Wall St. Speaks Out on NBC Ratings, Digital Ad Spend and More

By Wall St. Speaks Out Archives
Cover image for  article: Wall St. Speaks Out on NBC Ratings, Digital Ad Spend and More

Wible's Weekly - Ratings Hope, Poor MVPD Ranks, and Possible EU Share Shift. Janney/MediaEntertainment

Ratings Recovery – NBC won prime time TV ratings in the key 18-49 demo (according to Nielsen data), setting the stage for larger CPM increases to bridge the monetization gap. The 13.7% increase in PT ratings was certainly affected by the Olympics, but also saw big successes from The Voice and The Blacklist. This recovery shows that networks are able to work themselves out of bad ratings positions in a fragmented media landscape where it would ostensibly be difficult to build awareness around good shows even if you had them. This rebound along with the surprise breakout hits like Breaking Bad and Vikings show how it is possible to build audiences without initial awareness.

European Privacy – GOOG's loss in a European court on the "right to be forgotten" could help FB gain share and/or enjoy a relative cost benefit. The decision could mean significant compliance costs to implement adequate controls for search engines like GOOG, MSFT's Bing, and others. FB is exempt from the ruling given its approach of allowing advertisers to see user information (e.g. page view history) in a so-called "referral header" was not deemed to be a communication. Additionally, FB does not disclose confidential user information to third parties and allows users to control their own privacy settings, which helps minimize regulatory scrutiny and cost.

Local Search – Search continues to be an important tool for smartphone users to find local information, according to research by GOOG, IpsosMedia CT, and Purchased. The study found that 50% of consumers who conducted a local search on a smartphone visited a store within a day, vs. 34% for computer/tablet searchers. Local searches on a smartphone also led to a purchase 18% of the time (vs. 7%). This should help continue to drive boost local advertising, which is predicted to grow 3.6% annually (to $159 billion) through 2018, according to BIA/Kelsey. We believe local ad growth could also help mobile-centric services such as TWTR.

Customer Satisfaction – MVPDs continue to rank the lowest (as an industry) in customer satisfaction, according to the American Customer Satisfaction Index. This could be in part driven by the price-value perception of MVPD's video and broadband offering, as well as reliability issues. Interestingly, the two pending MVPD mergers T/DTV and TWC/CMCSA are at opposite sides of the rankings for Pay TV (with T/DTV both at the top), although all saw declines. We see this as a potential opportunity for online companies (e.g. AMZN), which are generally highly regarded, to offer competing VMVPD services.

Digital Marketing Mix – US Digital advertising will grow to over $50 billion in 2014, according to eMarketer projections. Over 59% of digital spending continues to be direct response, driven by search. ( MyersBizNet forecasts $42.3 billion in total digital advertising in 2014 and more than $53 billion in 2015, excluding search advertising.) By industry, only Media and CPG have a 50%+ focus on branding. While there is some uncertainty around proposed tax rule changes (limiting the deductibility of advertising expense), we expect the focus around branded advertising will benefit video content companies. This includes YouTube, AOL, YHOO, but will also benefit some of the ad networks and technology providers as brand advertisers seek to target specific audiences across multiple screens.

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

Research Analyst Certification
I, Tony Wible, the Primarily Responsible Analyst for this research report, hereby certify that all of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers. No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views I expressed in this research report.
Janney Montgomery Scott LLC ("Janney") Equity Research Disclosure Legend
Individual disclosures for the companies mentioned in this report can be obtained by accessing our Firm’s Disclosure Site.

Read all Tony's MediaBizBloggers commentaries at Wible's Weekly: Janney/MediaEntertainment.

Check us out on Facebook at MediaBizBloggers.com
Follow our Twitter updates @MediaBizBlogger

The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggers.com management or associated bloggers. MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries.

Copyright ©2020 MediaVillage, Inc. All rights reserved. By using this site you agree to the Terms of Service and Privacy Policy.