Wall St. Speaks Out on Ad Fraud, TV Ad Spend, Mobile & Social - Janney/MediaEntertainment

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Ad Fraud – Suspicious traffic (possibly indicating ad fraud) from desktops continues to significantly outpace mobile in the US, according to data by Solve Media. From 2Q14 to 3Q14, suspicious desktop traffic increased from 44.5% to 56.2% of impressions, while it declined from 18.8% to 17.2% for mobile. Bot (non-human) traffic increased to 41.5% (from 30.8% in 2Q) for desktops, while it decreased to 7.2% (from 11.6%) for mobile. These numbers favor performance-based campaigns and are likely to keep advertisers apprehensive about moving spend to (CPM-priced) digital platforms. However, the rapid shift of traffic to mobile could be a negating factor for advertisers but we suspect fraudsters will find ways to compensate.

TV Ad Spend – TV advertising declined approximately 2% in 4Q, with cable TV spend down slightly less (-1.6%), according to data from Standard Media Index. However, were not universal, with outperformance by Telemundo (+5%), NBC (+3%) and CBS (+2%) and underperformance in Fox (-12%) and Univision (-6%); ABC was down 2% YOY. In cable, outperformers included ESPN (+3%), NFL Network (+61%), and AMCX (+28%). The strong results (if true) suggest there are pockets of relative strength in an otherwise weaker market for TV advertising.

Social Updates – According to eMarketer, mobile is going to drive 73% of FB ad revenue with 1bn mobile MAU in 2015. This compares to our estimates of 79% and 1.33bn, respectively. eMarketer projects the US will remain the largest contributor of mobile traffic with 123.1mm MAU (12.5% of global) but is expected to be overtaken by India in 2017. A Pew survey shows that social media engagement is rising, with 70% of FB users accessing it daily vs. Instagram (49%), TWTR (36%), Pinterest (17%), and LNKD (13%). The TWTR data shows a 10%-point decline YOY, which is discouraging but could reflect changes on the site and Twitter integration with other sites.

Tony Wible can be reached at twible@janney.com.Tony Wible

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