tv trends definitive3_nofinancials_20150524_outgoing

TV Trends 2015

Brendan KittsPrecisionDemand

05-17-2015

2015: The Year of Change?*849,907,197,499.00 860,966,261,380.00

900,159,934,291.00863,843,830,802.00

-

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

Trend 1: Impressions were increasing... Until now

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?

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

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!

Trend 2: More Ads

• Networks are inserting more ads. This is distorting the TV ecosystem and eroding viewer experience and quality of programming.

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

201

2-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

3-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

4-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

5-1

ngs

ngs Linear ( ngs )

+12% more airings over 3

years

Airings 2010-

1,767,668.00

2,112,836.002,219,942.00

2,370,523.002,479,671.00

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

Trend 2: How can more ads be added?

A: Commercial break lengths are being extended

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

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

Longer Breaks

Equals

Less Program

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

http://quotes.wsj.com/TWX

http://quotes.wsj.com/TWX

http://www.wsj.com/articles/cable-tv-shows-are-sped-up-to-squeeze-in-more-ads-1424301320



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.

Summary: Commercial Break length is increasing

Trend 4: The Rise of Blipverts (15s ads)

These ads aren’t your grandfather’s ads!

The Rise of 15sYOY % 2011-

2012YOY% 2012-

2013YOY% 2013-

2014Diff 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

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.

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.

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....

Any impact on Advertiser Value?

Impact on Advertiser ValueCommercial 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

% o

f RPI

of P

ositi

on 1

Order in commercial ad break

Series1 Expon. (Series1)

2011 65%

201459%

59/65 = 0.90 ~ 1.102x decline in performance

Phone response data3,076 airings$2,287,822 spendCommercial breaks 1..7

Viewership

Trend 8: TV viewership

• Viewership is the most basic question we can ask about TV:

• Are people watching more TV or less?

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

/201

2

11/1

/201

2

12/1

/201

2

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

/201

3

11/1

/201

3

12/1

/201

3

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

/201

4

11/1

/201

4

12/1

/201

4

1/1/

2015

2/1/

2015

3/1/

2015

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

Max impressions

JiraL https://precisiondemand.atlassian.net/browse/TVTAX-73?filter=-3

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

STB viewing data (higher income population)

y = -2.5029x + 5734.6R² = 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

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...

Something far more interesting is going on...

Who is watching is changing!

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

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

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

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

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

18..49s are an endangered species

on TV

Prices have increased accordingly

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.

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) ->

Expenditure 18..25 vs 45-54Bureau 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

Expe

nditu

res

-

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

CPM

30 p

er 1

age

rang

e

BLS

Annu

al E

xpen

ditu

re p

er p

erso

n

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!

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

CPM

30 p

er 1

age

rang

e

BLS

Annu

al E

xpen

ditu

re p

er p

erso

n

BLS expenditure CY2015

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

The 18..49 year old decline is not

inevitable

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

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

/201

211

/1/2

012

12/1

/201

21/

1/20

132/

1/20

133/

1/20

134/

1/20

135/

1/20

136/

1/20

137/

1/20

138/

1/20

139/

1/20

1310

/1/2

013

11/1

/201

312

/1/2

013

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

/201

411

/1/2

014

12/1

/201

41/

1/20

152/

1/20

153/

1/20

154/

1/20

15

Average of maxA18to49 Average of maxA65plus

Linear (Average of maxA18to49) Linear (Average of maxA65plus)

Values

yearmonth


yy monthofyear callletters impressionsmax

AMCWalking 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

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

/201

211

/1/2

012

12/1

/201

21/

1/20

132/

1/20

133/

1/20

134/

1/20

135/

1/20

136/

1/20

137/

1/20

138/

1/20

139/

1/20

1310

/1/2

013

11/1

/201

312

/1/2

013

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

/201

411

/1/2

014

12/1

/201

41/

1/20

15



Values

yearmonth



ESPN

Increase in 18-49 year olds!!!!

Increase in 65+!

ESPN is increasing in both 18-49 and 65+ segments

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

/201

211

/1/2

012

12/1

/201

21/

1/20

132/

1/20

133/

1/20

134/

1/20

135/

1/20

136/

1/20

137/

1/20

138/

1/20

139/

1/20

1310

/1/2

013

11/1

/201

312

/1/2

013

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

/201

411

/1/2

014

12/1

/201

41/

1/20

15



Values

yearmonth



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

/201

211

/1/2

012

12/1

/201

21/

1/20

132/

1/20

133/

1/20

134/

1/20

135/

1/20

136/

1/20

137/

1/20

138/

1/20

139/

1/20

1310

/1/2

013

11/1

/201

312

/1/2

013

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

/201

411

/1/2

014

12/1

/201

41/

1/20

152/

1/20

153/

1/20

154/

1/20

15



Values

yearmonth



http://www.vox.com/2015/1/11/7528681/cw-tca-mark-pedowitz

OWN

0200000400000600000800000

100000012000001400000160000018000002000000

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

/201

211

/1/2

012

12/1

/201

21/

1/20

132/

1/20

133/

1/20

134/

1/20

135/

1/20

136/

1/20

137/

1/20

138/

1/20

139/

1/20

1310

/1/2

013

11/1

/201

312

/1/2

013

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

/201

411

/1/2

014

12/1

/201

41/

1/20

152/

1/20

153/

1/20

154/

1/20

15



Values

yearmonth



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

/201

211

/1/2

012

12/1

/201

21/

1/20

132/

1/20

133/

1/20

134/

1/20

135/

1/20

136/

1/20

137/

1/20

138/

1/20

139/

1/20

1310

/1/2

013

11/1

/201

312

/1/2

013

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

/201

411

/1/2

014

12/1

/201

41/

1/20

152/

1/20

153/

1/20

154/

1/20

15



Values

yearmonth



Ad Avoidance

Trend 10: Ad-Skipping

• Won’t ad skipping kill TV?

