There have never been so many new TV shows available as there are now, and rarely have there been so many great shows to watch, and yet the payoff for TV companies is getting increasingly tenuous. Ad spending through 2017 continued to shift away from traditional venues, including TV, toward digital platforms.
The growth in overall ad spending for calendar 2017 is going to be up when the final numbers come in for the fourth quarter, but it now looks like the growth rate for the full year will turn out to be less than expected, after a slowdown in spending during the latter half of the year.
It’s all generally good news for digital platforms as a category, but it turns out that there are only two major beneficiaries of all of these trends in advertising: Google and Facebook. Together those two took 74% of the market’s growth in the first half of 2017.
Within digital, the shift is away from desktop and toward mobile. Mobile represented 84% of digital’s growth. All of this according to a research note published on Friday by MoffettNathanson Research.
This year (2018), the biennial one-two of Olympics and elections will be attended by surges of ad dollars, lifting overall ad spending by 7%. It’s natural to think there will be a reset, the firm wrote, but that would be a mistake. The fundamentals of the market are not going to change, so don’t think 2018 will represent a turnaround that will carry through to subsequent years.
For 2017, given the slowdown in overall spending during the latter half of the year, MoffetNathanson Research dialed back on its earlier estimate of the rate of ad spending growth, cutting it from 3.4% to 2.5%.
Again, the growth is coming on the digital side. The analysts upped their estimate for the full-year 2017 digital ad spending growth rate by a percentage point, from 19% to 20%.
Meanwhile, spending in traditional media (including TV) will be less robust than previously thought; MoffetNathanson originally expected traditional ad spending for the full year would be down 6%, but now it thinks the decline will be 8%.
Focusing on TV ad spend alone, the research group said the decline in TV advertising through 2017 thus far was the worst three-quarter run they’d seen in five years: down 2% in each quarter. Filter out the additional spending on ads associated with Olympics and elections, and TV advertising has been flat or negative in five of the last six consecutive quarters, the analysts noted.
Looking ahead at 2018, they project elections plus the Olympics will boost ad spending by 7%. That will help alleviate the growing weakness in the traditional media segment, but won’t solve it; MoffettNathanson expects traditional media ad growth to be down 1% in 2018 (where otherwise it would drop 8%).