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Tv trends definitive3_nofinancials_20150524_outgoing

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Analysis of broad industry trends occurring in television. The presentation suggests that while TV CPMs are increasing, television is also becoming increasingly targetable.

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Tv trends definitive3_nofinancials_20150524_outgoing

  1. 1. TV Trends 2015 Brendan Kitts PrecisionDemand 05-17-2015
  2. 2. 2015: The Year of Change?* 849,907,197,499.00 860,966,261,380.00 900,159,934,291.00 863,843,830,802.00 - 100,000,000,000.00 200,000,000,000.00 300,000,000,000.00 400,000,000,000.00 500,000,000,000.00 600,000,000,000.00 700,000,000,000.00 800,000,000,000.00 900,000,000,000.00 1,000,000,000,000.00 CY2012 CY2013 CY2014 CY2015 5% 1% -4% *January of years 2012-2015
  3. 3. Trend 1: Impressions were increasing... Until now
  4. 4. Impressions Non-Hispanic y = 0.0021x + 0.9222 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 essionsnonzerononhispanic7 essionsnonzerononhispanic7 Linear ( essionsnonzerononhispanic7 ) Appears to show impression growth ~ 2% per year Ftest?
  5. 5. Impressions Non-Hispanic 755,850,469,335.00 789,563,176,339.00 813,740,194,346.00 826,580,301,086.00 865,770,481,110.00 830,920,810,110.00 700,000,000,000.00 720,000,000,000.00 740,000,000,000.00 760,000,000,000.00 780,000,000,000.00 800,000,000,000.00 820,000,000,000.00 840,000,000,000.00 860,000,000,000.00 880,000,000,000.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 Appears to show impression growth ~ 2% per year Drop in 2015 P<0.11 *January of each year
  6. 6. 2015: The year of change in Impressions growth? Summary • Impressions have been going up... • However Jan 2015 shows the first inkling of a shift in the market. • Deeper analysis: The impression increase that we were observing 2010-2015 hasn’t been fueled by viewership! Instead networks have been printing more money!
  7. 7. Trend 2: More Ads • Networks are inserting more ads. This is distorting the TV ecosystem and eroding viewer experience and quality of programming.
  8. 8. Airings Monthly y = 0.005x + 0.9622 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 2012-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2013-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2014-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2015-1 ngs ngs Linear ( ngs ) +12% more airings over 3 years
  9. 9. Airings 2010- 1,767,668.00 2,112,836.00 2,219,942.00 2,370,523.00 2,479,671.00 2,585,894.00 - 500,000.00 1,000,000.00 1,500,000.00 2,000,000.00 2,500,000.00 3,000,000.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 +12% since 2012
  10. 10. Trend 2: How can more ads be added? A: Commercial break lengths are being extended
  11. 11. Commercial Break Length per 30 minutes 07:07 07:12 07:21 07:30 06:55 06:59 07:03 07:08 07:12 07:16 07:21 07:25 07:29 07:34 CY2011 CY2012 CY2013 CY2014 breakminutes breakminutes
  12. 12. Commercial Pod Ads per break (Average all television networks) 4.6 4.8 5 5.2 5.4 5.6 5.8 6 6.2 2011 2012 2013 2014 commercial pod approx ads per pod commercial pod approx ads per pod
  13. 13. Longer Breaks Equals Less Program
  14. 14. Longer Breaks Equals Squished Programs • When Stephen Cox was watching “The Wizard of Oz” on TBS last November, something didn’t sound quite right to him about the Munchkins, who are near and dear to his heart. • “Their voices were raised a notch,” said Mr. Cox, the author of several pop- culture books including one about the classic 1939 film. “It was astounding to me.” • He wasn’t imagining things. Time Warner Inc. TWX -0.48 % ’s TBS used compression technology to speed up the movie. The purpose: stuffing in more TV commercials. • Joe Flint, (2015), Wall Street Journal, Feb 2015. • http://www.wsj.com/articles/cable-tv-shows-are-sped-up- to-squeeze-in-more-ads-1424301320
  15. 15. Longer Breaks Equals Truncation of opening and closing credits • Reruns of “Law & Order” on TNT have a 24- second opening, in contrast to the original 1 minute, 45-second opening when it aired on NBC. • senior executive at one major cable programmer said the speeding up of shows, which is done by removing repetitive video frames, is usually a last resort.
