According to GE Capital’s just-released Industry Research Update for Media, overall domestic ad spend growth rates contracted in Q1, although the aggregate growth rate for consumer spending on media & entertainment continue to demonstrate improvement. Indications have been that ad spend did improve late in the quarter. From the report:
Radio broadcasters’ revenues were flat in Q1, at $3.5 billion. Digital revenues continue to grow mid-single digit but longer term growth is threatened by growing Internet substitutes.
Tracked TV broadcasters’ revenues grew at a healthy clip, primarily driven by robust M&A activity and retransmission fees. Organic ad growth appears closer to flat to very low single digit.
Internet advertising continues to grow at a double-digit pace, far outpacing growth of the broader ad sector. Monthly unique visitors to Internet sites, from PCs, appears to have plateaued at around 220 million, as mobile access is likely capturing additional traffic.
Outdoor Advertising Association of America reported US revenue increasing in Q1, but metrics for bulletin boards and occupancy trended down and disclosures from public companies indicated Y/Y revenue growth close to flat.
Organic domestic growth rates of the major ad agency holding companies in the US grew by a median of just 0.9% in Q1, a significant decline in the growth rate, following two sequential quarters of improved growth that were boosted by both political and Olympic ad spending. Havas accounted for a significant portion of the decline in growth as they dealt with tough comps and several large customer defections.
Cable TV and Internet advertising continue to grow uninterrupted (although mobile now helps drive Internet ad growth) while TV broadcasters benefitted in 2012 from Olympic and political spending and direct mail held up fairly well in the short term despite longer-term forecasts that expect significant declines in coming years due to increased email and mobile campaigns.
Based upon data from the Bureau of Economic Analysis, consumers’ media and entertainment annualized expenditures totaled $377 billion in 1Q13, up 5.1% from Q1.
Overall ad spending and GDP have an 83% correlation with advertising reporting a meaningful slow down beginning in Q1 of 2013.
Media and entertainment expenditures have been divided into eight broad categories. Compared to 5 years ago, six are up, with CAGRs ranging from -3.9% for home video to a high of 9.9% for periodicals and 5.1% for Internet access. Overall, spending has improved at a 3.6% CAGR over the past 5 years.
Internet advertising grew 15% in Q1 to $9.6 billion, growing at roughly the same pace recorded in Q4 and far outpacing overall domestic ad revenue growth. Internet ad revenue is rapidly approaching ad revenues for broadcast television. E-Commerce revenues grew 16% in Q1, continuing to gain market share on traditional retail.
Radio industry revenues were flat YOY in Q1 and trended up slightly for full year 2012, according to the RAB, reflecting continued underperformance annually against the broader advertising industry.
Digital continues to take a larger share of radio revenue but digital growth slowed in 2012 and remains a small portion of total revenue with rising concerns about competitive pressures from Internet radio.
Auto advertising growth was up 9.4% in Q1, despite tough comparisons and the understanding that the first two months of Q1 were weak. GECA industry research estimates that total light vehicle sales in the US improved 13% YOY in 2012 to roughly 14.4 million and is on pace to 15.3 million in 2013.
