Ad sales pick up despite ongoing volatility

Michelle Clancy | 01-10-2013

Compared to 2012, the 2013 ad market is still dealing with volatility in the ratings for many networks, but growth is beginning to return to TV advertising, according to SNL Kagan.

In 2012, Viacom Inc's well-known problems at Nickelodeon and other large networks caused advertising sales issues. Meanwhile, Time Warner/Turner Broadcasting System (up 2%), NBCUniversal Media (up 4%) and 21st Century Fox (formerly News Corp, up 5%) posted modest growth. This year, all eyes will look to third-quarter reports as the second quarter was a mixed bag, with four companies reporting double-digit growth and five reporting growth in the single-digit range.

CPM growth has been more stable, with most of the cable networks posting significant mid-single-digit gains over the past year. After declining by 4.3% to an industry average of $5.19 in 2009, CPMs recovered nicely the following year, up 7.2% to $5.57.

In 2011, the ad metric was up 6.7% to $5.94. Although growth was not quite as strong in 2012, increasing 4.8% to $6.22, it was still a solid showing. Cable network CPMs have grown at a CAGR of 4.8% since the recession started to fully bloom in 2008, although they are still well below their broadcast counterparts.

“The individual network CPMs, however, are all over the map,” said the firm.
ESPN (no surprise here) has the largest CPM, $19.29 on average — well above No 2 network MTV and its CPM of $13.10. Of the ten networks with double-digit CPMs, six of them are full-time sports networks while TBS, which also has quite a bit of sports programming, is also in the top ten.

Looking at historical second-quarter ad revenue, the publicly-traded cable networks have shown remarkable stamina as the economic downturn set in, SNL Kagan said. In second quarter 2008, four of the seven that were reporting at the time posted double-digit domestic ad revenue growth, and this happened as the economy and the ad market were imploding.

As with other sectors, however, eventually things began to weaken. In second quarter 2009, there was no double-digit ad revenue growth and, in fact, most companies were in decline. But as with the dot-com boom and bust, cable networks quickly snapped back, and in the second quarters of 2010 and 2011, the majority of those reporting once again had come back to double-digit growth.