  16. 16. Summary: Commercial Break length is increasing
  17. 17. Trend 4: The Rise of Blipverts (15s ads) These ads aren’t your grandfather’s ads!
  18. 18. The Rise of 15s YOY % 2011- 2012 YOY% 2012- 2013 YOY% 2013- 2014 Diff between 2014 and 2011 seconds 1.0% 2.1% 2.0% 22.52 adoccurrences 1.4% 2.6% 4.9% 1.40 m15 2.5% 5.5% 12.6% 1.17 m30 3.5% 2.1% 1.2% 0.50 m60 -2.7% 3.4% -6.2% (0.07) m120 4.2% -4.6% -4.0% (0.01) 1.4 (one and a half) more ads, of which there is just over 1 15 second ad, and a half a 30 second ad
  19. 19. The Rise of 15s 2.5% 5.5% 12.6% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% YOY % 2011-2012 YOY% 2012-2013 YOY% 2013-2014 m15 YOY m30 YOY m60 YOY m120 YOY 2.5% 5.5% 12.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% YOY % 2011-2012 YOY% 2012-2013 YOY% 2013-2014 m15 YOY m15 YOY 0% 10% 20% 30% 40% 50% 60% CY2011 CY2012 CY2013 CY2014 m15 m30 m60 m120 12.6% YOY growth in 15s ads. Decline in 60s and 120s.
  20. 20. More Ads + Shorter Ads • Ad Break size has increased from about 7 minutes per half-hour to 7:30. The 30 seconds extra (about 22 seconds) roughly equals 2 15 second ad insertions. • There are about 2 extra ads per 30 minutes being inserted • All of the increase in impressions (about 2%) is accounted for by the insertion of 2 additional ads per half hour. • Without those additional insertions, impressions would be decreasing at the rate of about 4% per year.
  21. 21. Conclusion: Current Impression Counting methods are misleading • Nielsen counts impressions for each additional ad. Can lead networks to inflate their “ratings” / impressions by essentially “printing more money” – adding more commercial breaks. • 15s ads score as many impressions as 30s ads -> tendency to “print more 15s ads”. • However there is a cost to the advertiser....
  22. 22. Any impact on Advertiser Value?
  23. 23. Impact on Advertiser Value Commercial Break Expansion • 5.1 to 6 per pod • Mean 3 -> 3.5 • Most impact on cable • Broadcast networks largely have not experienced erosion y = 1.0928e-0.247x R² = 0.8969 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 5 10 15 20 %ofRPIofPosition1 Order in commercial ad break Series1 Expon. (Series1) 2011 65% 2014 59% 59/65 = 0.90 ~ 1.102x decline in performance Phone response data 3,076 airings $2,287,822 spend Commercial breaks 1..7
  24. 24. Viewership
  25. 25. Trend 8: TV viewership • Viewership is the most basic question we can ask about TV: • Are people watching more TV or less?
  26. 26. According to Nielsen: Nielsen max impressions - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 2/1/2015 3/1/2015 35,205,012 29,212,147 33,230,858 32,035,671 - ,000,000 ,000,000 ,000,000 ,000,000 ,000,000 ,000,000 ,000,000 ,000,000 CY2012 CY2013 CY2014 CY2015 J Max impressions JiraL https://precisiondemand.atlassian.net/browse/TVTAX-73?filter=-3
  27. 27. According to Rentrak: Rentrak max impressions 39,964,469 43,850,712 38,224,611 42,696,649 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 CY2011 CY2012 CY2013 CY2014 Series1 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 Series1 Linear (Series1)Jira: https://precisiondemand.atlassian.net/browse/TVTAX-75?filter=-3
  28. 28. STB viewing data (higher income population) y = -2.5029x + 5734.6 R² = 0.0022 0 1000 2000 3000 4000 5000 6000 7000 8000 monthdate Average of viewminutes per device year month 6.42 7.22 8.10 7.43 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 CY2012 CY2013 CY2014 CY2015
  29. 29. Trend 8: From 2012 to 2015 Viewership is steady According to 3 large independent data sources, across years 2010-2015, with January data , viewership is STEADY ! 6.42 7.22 8.10 7.43 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 CY2012 CY2013 CY2014 CY2015 39,964,469 43,850,712 38,224,611 42,696,649 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 CY2011 CY2012 CY2013 CY2014 Series1 35,205,012 29,212,147 33,230,858 32,035,671 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 CY2012 CY2013 CY2014 CY2015 J Something far more interesting is going on...
