Disney’s Bundle, Video Spending, Counter-Points to The Trade Desk’s CEO, Upfront Pricing Explained & More Media Earnings Analyzed. Plus, New Chocolate Biz Analysis (Pre-Chocolate Marathon Paris 2024)
Madison and Wall: Saturday Summary for May 11, 2024
So, so much new information to process in media-land this past week. This week’s notes of my commentary on companies who reported earnings covered the following:
From these results, I calculated that national TV – including CTV – was down slightly during 1Q24, despite very easy comparables in the year ago period. Actual growth will be even harder to come by, aside from Olympics-driven activity, in each of the year’s coming quarters. Ad tech was really strong, much as we saw with results from large sellers of digital advertising. And Political advertising on the core medium, local broadcasting, is, so far, coming in soft. Better than 2022, of course, but worse than 2020, in contrast to most Presidential election years which have always been stronger with every passing four-year cycle. It remains to be seen whether or not this is occurring because spending in total has been soft or because digital platforms are taking share.
Within the notes, I provided an extensive series of counter-points (some complementary information and some hard-disagrees) to comments made by The Trade Desk CEO Jeff Green on their earnings call last week.
I also offered new data on economy-wide spending on video services during 1Q24 (it was up slightly) with specific historical quarterly estimates and data related to cord cutting. In that context I tried to explain the spirit behind streaming bundles, such as the one announced last week by Warner Bros. Discovery and Disney.
Finally, I wrote an explanatory article related to the US national TV upfront marketplace connecting the rise of audience-based buying to trends in CPM pricing as well as ad volumes and revenues.
Post-Cannes Chocolate Marathon / Update On The Chocolate Industry
As many readers will be aware, I’m a fan of chocolate, of Paris and of seeing cities by foot. Thus, I’ve engaged in what I call a “chocolate marathon” in Paris recent years following the Cannes Lions Festival of Creativity. This year I’ll pursue another one all day on Sunday, June 23. See www.chocolatemarathon.com for more information, and then please reach out if you are interested in joining me next month. The site includes a route from last year if you prefer to do it on your own time.
Ahead of that event, I thought I would update last year’s take on key industry trends impacting this FMCG sub-sector, which I like to look at for the sake of a deep dive into a category of advertised goods. I estimate that the category probably accounts for around $5 billion in annual ad spend, and if company-wide trends from Hershey and Mondelez were representative of the broader sector, spending on advertising grew by double digit levels last year.
Source: Madison and Wall, Company Reports
Lately, the most noteworthy issue impacting the chocolate business – and any confections incorporating chocolate – is the dramatic spike in benchmark commodity exchange pricing for cocoa, which more than quadrupled from April 2023 to April 2024, rising up to more than USD$11,000/ton, or $11 per kilogram for the raw material alone (of course, there are other ingredients, not to mention costs to transport, design, manufacture, market and retail). Bloomberg provided a good summary of factors leading to this outcome here. Pricing of the raw ingredient has fallen by more than a third since the peak and then rose again, still substantially above where it was a year ago.
Although those recent price rises have evidently flowed through to the prices that consumers experience when they buy any given piece of chocolate, total revenue realized by the industry’s largest manufacturers has continued to grow, too. Through the end of 2023, organic revenue growth for the most relevant chocolate-focused reporting segments from each of Hershey, Mondelez, Lindt and Nestle ranged from 7-10%, similar to 2022 levels. Although growth slowed in the first quarter to 6% for each of Nestle and Mondelez, it accelerated to 10% for Hershey’s confectionary division. As Mondelez management described it on their most recent earnings call, “the chocolate market can be very resilient.” I would argue that so long as a product is highly desirable, total consumer spending can continue to rise, as is often the case for different media-related products, too.