It's not a blip. In the second quarter, the U.S. linear television market grew its ad revenue at the slowest clip, 0.4 percent, since the Great Recession. And online video, which accounted for 98 percent of total U.S. ad market growth in Q2, is to blame.
Backtracking on his earlier assertion--one shared by a number of other media analysts--that softness in the U.S. retail, automotive and movie industries caused a Q2 blip in broadcast and cable TV ad sales, Michael Nathanson now says online video is clearly the "culprit."
And germane to the pay-TV industry, the shift might be permanent.
"Online advertising is now a large percentage of the market (one-third as defined by our ad tracker) and still growing at an amazing speed (+21 percent in the second quarter)," Nathanson writes. "Despite the obvious math of a large number (32 percent) growing at a super-high rate (+21 percent), we are still shocked that, in a growing U.S. economy, online sourced 98 percent of second quarter growth."
With all this in mind, Nathanson lowered his full-year ad-sales growth forecast for cable from 6 percent to 5 percent, while dropping broadcast from 5 percent to 2 percent.
AdTracker Q2 contribution and growth, by media type. (Chart provided courtesy of MoffettNathanson)
Online advertising drives Q2 ad growth, YouTube revenue projected to hit $5.9B in 2014, reports say
Cord cutting slows to only 400K subs a year, report says
Broadcast, cable advertising numbers flat in Q2, creating concern
Cable networks AMC, Discovery, others face the hard times, analyst says