  30. 30. Something far more interesting is going on... Who is watching is changing!
  31. 31. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2012 2013 2014 2015 maxA18to20 maxA21to24 maxA25to29 maxA30to34 maxA35to39 maxA40to44 maxA45to49 maxA50to54 maxA55to64 maxA65plus Every age- group < 50 is declining! Jan of each year Average of max impressions during the year (proxy for viewers) Trend 9: Demographic Composition of TV Viewers
  32. 32. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2012 2013 2014 2015 maxA18to20 maxA21to24 maxA25to29 maxA30to34 maxA35to39 maxA40to44 maxA45to49 maxA50to54 maxA55to64 maxA65plus Every age- group < 50 is declining! But 50+ is increasing! AND it makes up most of the viewers already! Jan of each year Average of max impressions during the year (proxy for viewers) Trend 9: Demographic Composition of TV Viewers
  33. 33. 18-49 trends - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 maxA18to20 maxA21to24 maxA25to29 maxA30to34 Linear (maxA18to20) Linear (maxA21to24) Linear (maxA25to29) Linear (maxA30to34) 18..20; 21..24; 25..29; 30..34
  34. 34. Viewership % Forecast 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 maxA50to54 maxA55to64 maxA65plus maxA18to49 actual forecast
  35. 35. Overall viewership - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 maxA50to54 maxA55to64 maxA65plus maxA18to49 impressionsmax Viewership has been constant and is expected to remain so 18..49 viewership drops by > 33% 55+ take their place
  36. 36. 18..49s are an endangered species on TV Prices have increased accordingly
  37. 37. Price to target Demo populations on TV (CPM30) 18to20 increased from $700 to $1,200 in 3 years - 200 400 600 800 1,000 1,200 1,400 CY2012 CY2013 CY2014 CY2015 A18to20 A21to24 A25to29 A30to34 A35to39 A40to44 A45to49 A50to54 A55to64 A65plus It is getting much harder to get 18..20 on television. Because of the rapid decline in the segment, the effective CPM30 to reach this segment increased from about 700 to about 1200 per person between 2012-2015.
  38. 38. Side question: But do 18 year olds even have any money? • Spending power of 18..49 versus 50+ according to the Bureau of Labor Statistics (BLS) ->
  39. 39. Expenditure 18..25 vs 45-54 Bureau of Labor Statistics 31,411 62,103 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 under 25 45-54 Expenditures
  40. 40. - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 - 10,000.0 20,000.0 30,000.0 40,000.0 50,000.0 60,000.0 70,000.0 CPM30per1agerange BLSAnnualExpenditureperperson BLS expenditure CY2015 BLS Annual Expenditure for targeted age-group Marketers are paying most for the segment that has the least annual expenditure ...and paying the least for the segment with the highest expenditure!
