March 20, 2015
The year has not started well for two of the biggest advertising categories, automotive and retail.
New figures from Standard Media Index, which tracks ad spending for 80 percent of U.S. agencies, find both cut spending during February compared to last year.
And that’s having a big impact on television ad revenue, which was down 16 percent compared to 2014. That includes a 24 percent drop for broadcast.
“Retail sales have been soft in the first couple of months of the year and that is impacting marketing spend across the board,” James Fennessy, SMI’s chief commercial officer, tells Media Life.
Retail sales have indeed been struggling. They were down 0.6 percent in February, the third straight month of declines for the industry, according to the Commerce Department.
Sales at department stores declined by 1.4 percent, and electronics and appliance outlets dropped 1.2 percent.
The weather has been a factor. Snowstorms blanked the Midwest and Eastern part of the country last month, making it hard for people to go out shopping.
But regardless of the reasons for the decreases, retailers aren’t going to spend to advertise if people aren’t going to come out and buy things, which leads to decreasing ad revenue.
Auto has faced a similar issue.
Total auto advertising was off 21 percent in February, SMI says, though that figure includes some tough comparisons to last year. Car companies placed a lot of money in the Winter Olympics last year in February, and so part of the decline simply reflects the non-Olympic year.
“Auto was a very large advertiser in the Winter Games last year, so those dollars aren’t showing up in the same way as they did in 2014. This is impacting all media, but it’s especially significant for TV,” says Fennessy.
Auto sales were also down in February, off 2.5 percent, according to Commerce. That was the first year-to-year decline in some time.
The big question is whether these declines will bleed into March as well.
In addition to the big year-to-year declines for TV, newspapers were down 2 percent and magazines fell 5 percent, while radio dipped 3 percent.
“March should definitely look better thanks to the absence of the Winter Games fallout comparison, although we expect that the movement of the Academy Awards from March last year to February this year will impact ABC’s year-on-year numbers,” Fennessy says.
Last month remained strong for digital, no surprise. It surged 30 percent over last year, with social media soaring 84 percent and mobile jumping 60 percent.
And cable TV was steady, up 1 percent, with a handful of networks including ESPN, AMC and MTV seeing at least 17 percent gains over last year.
http://www.medialifemagazine.com/slow-start-to-2015-for-big-advertisers/
