The past few days have been unusually hectic in terms of quarterly statements and trading updates from media companies. And what has been notable is the variation we’ve seen in terms of ad performance among media companies – while some have seen strong growth, others have seen sharp falls.
It’s easy to just pick up one or two negative (or positive) headlines, and extrapolate those across the whole market. But what we’re currently seeing suggests that the overall ad market is neither strictly strong nor strictly weak – rather that media companies’ client bases, markets, and ad products are key for whether they’re seeing ad revenue growth or decline.
Here’s our breakdown of the cross-section of ad-related statements we’ve seen over the past few days.
We’ve already seen signs of a more positive ad market earlier in results season, primarily from the major tech companies. Those which had previously seen blips in ad revenue have now returned to growth (which may boost the rest of the sector later down the line, as they themselves are big ad spenders).
But two traditional media companies have also reported a more positive ad market.
Yesterday the New York Times, which has made subscription revenues a priority in the face of long term ad declines, saw growth in both subscription revenues and ad revenues, which were up six percent year-on-year. CEO Meredith Kopit Levien said that the Times’ first-party data offering, its extension of its ad offerings, and the attractiveness of its brand to advertisers drove the growth in ad revenue.
And Italian broadcaster Mediaset reported that TV ad revenues in October were up by eight percent year-over-year. And Stefano Sala, CEO of Mediaset’s sales arm Publitalia, told newspaper Il Sole 24 Ore that he expects similar growth in November. He added that ad revenues in Mediaset España are also stronger than had previously been expected (though he didn’t provide any figures).
ITV, RTL, and Disney meanwhile all posted much more mixed results.
For ITV and RTL, the story was quite similar. Both saw falls in overall ad revenues during Q3, but these falls were less steep than earlier in the year. As VideoWeek reported yesterday, ITV posted a seven percent decline in total ad revenues for the first nine months of the year, compared with an 11 percent decline across the first half. Q3 specifically was actually up one percent year-on-year, with August up by seven percent (likely buoyed by the Women’s World Cup).
RTL meanwhile reported a 3.7 percent drop in total advertising revenue across Q3. This marked an improvement compared with the first half of the year, where ad revenues were down by 12.5 percent.
Both broadcasters are also seeing the ad market impact their studio businesses, as broadcasters shift commissions in anticipation of stronger future ad markets.
Disney meanwhile reported an overall fall in ad revenues, driven largely by drops in income from its TV networks, but also by a fall in ad revenues for its streaming service Hulu. Disney+ and ESPN were the only growth areas for advertising.
But on the earnings call, executives spoke relatively positively about the shape of the ad market. “In terms of advertising, we are actually finding that linear is a little bit stronger than we had expected it would be,” said CEO Bob Iger. “So as we look at the advertising marketplace right now, while it’s not as strong as we would like it to be, it’s certainly not as bad as some people think it is, and it’s working for us.”
Elsewhere, it was harder to find positives.
Warner Bros. Discovery saw a 19 percent fall in its share value after a disappointing quarter, in which ad revenues for its TV networks were down by 12 percent. Ad income from its streaming services saw strong growth in Q3, up by 30 percent. But CFO Gunnar Wiedenfels’ overall outlook for the ad market was fairly grim.
“It is becoming increasingly clear now that much like 2023, 2024 will have its share of complexity, particularly as it relates to the possibility of continued sluggish advertising trends,” Wiedenfels said. “We don’t see when this is going to turn.”
Meanwhile Sir Martin Sorrell’s ad business S4 Capital saw a sharp revenue drop in Q3, issuing a further profit warning for the business. S4 Capital has been hit particularly hard by the advertising pullback from tech clients, and the company said this was the major factor behind its Q3 decline.