  41. 41. BLS Annual Expenditure versus CPM30 for targeted age-group Marketers are paying most for the segment that has the least annual expenditure ...and paying the least for the segment with the highest expenditure! - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 - 10,000.0 20,000.0 30,000.0 40,000.0 50,000.0 60,000.0 70,000.0 CPM30per1agerange BLSAnnualExpenditureperperson BLS expenditure CY2015
  42. 42. Summary • In contrast to TV doomsdayers, TV viewership remains steady • However this belies a demographic change that is happening in TV audiences • The “coveted” 18..49 year old segment is rapidly declining on television and is being replaced by new viewership from 50+ age groups • TV is already majority 50+ (58.1% in 2012) increasing to 64.6% in 2015 • It will be increasingly expensive to target young adult demographics on television: CPM30 has already increased from $700 to $1,200 in just 2012- 2015
  43. 43. The 18..49 year old decline is not inevitable
  44. 44. The 18..49 year old decline is not inevitable • The shrinking younger segments should be of great concern for TV networks • Younger segments will be older segments in the future. • However the decline in 18..49 is not inevitable. • Several networks have increased their viewership amongst 18..49
  45. 45. 0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 2/1/2015 3/1/2015 4/1/2015 Average of maxA18to49 Average of maxA65plus Linear (Average of maxA18to49) Linear (Average of maxA65plus) Values yearmonth Average of maxA18to49 Average of maxA65plus yy monthofyear callletters impressionsmax AMC Walking dead Walking dead Walking dead went off the air in Dec and Jan 2015 In 2013, and 2014 Walking dead extended into Dec and was off the air in Jan Increase in 18-49 year olds!!!! 65+ steady Walking dead AMC is increasing in 18to49 segment, mainly because of its award winning Walking Dead drama
  46. 46. 0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 Average of maxA18to49 Average of maxA65plus Linear (Average of maxA18to49) Linear (Average of maxA65plus) Values yearmonth Average of maxA18to49 Average of maxA65plus yy monthofyear callletters impressionsmax ESPN Increase in 18-49 year olds!!!! Increase in 65+! ESPN is increasing in both 18-49 and 65+ segments
  47. 47. ESPN2 0 500000 1000000 1500000 2000000 2500000 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 Average of maxA18to49 Average of maxA65plus Linear (Average of maxA18to49) Linear (Average of maxA65plus) Values yearmonth Average of maxA18to49 Average of maxA65plus yy monthofyear callletters impressionsmax
  48. 48. CW 0 500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 2/1/2015 3/1/2015 4/1/2015 Average of maxA18to49 Average of maxA65plus Linear (Average of maxA18to49) Linear (Average of maxA65plus) Values yearmonth Average of maxA18to49 Average of maxA65plus yy monthofyear callletters impressionsmax http://www.vox.com/2015/1 tca-mark-pedowitz
  49. 49. OWN 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1800000 2000000 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 2/1/2015 3/1/2015 4/1/2015 Average of maxA18to49 Average of maxA65plus Linear (Average of maxA18to49) Linear (Average of maxA65plus) Values yearmonth Average of maxA18to49 Average of maxA65plus yy monthofyear callletters impressionsmax
  50. 50. TLC 0 500000 1000000 1500000 2000000 2500000 3000000 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 1/1/2015 2/1/2015 3/1/2015 4/1/2015 Average of maxA18to49 Average of maxA65plus Linear (Average of maxA18to49) Linear (Average of maxA65plus) Values yearmonth Average of maxA18to49 Average of maxA65plus yy monthofyear callletters impressionsmax
  51. 51. Ad Avoidance
  52. 52. Trend 10: Ad-Skipping • Won’t ad skipping kill TV?
  53. 53. Ad Skipping • Adview % = percentage of commercial break that STB is tuned. • Only possible to do this analysis using STB data
  54. 54. According to our STB data, commercial Viewing has increased between 2011 – 2014 0.165 0.17 0.175 0.18 0.185 0.19 2011 2012 2013 2014 (blank) Total Total yy Average of adviews_seconds_pct callletters adviews_per_session DOW 17.5% -> 19%
  55. 55. Commercial Viewing Increase How could this be so?
  56. 56. Commercial Viewing Increase How could this be so? • Could it be phenomenal creative? – Triumph of the Mad Men? Probably not.... – Ad creative quality is undoubtedly higher; outstanding super bowl ads. • Could it be phenomenal ad relevance? – More relevant ads should promote higher viewing – Ad relevance has improved by only about 3% 2012-2015 • Most likely: Older Demographic explosion – Egress of younger demographics leaving an older population – Older population have higher propensity to view commercials. – 55+ population on TV has increased from 45% -> 53% between 2012- 2015
  57. 57. Trend 11: TV Prices • TV is the last great reach medium. • Shared cultural experience. • Audience has maintained itself. However prices have not just remained the same – prices have grown significantly. • This “price inflation” is exerting a huge burden on advertisers.
