Advertisers are spending less to get their messages in front of the U.S. consumer base, thanks to fewer big media spectacles to which they can attach.
U.S. advertising revenue fell 31% in May as the nation had only a handful of major sports events take place due to the coronavirus pandemic and most major ad categories cut back the amount of money they spent significantly – by 10% or more – according to Standard Media Index, a tracker of ad spending. Among specific types of advertisers, only pharmaceutical manufacturers spent more in May than they did in the year-earlier period.
While dismal, the figures offer some small sign of hope. Ad spending fell 35% in April, leading to some anticipation that big marketers are in the process of loosening their purse strings, albeit at a terribly slow pace. “There is anticipated improvement in the market conditions as live sports gradually returns in June,” says James Fennessy, CEO of Standard Media Index. “Although annual year-over-year growth is not expected, smaller declines will be the new norm.”
The figures suggest rockier-than-usual terrain ahead for both the digital and traditional media sectors. The pandemic has forced many large marketers to rethink how they spend millions of ad dollars. A handful of big brand names – including Unilever and Coca-Cola – have pulled back from social media in protest of policies that allow hateful and inaccurate statements to reach users. Meanwhile, advertisers are pressing TV networks to cut rates for ad deals by significant amounts.
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A lackluster May would only continue a series of tough weeks for TV companies. SMI previously reported that ad dollars allocated to national TV fell by 26.7% in April of this year to $2.7 billion. Aed revenue for broadcast television fell 33.4% to $907 million in April, while ad revenue for cable TV fell 24.8% to $1.66 billion. Syndicated TV, however, managed to snare new ad dollars, with revenue rising 12.1% to $140.2 million.
Multiple categories of advertising were in decline in May. Travel services cut back advertising outlays by 87%, the most in any category. Marketers of apparel and accessories cut spending by 54%, while restaurants pulled back by 52% and retail outlets cut 45% of their ad outlays. Meanwhile, automotive ad spending decreased 60%. Tech ad spending fell 25% and advertising from financial-services advertisers was off 13%, according to Standard Media Index.
SMI found that ad revenue was least affected at media companies not reliant on live sporting events. Ad revenue declines in May at Google, Facebook and Microsoft were among the smallest drops. Digital media companies in May accounted for 50% share of all ad dollars, according to SMI, up from a share of 47% in April and a share of 43% during the first quarter.
Two traditional media companies saw ad revenue decline as a direct result of the absence of NBA games. The NBA playoffs typically take place in May, broadcast by Walt Disney’s ABC and ESPN and WarnerMedia’s TNT. WarnerMedia saw ad revenue decline by 45.5% during the month while Disney saw it tumble by 39.6%.
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June 29, 2020 at 08:38PM
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Thanks to Lack of Sports, Advertising Revenue for U.S. Media Plummeted 31% in May - Variety
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