Ad Skipping

• Adview % = percentage of commercial break that STB is tuned.

• Only possible to do this analysis using STB data

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%

Commercial Viewing IncreaseHow could this be so?

Commercial Viewing IncreaseHow 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

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.

CPM30

y = 0.0125x + 0.9023

0.50

0.70

0.90

1.10

1.30

1.50

1.70

201

2-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

3-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

4-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

5-1

CPM30_AVG

CPM30_AVG Linear ( CPM30_AVG )

29% increase since 2012

CPM30 2010-

4.17 4.33

5.49

6.23

7.337.73

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

CY2010 CY2011 CY2012 CY2013 CY2014 CY2015


CPM30

5.49

6.23

7.337.73

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

CY2012 CY2013 CY2014 CY2015


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

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

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

Trend 8: Spend was increasing – 2015 Jan the market appears to have shifted

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

Spend

y = 0.0034x + 0.9664

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

201

2-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

3-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

4-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

5-1

damt

damt Linear ( damt )

+5% YOY growth

SMI for comparison

0

20

40

60

80

100

120

140

160

180

200

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-

12Ju

l-12

Oct

-12

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-

14Ju

l-14

Oct

-14

Jan-

15Ap

r-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/article/250445/madison-avenue-trading-volume-falls-10-in-april.html?edition=83053

Spend

5,088,426,730.00

5,315,193,512.005,276,628,736.00

5,721,265,936.005,790,088,408.50

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

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

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

100110

123135

129142 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

114124 129

140148

160148

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%

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.

Trend 12: TV Ad Revenue Forecast

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)


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*



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

Trend 9: Advertising Industries

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

Trucks

y = 0.0063x + 0.8285

-

0.50

1.00

1.50

2.00

2.50


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-JanDrop in 2015

Unclear why 2014 was a big year for trucks

Trucks tratio

y = 0.0001x + 0.9331

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40


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

Autos spend

y = -0.0028x + 1.0115

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60


Spend down 7% from 2012

150,471,438.00

239,605,019.00 241,393,366.00

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-JanDrop in 2015

Autos (CPM30)

y = 0.0158x + 0.9172

-

0.50

1.00

1.50

2.00

2.50


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-JanLarge price growth Drop in 2015

y = -0.0021x + 1.0016

-

0.20

0.40

0.60

0.80

1.00

1.20


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

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


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-JanDrop in 2015

Prices up 14%

Investment Services

y = -0.0011x + 1.0273

-

0.50

1.00

1.50

2.00

2.50


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

Investment services tratio

y = -0.0007x + 1.0152

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40


-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-JanRelatively constant tratio

Summary: Industries

• Major industries Auto, Investment services are showing declines in 2015.

Trend 12: Television Networks

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

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



Values

year month


stationgenre

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



Values

year month


stationgenre

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



Values

year month


stationgenre

Television Network Genres CY2014 vs CY2012

Network Genre 2012 2014% diffSports 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)

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%)

Stock Prices and Revenues

CBS Stock price vs CBS Network revenue

0

1

2

3

4

5

6

D-09

F-10

A-10

M-1

0J-1

0A-

10O

-10

D-10 J-1

1F-

11A-

11J-1

1J-1

1S-

11O

-11

D-11 J-1

2M

-12

A-12 J-1

2A-

12S-

12N

-12

D-12

F-13

M-1

3M

-13

J-13

A-13

O-1

3N

-13

D-13

F-14

A-14

M-1

4J-1

4S-

14O

-14

D-14 J-1

5M

-15

A-15

Series1 Series2

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 priceQ1 of each year

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.

Spot Impressions

y = -0.0031x + 1.0157

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

201

2-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

3-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

4-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

5-1

spotimpressionsnonzero7

spotimpressionsnonzero7 Linear ( spotimpressionsnonzero7 )

Spot Impressions 2010-698,553.83

595,661.60

463,284.78439,255.54 439,721.40

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

Spot Impressions463,284.78

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

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

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

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 thousandimpressions)

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

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

201

2-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

3-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

4-1 -2 -3 -4 -5 -6 -7 -8 -9 -10

-11

-12

201

5-1


3% change over 3 years

tRatio Summary

• Tratio has improved very slightly; only 3%• We believe this is causing a shift particularly in

the Scatter market.

TV Trends Summary 1: Ad load is higher

• Viewer ad load has increased

• More Ads

• Shorter Ads

• Longer Commercial Breaks

• Shorter TV Programs

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.

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

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.

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

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.

End of TV Trends

tv trends definitive3_nofinancials_20150524_outgoing

Data & Analytics