  58. 58. CPM30 y = 0.0125x + 0.9023 0.50 0.70 0.90 1.10 1.30 1.50 1.70 2012-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2013-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2014-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2015-1 CPM30_AVG CPM30_AVG Linear ( CPM30_AVG ) 29% increase since 2012
  59. 59. CPM30 2010- 4.17 4.33 5.49 6.23 7.33 7.73 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 29% increase since 2012
  60. 60. CPM30 5.49 6.23 7.33 7.73 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 CY2012 CY2013 CY2014 CY2015 29% increase since 2012
  61. 61. Consumer Price Index Compounded Inflation index = 3% 0.97 0.98 0.99 1.00 1.01 1.02 1.03 1.04 1.05 Inflation accounts for 3- 4% of the increase
  62. 62. Advertiser Value is being impacted • Prices are going up: – ~ 29% inflation since 2012 • Pod positions are going down: – Ad Pod Position ~ 10% degradation in performance due to inflated ad breaks and loss of position • $1.00 in 2012; • $0.58 in 2015 • 42% loss of performance since 2012
  63. 63. Price increases to slow • Prices have been increasing at the rate of about 18% per year since 2012. • In 2015 we are seeing a slow-down. • 6% forecast for 2015; down from 18% per year from 2012. So approximately a 2/3rd reduction in price growth in 2015
  64. 64. Trend 8: Spend was increasing – 2015 Jan the market appears to have shifted
  65. 65. Spend y = 0.0034x + 0.8844 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 damt damt Linear ( damt ) +5% YOY growth Industry has shown consistent growth in ad budgets
  66. 66. Spend y = 0.0034x + 0.9664 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 2012-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2013-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2014-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2015-1 damt damt Linear ( damt ) +5% YOY growth
  67. 67. SMI for comparison 0 20 40 60 80 100 120 140 160 180 200 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 SMI SMI Approx 8.5% per year growth since 2009 Since 2012 growth has been 4% per year (my number is 5%) http://www.mediapost.com/publications/articl e/250445/madison-avenue-trading-volume- falls-10-in-april.html?edition=83053
  68. 68. Spend 5,088,426,730.00 5,315,193,512.00 5,276,628,736.00 5,721,265,936.00 5,790,088,408.50 5,612,103,420.50 4,600,000,000.00 4,800,000,000.00 5,000,000,000.00 5,200,000,000.00 5,400,000,000.00 5,600,000,000.00 5,800,000,000.00 6,000,000,000.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan February was affected by winter olympics and shows big drop – January seems to be better for comparisons 5% 0% 2%+7% -3% +7% since 2012 -3% Jan 2015
  69. 69. Spend 5,276,628,736.00 5,721,265,936.00 5,790,088,408.50 5,612,103,420.50 5,000,000,000.00 5,100,000,000.00 5,200,000,000.00 5,300,000,000.00 5,400,000,000.00 5,500,000,000.00 5,600,000,000.00 5,700,000,000.00 5,800,000,000.00 5,900,000,000.00 CY2012 CY2013 CY2014 CY2015 -3% YOY Jan 2015
  70. 70. SMI for comparison month CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 J 100 110 123 135 129 142 142 F 101 127 120 132 136 168 147 M 114 133 131 146 142 162 161 A 114 124 129 140 148 160 148 100 110 123 135 129 142 142 0 20 40 60 80 100 120 140 160 CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 J J SMI reports flat spend in Jan, and -8% in April 2015 114 124 129 140 148 160 148 0 20 40 60 80 100 120 140 160 180 CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 A A Values in Jan-Apr 2015 are 0% -13% -1% -8% Mean not including Feb = - 3%
  71. 71. Spend summary • 7% year over year growth in spend since 2012, and further back • First inclination of a shift -> 2015 January shows almost the first time that spend has dropped. • Drop is 3% in January. • February was affected by Olympics, but should get more information with March data.
