Madison and Wall: Saturday Summary
For the week ending May 5, 2023
Below is a summary of some of key data points and ideas from my regular publications during the past week along with quick-takes on additional news:
DoubleVerify: Counter-Points and More Points. The importance of brand safety and verification to the broader industry was affirmed to me by writing this piece. I don’t think I’ve received so many inbounds from anything else I’ve written since starting Madison and Wall. While there are valid reasons to debate the right trajectory of growth for DV or any other company the broad thrust of the piece which, among other flaws, questioned the integrity of individuals involved in the business was unwarranted. Nonetheless, the underlying report I critiqued serves as a good example of how not to analyze a company and influence an industry, and so I hope you find it to be useful reading.
Ad Intensity Analysis. I’m building out data sets to help analyze different parts of the industry. I’ve included a summary of some key benchmarks, but I now have some useful global data covering hundreds of companies in one place that indicates how much typical large companies in different categories allocate to advertising, and how their profit margin trends are evolving over time.
WGA Strike. I’ve included a number of thoughts about how the impact of the US Writers’ Guilds strikes on advertising and how there are changes in the utility of TV advertising happening regardless of the strike’s outcome. I would be curious to know what the implied expectations are for either side and how that informs their respective positions, as any assumptions involving growth for TV advertising in years ahead would be overly optimistic.
From the Archives: May 2023 Edition. Links are contained here to two reports from 2012 and 2020 directly related to the mechanics of the US television upfronts – what drives pricing, how negotiations work, etc – based on my experience in the process. A separate report from 2012 provides useful ideas on how to segment different kinds of companies responsible for driving growth in digital advertising.
There were other topics I didn’t get to this week, especially in relation to earnings from some large (nominally) traditional media owners from around the world. Most owners of TV-based advertising properties were down anywhere from mid-single digits to low double-digits, while radio was only modestly down and outdoor advertising was positive (as that sector continues to rebound back towards pre-pandemic levels in many instances). Commentary looking forward was mixed, but I would characterize it as generally cautiously optimistic about continued recovery.
At Paramount, ad revenue fell 7% as reported, or closer to 5% in constant currency terms, with DTC ad revenues growing 15% but linear TV advertising falling 11% (or 9% excluding the impact of foreign exchange). The impact of political advertising was not disclosed but excluding it, advertising likely declined by a percentage point or two lower.
At Warner Bros. Discovery, advertising was down 14% organically, or 13% excluding the Olympics in the year-ago period. It’s unclear to what degree international markets were a drag on the results.
RTL, the largest media owner in Germany and a significant player in France and the Netherlands saw ad revenue down by 16%, including TV advertising off by 17%, digital falling 8% and radio falling 15%.
At Bell Media (Canada’s largest media owner) ad revenue fell 5% “due to reduced conventional TV, specialty TV and radio advertising revenues…partly offset by higher year-over-year out-of-home advertising revenues.” Digital advertising was noted as growing by 4%.
Outdoor advertising was positive elsewhere as well, with Outfront seeing 5.5% organic revenue growth, and the equivalent figure at Lamar was up 1.5%
I Heart Media, the largest US-based terrestrial radio station operator (and a significant player in digital audio) saw ad revenue fall by 3% excluding political advertising.
Sinclair, one of the largest local TV station owners in the US saw its core advertising revenues excluding political advertising fall by 2. At EW Scripps, another large primarily local TV broadcaster, core advertising fell 10%.