ZenithOptimedia’s latest forecast says global ad spend is expected to strengthen over the next two years, rising from 3.8% in 2012 to 4.6% in 2013 and 5.2% in 2014. Developing markets are expected to grow by 8% in 2013, and internet advertising by 15%. Eurozone ad spend will to return to slow growth in 2013 after decline in 2012. The US is expected to contribute 29% of adspend growth between 2011 and 2014. Developing markets are expected to contribute 59% of growth between 2011 and 2014, and increase their share of global spend from 33% to 36%. The Internet’s share of spend is expected to rise from 16.0% in 2011 to 21.4% in 2014, exceeding 30% in seven markets. The European football championship, Olympics and US elections will help television attract a record 40.4% of global spend in 2012
For the U.S., given the current economic conditions and expected ad market, they are projecting a 4.3% increase in ad spend for 2012, up from ZO’s June forecast of positive 3.6% growth. As we move further past the recession, they expect increases of 3.6% in 2013 and 4.4% in 2014, slight downgrades from their last forecast.
ZO continues to see TV dollars moving from network to cable and this trend will likely continue as cable networks continue to add quality programming to their lineups. Print will suffer on account of digital media, but mobile devices have given new life to magazines; as smartphones, tablets and e-readers gain traction, they expect accelerated adoption of these devices. The largest increases in spend for 2012 are in Internet/ mobile (17.9%) and spot TV (12.0%). They expect to see ad spend decreases in 2012 for newspapers (-8.0%) and magazines (-3.0%). Marketing services are expected to grow 2.9% in 2012.
Looking ahead, they expect to see slight increases of 2.0%, 3.0% and 2.0% in 2012, 2013 and 2014, respectively, with a resurgence in the retail field. Radio continues to be the choice medium of retailers, seasonal products and automotive, providing heavy frequency and drive to retail messages. Spring and summer bring key sporting events which generate strong listener interest in baseball, college football and NFL.
Given the strength of the Summer Olympics, Network TV spend is now expected to increase 1.0% in 2012, up from their June 2012 projection of a 1.0% decrease, while spend in 2013 and 2014 is expected to decrease at an annual rate of 1.0%.
Substantial price increases, a shaky stock market and high unemployment contributed to a fairly flat network upfront. The big four networks (CBS, Fox, NBC, CBS) drew in an estimated $9 billion, roughly the same as last year’s upfront, once again falling far behind the high of 2004, which was estimated to be around $9.6 billion. NBC was the only network to score gains over last year.
General Motors made news when they refused to pay upfront prices, instead mandating that the networks actually roll back their prices by 20%. The big four networks were unwilling to accept these demands, and it remains uncertain whether GM made any deals; if not, GM, which is the third largest advertiser in the country, could be a sizable buyer in the scatter market. Perhaps in the hopes that GM would buy into the scatter market, most of the networks held back slightly more than they did during last year’s upfront. Overall, the automotive category was a mixed bag when it came to the upfront. Retail and technology were strong players, but entertainment was weaker than usual.
The Summer Olympics defied most expectations that NBCUniversal would lose money, considering the enormous $1.18 billion the network spent in acquisition rights. Even NBCU expected to lose money on the Olympic Games, as the company has in past years, but with ratings 30.0% higher than forecast, the company was able to break even. In addition to ratings, the Summer Olympics offer a great opportunity for NBC to launch its primetime schedule, boost its news operations and increase penetration of the NBC Sports Network.
Despite the enormous increase in buzz and the spoiling of events that aired in the UK several hours before they aired in the US, NBC still saw increases in TV viewing over the Beijing Games. In fact, some viewers said they tuned in because they had heard who won and wanted to see that in action. NBC did address concerns about tape-delayed coverage, broadcasting everything it aired in primetime live through NBCOlympics.com. Viewers did, however, have to login with their cable provider. However, considering that most viewers watched in the evening, the live broadcast did not adversely affect ratings.
NBC has confirmed renewals of current series; Monday night’s Smash will be back for a second season, while anchor, The Voice, will return in the fall, in hopes of bringing more stability to the network in the first half of the season. Grimm has also been picked up for a second season. For the 2012-2013 season, NBC will be introducing six new dramas and six new comedies. NBC confirmed that the seventh season of 30 Rock will be its last.
ABC has several key themes the network is looking to capture in the upcoming slate. Continuing to define the ABC brand with content that is upscale and “smart with heart,” the network’s new focus is to reach Gen-Xers and Millennials, while also representing more multi-cultural storylines. ABC believes that viewers, and specifically families, are looking for cinematic experiences with entertainment. ABC’s picked-up series consist of four comedies and six dramas.
With the continued success of CBS in primetime during the 11/12 season, there are very few holes to fill on their schedule in the upcoming year. The Eye network rolled out five new series this past season with only one, How to Be a Gentleman, receiving the ax. The rest of the schedule remained strong, despite the presence of numerous aging series.
FOX’s comedy agenda is a big initiative for the network next year. With the success of New Girl, FOX plans to premiere three new comedies, pairing them with current programs (Glee, Raising Hope and New Girl). A focus on young ensemble casts and family relationships has spearheaded much of comedy development. FOX also picked up two new dramas.
ABC’s recent announcement to swap Jimmy Kimmel Live! and ABC News: Nightline in its late night schedule beginning on Tuesday, January 8th 2013, has caught the attention of the industry. The recent viewership growth that Kimmel has experienced during the 2011-2012 season and the increased revenue potential the program may possess moving forward have convinced the network that it can now compete directly against Jay Leno and David Letterman in late night.