  72. 72. Trend 12: TV Ad Revenue Forecast
  73. 73. Spend Forecast 54.67 56.28 59.92 61.71 64.34 63.33 65.51 63.25 64.64 63.22 65.40 48.00 50.00 52.00 54.00 56.00 58.00 60.00 62.00 64.00 66.00 68.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015* CY2016* CY2017* CY2018* CY2019* CY2020* National Spend (Billions) National Spend (Billions) 54.67 56.28 59.92 61.71 64.34 63.33 63.57 59.46 58.84 55.61 55.59 48.00 50.00 52.00 54.00 56.00 58.00 60.00 62.00 64.00 66.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015* CY2016* CY2017* CY2018* CY2019* CY2020* National Spend (Billions) National Spend (Billions) Through 2016 we don’t know what trajectory we’re on End of 2017 should be clear if TV spends are stable National Broadcast and Cable (not spot). Add approx 30B for spot. Rate-card (not clearing). Multiply by approx 70% for clearing. Rational market assumption Over-weighted 18-49 market assumption
  74. 74. Trend 9: Advertising Industries
  75. 75. Trucks (CPM30) y = 0.0287x + 0.7853 - 0.50 1.00 1.50 2.00 2.50 3.00 Series1 Linear (Series1) Prices up 73% from 2012 5.21 5.21 5.72 6.81 14.33 8.99 - 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Large price growth Drop in 2015
  76. 76. Trucks y = 0.0063x + 0.8285 - 0.50 1.00 1.50 2.00 2.50 Series1 Linear (Series1) Spend up 11% from 2012 152,198,948.00 142,438,815.00 157,184,042.00 139,114,654.00 237,292,409.00 183,043,869.00 - 50,000,000.00 100,000,000.00 150,000,000.00 200,000,000.00 250,000,000.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Drop in 2015 Unclear why 2014 was a big year for trucks
  77. 77. Trucks tratio y = 0.0001x + 0.9331 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 Series1 Linear (Series1) 0.17 0.15 0.21 0.22 0.16 0.16 - 0.05 0.10 0.15 0.20 0.25 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Apart from 2012-2013, relatively constant tratio
  78. 78. Autos spend y = -0.0028x + 1.0115 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 Series1 Linear (Series1) Spend down 7% from 2012 150,471,438.00 239,605,019.00241,393,366.00 275,952,972.00 233,303,963.00 165,320,430.00 - 50,000,000.00 100,000,000.00 150,000,000.00 200,000,000.00 250,000,000.00 300,000,000.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Drop in 2015
  79. 79. Autos (CPM30) y = 0.0158x + 0.9172 - 0.50 1.00 1.50 2.00 2.50 Series1 Linear (Series1) Prices up 40% from 2012 5.11 5.29 5.93 8.02 9.33 7.65 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Large price growth Drop in 2015
  80. 80. y = -0.0021x + 1.0016 - 0.20 0.40 0.60 0.80 1.00 1.20 Series1 Linear (Series1) Autos combined tratio 0.11 0.19 0.20 0.20 0.20 0.19 - 0.05 0.10 0.15 0.20 0.25 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-JanProbably spurious tratio relatively unchanged
  81. 81. Investment Services (CPM30) y = 0.0048x + 0.8813 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 Series1 Linear (Series1) CPM up 14% from 2012 4.73 4.67 4.95 5.16 10.19 6.90 - 2.00 4.00 6.00 8.00 10.00 12.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Drop in 2015 Prices up 14%
  82. 82. Investment Services y = -0.0011x + 1.0273 - 0.50 1.00 1.50 2.00 2.50 Series1 Linear (Series1) Spend down 2% from 2012 45,148,021.00 42,915,107.00 41,019,428.00 40,579,533.00 39,977,190.00 38,491,972.00 34,000,000.00 36,000,000.00 38,000,000.00 40,000,000.00 42,000,000.00 44,000,000.00 46,000,000.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Consistent decline in spending
  83. 83. Investment services tratio y = -0.0007x + 1.0152 - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 Series1 Linear (Series1) -6% tratio 0.17 0.17 0.19 0.18 0.18 0.17 - 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18 0.20 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1-Jan Relatively constant tratio
  84. 84. Summary: Industries • Major industries Auto, Investment services are showing declines in 2015.
