Dive Brief:
- According to Standard Media Index, digital led all media categories in ad spending growth last year, although that growth slowed toward the end of the year, bottoming out in December, as reported by MediaPost.
- Overall, digital ad spending grew 13.3% in 2016, a far cry from 2015’s 50% lift over 2014. Broken down into quarters, that growth slowed to only 7.1% in Q4.
- Two sectors in particular impacted the Q4 numbers — retail and telecommunications. Both cut digital spending in Q4, 3.5% and 2.4% respectively, with the freed-up ad dollars instead going to TV.
Dive Insight:
The Standard Media Index findings point to how some businesses may have been overly bullish on digital and are now walking back to the more tried-and-true channel of TV, even as ratings slip amid trends like cord-cutting. Digital is likely to continue as the fastest growing category and recently became the largest channel by investment, but TV clearly isn't going anywhere.
Coca-Cola, while not a retailer or telecom, is one brand that dove fully into digital only to recently pull back to a more measured approach. In December, Coca-Cola CMO Marcos de Quinto noted that TV advertising still beats digital in terms of return on investment "across media channels," though he was drawing from admittedly years-old data.
Explaining the Q4 results with retail, telecom and consumer electronics, SMI CEO James Fennessy similarly told MediaPost that those sectors "have not seen the outcomes they expected from digital" and that was why they moved back into TV, "the medium they have trusted for decades." While that might be the case to a degree, it’s also possible that all three sectors place more ad budget toward TV during the peak of the holiday marketing season.
The only media category out of digital, TV, print, radio and out-of-home to face a significant drop was print, with magazines down 9.1% and newspapers losing 13.9% against last year. Radio was down, but only by 0.5%.
