Comcast and Amazon Ad Results Show Contrasting Trends For TV and Digital Advertising
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To start this afternoon’s note, a correction: in my analysis of Meta earlier today, a typo led to an incorrect data point around the growth rate for US and Canada advertising. Apportioned by the billing address of advertisers, 3Q23 growth in advertising from the region was 8.4% on my estimates, while apportioned by consumers, growth in advertising was up 17.2%. An updated chart follows here:
Source: Madison and Wall, Company Reports
More earnings from the largest sellers of advertising came out today, as Comcast reported its third quarter 2023 results. Comcast Advertising, including local cable inventory as well as Freewheel and other related ad tech businesses saw ad revenues decline by 11% year-over-year, although an absence of meaningful political advertising was responsible for most of the reduction in revenue there. At NBC Universal, advertising revenue was down 8.4%, although excluding political advertising which would have benefitted NBCU’s local stations, revenue was more likely down by something closer to low single digits. However it’s assessed or defined, television advertising continues to lose meaningful share to digital advertising at this point in time.
Within NBCU, Peacock grew 39%, although I argue a better way to look at the data is to note that Peacock now accounts for 19% of NBCU revenue vs. 12% in the year-ago quarter, as spending on television-related ad inventory generally comes from the same budgets. Peacock subscribers grew by 4 million, to 28 million, as distribution revenue for the service nearly doubled year-over-year. Total distribution revenues including linear services in the US as well as Peacock grew by 4%.
Importantly, US pay TV subscribers continued to fall at a rapid pace, declining by 12.6% year-over-year, as cord-cutting (or cord-slashing?) continues at heightened levels. As I’ve noted, by end of next year, it’s likely that fewer than half of all US households will have conventional pay TV or vMVPD services. Significant media planning implications for all sellers of TV advertising and the marketers who rely on the ecosystem will follow. For Comcast the video distributor and their peers who also provide the fastest internet access services, such cuts are generally neutral to their businesses, as the risk of higher churning subscribers may be offset by greater dependence on higher speed (and higher priced) internet services.
Amazon also reported results on Thursday. Global advertising revenues there accelerated to +25% growth year-over-year in constant currency terms, illustrating the ongoing strength of retail media which I would argue is a significant contributor to cuts in spending on television among large brands (large brands who are mostly enamored with retail media have few other places to cut in order to fund this relatively new source of advertising inventory). E-commerce itself continued to grow as well, albeit at a more modest pace as the company’s online stores grew by 6%, but critically the marketplace – which likely drives a disproportionate share of advertising activity given the heightened degree of competition in that environment – was up by 18% year over year.