The decision by ABC to switch time periods is the biggest change the daypart has seen since NBC’s failed experiment to move Jay Leno from late night to primetime, ultimately resulting in Leno back on the Tonight Show and Conan O’Brien on TBS. While ABC’s news is not nearly as drastic, the network is predicting a much better outcome for its late night schedule.
Zenith is predicting a slightly larger A18-49 audience for Jimmy Kimmel Live at 11:30pm than it would have received had ABC kept its late night schedule unchanged. Any additional audience growth from younger viewers leaving CBS’ Late Night with David Letterman, NBC’s Tonight Show or any of the late night cable programs will be largely offset by the loss in older viewers from ABC’s local news lead-in, as they look for news or entertainment elsewhere.
Despite a slightly downward revision to cable’s growth, Zenith still anticipates strong cable spending going forward, with increases of 8.0% in 2012, 7.0% in 2013 and 7.0% in 2014. Cable now draws a larger percent of ad dollars than network TV, accounting for 12.3% of total advertising spend and 31.8% of total TV spend. They forecast that cable will account for 13.0% of total ad spend and 34.1% of TV spend by 2014.
New and rebranded cable networks are on the rise in 2012. Sean “Diddy” Combs plans to launch an urban music-themed cable network, Revolt, in December 2012. The Disney Junior Network, which replaced Soapnet on most cable providers, began airing on March 23, 2012. In an effort to revive a network, NBCU recently rebranded Versus as the NBC Sports Network, which has a focus on professional hockey and soccer. NBC Sports Network aired around 14 hours a day of team-focused Olympics coverage during the Summer Games, causing its viewership to increase sixfold. The most-watched event was the women’s soccer match. The network drew more viewers than it has for any event in its 17 years on the air.
Comcast Corp’s NBCUniversal unit exercised an option to sell a substantial portion its 15.8% stake in A&E Television Networks to joint-venture partners Walt Disney Co. and Hearst Corp. The media conglomerate will collect $3.03 billion in exchange for its minority stake in A&E Networks. Currently, Walt Disney Co. owns 42.1%, and Hearst Corp. owns 42.2%. When the deal closes, each JV partner will control an even 50.0%. A&E consists of several top-rated channels including A&E, The History Channel, The Biography Channel and Lifetime. Comcast may use the $3.03 billion to buy a greater stake in NBCUniversal. In June 2014 GE will be able to sell half of its remaining interest in the media company; in June 2018 it can sell the remainder.
Discovery Communication’s OWN (Oprah Winfrey Network) has underperformed expectations, and projections of losses for the company are in the range of $330 million. OWN has already reduced its staff by at least 30 and it cancelled The Rosie Show, aiming to save as much as $50 million in 2012. A new contract with Comcast should allow OWN to start recording profits in 2013. Series Oprah’s Next Chapter and Lovetown, USA have given the network a boost, but the future of the cable network remains murky.
Cable networks are experimenting with using multiplatform content to create engagement. During Bravo’s latest season of Top Chef, the cable network launched an original Internet series Top Chef: Last Chance Kitchen, as well as a fan favorite contest and an active social media campaign. Over a quarter of the television Top Chef audience watched the Internet series, resulting in 8 million live streams.
Due to the political advertising storm, they have revised their 2012 growth forecast to 12.0%, up from 8.0% growth – annual increases for 2013 and 2014 remain at 3.0% and 4.0% respectively.
The 2012 spot TV market place is extremely volatile with the Presidential election at hand. Primaries will be pivotal for candidates and the introduction of the Super Pac has brought political spending to new heights. This category is not classified as “political” on a stations rate card and pays top dollar to be on air. Political spending is currently pacing at a +90% over same time period in 2010. This is causing tremendous volatility on all clients current schedules and increasing market pricing for short term buys based upon demand.
The automotive category is coming back very strong on both the foreign and domestic front, with tier I, tier II and now tier III local dealer advertisers spending heavily. There is a strong appetite among consumers for new vehicles, with many holding off coming out of the recession, and automakers are offering deals and incentives to entice these consumers. Local dealer advertising was the number one spender in 2007 for many markets; this category coming back is making a strong impact on local inventory in markets.
Given three key market drivers, ZO has adjusted their forecasts to positive/flat growth for 2012 (+1.0%), 2013 (0.0%) and 2014 (1.0%). The strength of comedy and talk genres, an increase in inventory and strong potential for fall new comers, all contributed to their revised projections.
Comedies continue to perform well ratings-wise in the syndication arena, claiming 15 of the top 20 programs among A18-49 so far this season. The Big Bang Theory does particularly well.
The majority of talk shows experienced ratings growth or remained steady from last year with Dr. Phil, Dr. Oz, Live! With Kelly, Rachael Ray, Wendy Williams and The Nate Berkus Show all posting year-to-year increases with most demos.
TBS has landed cable off-net rights to Warner Brothers Television’s 2 Broke Girls. The CBS sitcom, which is the highest-rated new comedy of the 2011-12 season, will begin airing on TBS in 2015. The studio has also finalized deals with CBS Television Stations and the Weigel station group for Broke Girls and Mike & Molly for 2014 and 2015, respectively.
Disney-ABC Domestic Television’s Katie, the nationally syndicated live daily talk show starring Katie Couric, begins in September. After the departures of Regis Philbin and Oprah Winfrey, and the cancellations of two of its longest-running soaps, Katie is an important program for ABC.