followthemedia.com - a knowledge base for media professionals
Spots & Space

Ballast Overboard, TV Broadcasters Seek Ad Lift

Ad spending growth rates have long correlated with GDP growth rates, a lagging variable say the economists. Through the last decade TV ad spending led GDP growth, partly on the collapse of print advertising. That bubble has lost its lift. The worrying possibility of a disconnect appears to be another digital dividend.

free fallingBig commercial television companies are emerging from the summer holidays in a somber mood. Revenues, largely but not exclusively from advertising, are in decline. German broadcaster ProSiebenSat.1 Media, Spanish broadcaster Atresmedia and Italian broadcaster Mediaset all reported weak revenues with profit warnings within a couple of days. Stock traders are responding predictably.

Contagion is worse than the disease for publicly traded companies. Global advertising holding company WPP sounded a warning about TV advertising. Within days broadcasters also hit the red button.

London-based WPP warned of “sharp declines” in ad spending for the remaining months of 2017, much of it in the United States but also within Europe. Consumer and packaged goods advertisers, it said, are expected to cut back on traditional ads. "In the last year or so, growth has become even more difficult to find," said the company statement (August 23). The company’s 2017 revenue growth forecast is now “between 0% and 1%” from the more optimistic 2% six months ago.

"It's the digital disruption in consumer consumption of media, the digital disruption you see in distribution, and the digital disruption you see in production through 3-D printing, and digital forms of production, autonomous cars, electrical cars, whatever it is disrupting legacy models," said always quotable WPP chief executive Martin Sorrell to CNBC (August 23).

Barely a week later ProSiebenSat.1 Media reduced for the third time its guidance for the year. “Previous expectations regarding an improved TV advertising revenue performance in the Broadcasting German-speaking segment of ProSiebenSat.1 Group in Q3 2017 are unlikely to be met,” said the company statement, quoted by Reuters (August 28). Stock traders met out considerable punishment, whipping Mediaset, Atresmedia, TF1 and ITV on their respective stock exchanges. Most recovered within a day or so.

TF1 chief executive Gilles Pélisson blamed the stock-trader freak-out on overheated German and UK TV markets, too hot not to cool down. The French TV ad market has had “extremely modest growth,” he said, quoted by Le Figaro (August 31). "Our German friends have had advertising markets that have grown strongly in recent years, as has the English market. Seeing the German market slow down… is something that surprised the markets and led to a correction. I do not think it applies to our market, which is much more resilient.”

A bit of a contrarian in TV land, RTL Group reported a 9% increase second quarter German market sales and 4% rise in net profit. “We believe that our Q3 German TV advertising revenues will be around plus 3 percent,” said co-Chief Executive Guillaume de Posch to Reuters (August 30). “The only reason we’ve been outperforming is audience performance.” Total TV ad spending in all countries in which it operates have fallen, said the company statement. RTL Group issued an interim dividend.

A digital advertising sales joint venture of ProSiebenSat.1 Media, TF1 and Mediaset was blessed by the European Commission DG Competition (August 31) as it will have “very limited impact” across European Union Member States. The European Broadcaster Exchange was formed in June with a London headquarters. Separately, RTL Group completed its takeover of ad tech company SpotX.


See also in ftm Knowledge...

Media in Germany

Home to Europe's biggest broadcasters and publishers, Germany is a highly competitive media market. Transition to digital television was easy, other media not so simple, unsuprising with Germany's complex regulation and business structures. This Knowledge file reports on media leaders and followers. Includes Resources 214 pages PDF (July 2013)

Order here

The Happy Advertising People

The advertising people are spending again. But things are different now and media people are feeling it. New media attracts attention and advertisers want to be where the action is. This ftm Knowledge file looks at the paradox of media and advertising. 120 pages PDF (September 2011)

Order here

Become an ftm Member to receive Knowledge Files. JOIN HERE!


related ftm articles:

Mirror, Mirror On The Wall, Ad People To Millennials Total Enthrall
Nobody in the advertising business, at least, is altogether prepared to let go of the notion that buying and media habits established before adulthood are, well, set for life. Many advertising people fear – really fear – that Millennials are rejecting advertising and always will. There’s no fear like the fear of rejection. Ad people want to be loved.


advertisement

ftm Knowledge

Media in Spain - Diverse and Challenged – new

Media in Spain is steeped in tradition. yet challenged by diversity. Publishers hold great influence, broadcasters competing. New media has been slow to rise and business models for all are under stress. Rich in language and culture, Spain's media is reaching into the future and finding more than expected. 123 pages, PDF. January 2018

Order here

The Campaign Is On - Elections and Media

Elections campaigns are big media events. Candidates and issues are presented, analyzed and criticized in broadcast and print. Media is now more of a participant in elections than ever. This ftm Knowledge file reports on news coverage, advertising, endorsements and their effect on democracy at work. 84 pages. PDF (September 2017)

Order here

Fake News, Hate Speech and Propaganda

The institutional threat of fake news, hate speech and propaganda is testing the mettle of those who toil in news media. Those three related evils are not new, by any means, but taken together have put the truth and those reporting it on the back foot. Words matter. This ftm Knowledge file explores that light. 48 pages, PDF (March 2017)

Order here

More ftm Knowledge files here

Become an ftm Individual or Corporate Member to order Knowledge Files at no charge. JOIN HERE!

<
copyright ©2004-2017 ftm partners, unless otherwise noted Contact UsSponsor ftm