Media and Internet -- Tectonic Shifts

We are updating our US and Global advertising models to incorporate further structural shifts towards digital media as well as some global macroeconomic softness Not surprisingly we expect online ad growth to remain the key growth driver of US and Global ad spend incrementally lower US cable and broadcast TV estimates offset modest upward revisions to our online ad forecasts reducing our overall 2015E US ad spend growth estimate to 26 from 27 while essentially maintaining our 36 2016E estimate Concerns of slowing growth in emerging markets drive a reduction in our global growth estimate to 40 from 48 in 2015E and to 52 from 67 in 2016E including political and Olympics PampampOLowering US Cable and Broadcast Growth Estimates amp8230 Underlying trends in TV ratings have remained lackluster given the structural shifts in viewing behavior towards ondemand adfree viewership In the near term we expect these declines to manifest themselves as a deficiency of gross ratings points GRPs which serves to support scatter market ad pricing for those who have inventory to sell however this inventory shortage reduces dollar ad revenue growth for the group as a whole Therefore we believe the probability of a material nearterm rebound in TV advertising revenue whether cable or broadcast remains low Overall we are now looking for 2015E TV advertising growth of amplt1 and 16 in 2016E excluding PampampO modestly below our previous forecastamp8230 But Raising US Online Forecasts 2Q15 internet earnings were characterized by broadbased acceleration across the US online advertising landscape in our view brand spend is moving to scaled video and social platforms at an increasing rate Online continues to be the primary growth driver in our model but is perhaps proving mildly deflationary to overall spend as advertisers adopt more stringent internal budgeting We remain encouraged by accelerating trends at GoogleYouTube and Facebook as we believe online video and social categories will grow 40 and 33 YoY in 2016E The strong growth profile of social and video is proving cannibalistic to both TV media and also standard online display formats Given acceleration in the US and better visibility into the trajectory of growth in social and video we increase our 20152018E by 50bps to 140 in the US and by 60bps to 149 globallyShift to Digital is a Global Trend Macro Uncertainty Drives Estimates Loweramp160 In light of the growing concerns regarding a macroeconomic emerging market slowdown particularly in China and Brazil we lower our 2015E and 2016E global ad estimates to 40 and 52 from 48 and 67 Similar to the dynamic in the US ongoing budget shifts towards digital are occurring across the global media landscape which leads us to now estimate that online will surpass television39s share of the global advertising market in 2017CLICK BELOW TO ACCESS RESEARCH REPORTPRESENTATION including important disclosuresAmericas Media ampamp Internet Tectonic Shifts ContinuedPrepared by Nomura Securities International Inc amp160For complete details of the research together with the associated important disclosures analyst certification valuation methodology and discussion of risks please see the full publication attachedThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecom MyersBizNet Inc management or associated bloggersamp160

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Media and Internet -- Tectonic Shifts

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Anthony DiClemente

"About That with Carl Mayer:" Alaina Donnellon (Episode 10: Political Spending) - By Carl Mayer

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