Perhaps all of the election dollars in the marketplace are not making the advertising marketplace as rosy as many had thought—but it sure did help Local TV. Brian Wieser, Senior Research Analyst, Pivotal Research Group, writes that after a review of Q2 earnings and commentary from media buyers in recent weeks, they are revising expectations for ad-supported media downward: “What seemed an improving environment in Q1 now appears to have been a “false dawn”: Q2 turned out to be in line with trends observed during late 2011, growing by only 1.3%. With the US “fiscal cliff” unlikely to be resolved soon, and with economists downgrading their expectations for the economy at the same time, we’re skeptical that Q3 will reverse course again. Our expectations for US advertising are further reduced for 2012 through 2017. For 2012 we now forecast 1.4% growth vs. 2.3% previously.”
Local radio was in-line with expectations. Still, as with other media, they’ve reduced long-term forecasts because of macro-concerns. The Total Network and Satellite Radio category is now forecast to grow 4.7% for the year, to $1,266,400,000. Total Local Radio is now forecast to be down .1% for the year, to $14,043,500,000.
National TV was weaker than prior expectations. With negative growth in network TV, and diminished growth in cable, the total sector grew by only 2% in Q2. While management teams identified various reasons to explain declines, the fact that budgets didn’t show up elsewhere indicates the markets generally softened more in line with the trend Pivotal observed coming out of last year’s Q4. The flow through effect of related share-shift trends leads them to now estimate normalized (ex-Olympics) growth of 3.1% for 2012 vs. 4.8% previously.
Local TV (including local broadcasting and cable) grew by nearly 9.8% vs. expectations of +7.8%. Political is likely to have had stronger impact than originally forecast, especially on local broadcasting: “Overall, our prior forecasts now appear too conservative, with industry contacts confirming the general nature of expectations implied by local broadcasters with respect to political advertising. We now expect local TV advertising to grow by 15% in 2012 vs. 2011, and up 8% vs. 2010. Total political revenues are now forecast for $2.9 billion this year.”
National digital display and related media seemingly grew at a consistent pace in Q2 ‘12 vs. Q1 ‘12 at around 4% in each period. However, overall display advertising continues to decline by high single digit rates annually. This is partially offset by growth in mobile (which they believe to be nearly doubling year-over-year) and online video (growing in excess of 20% year over year in recent quarter). “Our expectations for this grouping of media now call for +5.1% growth for 2012 vs. +6.8% previously.”
Direct online media – including paid search – held up well, decelerating but still likely growing by 20% YOY. “We have only reduced our expectations for related media types modestly because of the aforementioned macro-economic issues. The impact of those changes means that our 5-year CAGR for pc-based paid search growth has only been reduced from +12.2% to +11.8%.”