  85. 85. Trend 12: Television Networks
  86. 86. Family 0 50000000 100000000 150000000 200000000 250000000 300000000 350000000 400000000 450000000 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 2010 2011 2012 2013 2014 2015 Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 Linear (Sum of spendamt7) Values year month Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 stationgenre
  87. 87. African American 0 10000000 20000000 30000000 40000000 50000000 60000000 70000000 80000000 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 2010 2011 2012 2013 2014 2015 Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 Linear (Sum of spendamt7) Values year month Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 stationgenre
  88. 88. International 0 2000000 4000000 6000000 8000000 10000000 12000000 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 2010 2011 2012 2013 2014 2015 Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 Linear (Sum of spendamt7) Values year month Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 stationgenre
  89. 89. Sports 0 100000000 200000000 300000000 400000000 500000000 600000000 700000000 800000000 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 2010 2011 2012 2013 2014 2015 Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 Linear (Sum of spendamt7) Values year month Average of tratio_pos7 Sum of spendamt7 Average of tCPM30nonzero_pos7 stationgenre
  90. 90. Television Network Genres CY2014 vs CY2012 Network Genre 2012 2014% diff Sports 4204071622 5503799290 30.92%1,299,727,669 Movies 671296438.1 872081017.4 29.91% 200,784,579 International 74898556.14 97056451.57 29.58% 22,157,895 Family 2467881835 3142870090 27.35% 674,988,255 Syndicated Programming 2906935059 3554318346 22.27% 647,383,288 African American 607155858.4 738956825.6 21.71% 131,800,967 Lifestyle 2133509398 2549814621 19.51% 416,305,223 Latin American 6762502416 7752723447 14.64% 990,221,031 Faith 24295533 27638455.64 13.76% 3,342,923 Education 4088229212 4570032030 11.79% 481,802,818 News 1907271220 2034546912 6.67% 127,275,692 Reality 2638553315 2749163712 4.19% 110,610,398 Women 1278014440 1272933929 -0.40% (5,080,511) National Broadcast 28419374959 27873120825 -1.92% (546,254,134) Music 1731026523 1603606931 -7.36%(127,419,592)
  91. 91. Network Summary (Forecast) • Expansion in – Sports (31%) – International (30%) – Latin American 18% • Minimal growth in – Reality shows (4% becoming cultural old news) – Music television (-7% Youtube) – Movies* (Netflix effect? 2015 Jan data shows low growth) – News (7%)
  92. 92. Stock Prices and Revenues
  93. 93. CBS Stock price vs CBS Network revenue 0 1 2 3 4 5 6 D-09 F-10 A-10 M-10 J-10 A-10 O-10 D-10 J-11 F-11 A-11 J-11 J-11 S-11 O-11 D-11 J-12 M-12 A-12 J-12 A-12 S-12 N-12 D-12 F-13 M-13 M-13 J-13 A-13 O-13 N-13 D-13 F-14 A-14 M-14 J-14 S-14 O-14 D-14 J-15 M-15 A-15 Series1 Series2
  94. 94. CBS Revenue vs TV Ad Revenue 13.39 13.44 13.92 14.33 13.81 13.74 12.8 13 13.2 13.4 13.6 13.8 14 14.2 14.4 14.6 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 Q1 Revenue (B) 781,946,295 820,406,534 839,300,916 843,359,491 869,548,542 739765388 - 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 800,000,000 900,000,000 1,000,000,000 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 1/1/2015 CBS Revenue Q1 of each year CBS Television Ad Revenue January of each year 12.91 20.99 28.83 41.99 62.38 58.33 - 10.00 20.00 30.00 40.00 50.00 60.00 70.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 Q1 CBS Stock price Q1 of each year
  95. 95. Spots are becoming smaller and more demographically targetable • This doesn’t mean TV is going away. This trend has been underway since 1950. • However it does suggest a greater role for targeting.
