Commentary & Analysis
Advertising Rebounds in Q1-2016 v 2015; Publishing Still Struggles
Advertising agency had a much better first quarter than last year, up by nearly $3.9 billion on an inflation-adjusted basis (+16.5%) according to the most recent Quarterly Services Survey. Advertising revenues had slipped in 2014 and 2015, in similar pattern to the decline in durable goods and other manufacturing orders and shipments.
By Dr. Joe Webb
Published: June 16, 2016
Advertising agency had a much better first quarter than last year, up by nearly $3.9 billion on an inflation-adjusted basis (+16.5%) according to the most recent Quarterly Services Survey. The report is published by the Department of Commerce. Advertising revenues had slipped in 2014 and 2015, in similar pattern to the decline in durable goods and other manufacturing orders and shipments.
Previously, the Commerce Department had shown a somewhat steady rise in advertising agency revenues, but those were revised away into a decline since early 2014. It now appears that revenues have already bottomed at the end of the year and may be starting to rise again. The timing could be related to the start of new budgets for clients on calendar years. At the beginning of 2014 those budgets may have been cut back, but they may be looser now.
The chart shows the trends as inflation-adjusted 4-quarter moving totals, which smooths the variations and makes each point an annualized figure.
Also for comparisons of just the first quarter with the prior year, revenues for newspapers were down -5.2%, periodicals down -6.2%, and books, and other miscellaneous publishing down -5.2%.
A factor in economic data that is not considered often enough is the effects of population growth. This chart shows the revenue for these categories on a per capita basis.
Newspapers have taken the biggest fall on this basis. While no corner of the industry was unaffected, the biggest declines were the metropolitan dailies. There are many non-dailies that have done quite well in this environment as digital media does not have the same foothold for local news coverage. Periodicals and books had fallen the same -47% since 2004, and advertising revenues were less affected, down -34% on a per capita basis.
Advertising is still important, but is less so, as companies manage their own e-marketing campaigns and use other methods that are more targeted and more flexible.