While digital advertising continues to grow, traditional media ad spending fell by 3.6% in the second quarter, making it the worst non-Olympic ad growth quarter since 2009, according to media analyst Michael Nathanson.
As a result, analyst firm MoffettNathanson lowered its total television (national plus local) estimates to a 5% decline for the year. The firm also lowered estimates for outdoor, radio, newspapers and consumer magazines, and lowered its overall projection for traditional media advertising to a decline of 7% for the full year.
“Simply put, traditional media and agencies in the U.S. face the same problem. They have too much client concentration in sectors like retail, consumer products and auto that are not growing budgets and not enough small to medium sized enterprises that continue to fuel online growth. The limited scale of their client base works as a major drag on growth as these industries experience structural headwinds,” wrote Nathanson in a research report.
But Nathanson clarifies that online’s gains don’t necessarily attribute to traditional’s losses, even though national TV lost 300 basis points of share to online during the second quarter.
“National TV advertising is typically supported predominantly by Fortune 500 advertisers while online, which includes search, pulls money from all types of advertisers and marketing budgets that include non-paid media,” wrote Nathanson.
Despite the second-quarter hardships for national TV ad revenues indicated by MoffettNathanson, revenues for the national television advertising market rose 2.5% in July thanks largely to growth at cable networks, according to the Standard Media Index.
Cable networks ad revenues rose 3.7% in July while broadcast networks were nearly flat, up 0.3% compared with July 2016.
“Despite national TV ratings challenges, the ad market opened the second half of the year with a real bang. Social and Premium Video remain the powerhouses of the digital sector and, after some weak performances in recent months, Prime Time Entertainment has come storming back, which will be an enormous relief to the major networks,” said James Fennessy, CEO of Standard Media Index, in a statement. “We continue to see major advertisers, like Unilever, return to the highly trusted medium of national TV at the expense of nonpremium digital video. We expect this trend to continue as the networks strengthen their digital offerings and brands continue to question viewability and environment on nonpremium platforms.”