  96. 96. Spot Impressions y = -0.0031x + 1.0157 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 2012-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2013-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2014-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2015-1 spotimpressionsnonzero7 spotimpressionsnonzero7 Linear ( spotimpressionsnonzero7 )
  97. 97. Spot Impressions 2010- 698,553.83 595,661.60 463,284.78 439,255.54 439,721.40 415,009.96 - 100,000.00 200,000.00 300,000.00 400,000.00 500,000.00 600,000.00 700,000.00 800,000.00 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
  98. 98. Spot Impressions 463,284.78 439,255.54 439,721.40 415,009.96 390,000.00 400,000.00 410,000.00 420,000.00 430,000.00 440,000.00 450,000.00 460,000.00 470,000.00 CY2012 CY2013 CY2014 CY2015
  99. 99. Audience Network Entropy 1.69 1.73 1.75 1.76 1.77 1.78 1.64 1.66 1.68 1.70 1.72 1.74 1.76 1.78 1.80 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015
  100. 100. 8.11% 8.04% 8.12% 7.90% 7.59% 7.81% 7.30% 7.40% 7.50% 7.60% 7.70% 7.80% 7.90% 8.00% 8.10% 8.20% CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 Highest impression % Network Highest impression % Network
  101. 101. Programmatic TV ad relevance out-performs the Industry 74% 5% -40% -60% -40% -20% 0% 20% 40% 60% 80% tratio (buyers per impression) CPM (raw cost per thousand impressions) tCPM (cost per buyer reached) Programmatic vs industry: tratio 74% higher tCPM 40% lower CPM buying inventory at about the same price – if not a little higher! tCPM range - 90%..+20% Tratio increase range -0.01..+0.23 Mean increase 0.11
  102. 102. tRatio / ad relevance 2012-2015 y = 0.0007x + 1.0135 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 2012-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2013-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2014-1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 -12 2015-1 Series1 Linear (Series1) 3% change over 3 years
  103. 103. tRatio Summary • Tratio has improved very slightly; only 3% • We believe this is causing a shift particularly in the Scatter market.
  104. 104. TV Trends Summary 1: Ad load is higher • Viewer ad load has increased • More Ads • Shorter Ads • Longer Commercial Breaks • Shorter TV Programs
  105. 105. TV Trends Summary 2: Advertiser value is not as high • 29% CPM increase since 2012 • Worse pod positioning ~ 10% degradation in perf • However advertisers can now target – this is the future.
  106. 106. TV Trends Summary 3: TV Demographics are shifting • Impressions were going up – until now. Impressions inflated due to counting practices plus longer ad breaks. • Core viewership is steady but the demographics are changing • A18to49 to become increasingly rare on TV; A50+ increasingly common • Cost to reach 18to20 exorbident on television • Cost to reach 50+ will become cheaper
  107. 107. TV Trends Summary 4: Prices dropped in 2015 • Demographic changes may cause some disruption. • If TV industry was geared towards reaching 18to49 then correction will be occurring, since this segment is rapidly exiting. • 3% drop in spend this year • Price increases have declined by 2/3rds in 2015 • Other monitoring companies reporting drops in TV spend in 2015.
  108. 108. TV Summary 5: Programmatic unlocks revenue • Networks should actively manage their ad relevance to ensure a total viewer experience. • Advertisers can micro- target on television. • Increased ad relevance • Higher Advertiser ROI • Higher Network revenues • Better viewer experience
  109. 109. TV Trends 6: It is possible to win 18to49s on TV but content and ad relevance/load need to be improved • For example CW carries innovative, high quality, original content that appeals to 18to49s. • CW has expanded its footprint amongst 18to49s significantly. • Ad load and Ad relevance needs to be monitored carefully lest the network lose its audience.
  110. 110. End of TV Trends

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