 per cent, ABC at 7 per cent, NBC at 2 per cent, and FOX at 2 per cent.

Among Primetime Originals, AMC’s “The Walking Dead” charged the most for a 30-second commercial at $331,691 in Q2. That’s followed by FOX’s “Empire” at $322,659, and CBS’ “The Big Bang Theory” at $295,138.

Q2 also marked the start of the summer season, and with that, the premieres of several talent competition programmes.  Along with the new season of NBC’s “America’s Got Talent,” came NBC’s “World of Dance,” FOX’s “So You Think You Can Dance?” and FOX’s “The Four: Battle for Stardom.” In June alone, new episodes of those four shows earned a combined $76.9 Million.

Looking at market share, Comcast was the largest TV network group by Entertainment revenue in Q2 at 19 per cent.  That’s followed by Discovery, Inc (including Scripps Network Interactive, which it acquired in March) at 15 per cent, Viacom, Inc at 14 per cent, Time Warner, Inc at 10 per cent, CBS Corp. at 9 per cent, The Walt Disney Co. at 9 per cent, A&E Television Networks at 7 per cent, and 21st Century Fox at 6 per cent.  It’s a highly consolidated market where the top eight media owners, all with greater than 5 per cent market share, account for 88 per cent of ad revenue.  The top 12 media owners account for 98 per cent of ad revenue.

News

Cable News continues to be a boon for National TV in Q2.  The five cable news networks – FOX News, CNN, MSNBC, CNBC, and HLN – grew a combined 16 per cent YoY for the quarter.  Among the networks, MSNBC has been a powerhouse, growing 70 per cent YoY.

Meanwhile, Broadcast News is down -6 per cent in Q2.  In fact, the genre has lost revenue every month so far in 2018.  Among the Big Four Broadcast Networks, only CBS and ABC increased news revenue in Q2 by 4 per cent and 2 per cent respectively.

Among TV Network Groups, Comcast has 35 per cent share in news, followed by 21st Century FOX at 17 per cent, The Walt Disney Co. at 16 per cent, Time Warner at 15 per cent, and CBS at 10 per cent.

Sports

Revenue from Sports fell -6.6 per cent in Q2 YoY when excluding the World Cup. Sports revenue saw significant losses from changes in basketball schedules – both at the professional and college level.  This year’s NBA Finals only lasted four games compared to five last year, causing the series to earn -12 per cent less revenue YoY.  However, when looking at average revenue per game, this year was up 10 per cent, having brought in $45.7 Million per game for ABC.

Similarly, NCAA Basketball earned less than half of what it did last year in Q2 due to the March Madness schedule.  In 2017, the two Final Four Semifinal games took place in April; meanwhile, those two same games took place in March of this year.  When equivalising for both the NCAA Basketball games, as well as the World Cup, Sports is only down -1 per cent in Q2.

Looking at World Cup revenue for June only, English-language live games were broadcast by both FOX and FOX Sports 1 (FS1).  The total revenue for June on the combined FOX stations was $58.2 Million, which is a 31 per cent decline from the 2014 games that aired on ABC-owned networks.  Among Spanish-language broadcasts, the 2018 World Cup earned $90.3 Million in June for NBCUniversal’s Telemundo compared to $135.5 Million for Univision in 2014.  However, it is important to note that four additional games took place in June 2014 than they did this year.

“The growth in average revenue per-game for the NBA Finals highlights the opportunity for highly-anticipated sports events to drive revenue,” says Fennessy.  “By the same token, the declines for the World Cup, without the US in the tournament, illustrates the risk that TV Networks take when it comes to punting on expensive sports rights.”

Among TV Network Groups, The Walt Disney Co. has 41 per cent share in sports, followed by Comcast at 21 per cent, Time Warner at 17 per cent, 21st Century FOX at 13 per cent and CBS at 2 per cent.


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