Essential Second-Quarter Stats for Agencies and Media Companies

This iteration focuses specifically on agencies and media companies in the 2019 second quarter.

• Publicis: Revenue is up 1.6% year-over-year, with U.S. revenue flat year-over-year. Bought Epsilon for $3.95 billion. All of the digital growth in the U.S. is actually captured by Facebook and Google. The need for transformation has never been so strong in the sector. Has a model allowing Publicis to address those challenges and invest in the talent and the expertise of the future. Combination of media and creative assets, uniquely positioned to help clients acquire market share at a lower cost. Publicis believes that some clients will continue to reduce their spending in traditional areas, but it is uniquely positioned to help clients with the addressable market of $1.5 trillion. The cut in advertising fees that the business is experiencing mainly with CPG clients (and other categories) in the U.S. is leading to a conservative approach. The significant proportion of ad spend growth is now being driven by small and medium-sized businesses and direct-to-consumer businesses. These are the kinds of businesses that are not using ad agencies. Forecasting the market is going to grow more in 2020, driven by the U.S. elections and the Olympics. Clients are obsessed today with “How can I take back control of my customer?” In a world that is being dominated by the platform, their ability to have a direct relationship with their customers is key.
• Omnicom: Worldwide revenue decreased 3.6%, and the U.S. was up 3.2%. A key takeaway of Cannes was the return to celebrating creativity. Excited about that Annalect launched the people-based precision marketing and insights platform, called Omni. Prefer to rent the right data and technology that can improve agility and client integration at any point in time, rather that invest in legacy data assets and platforms that can easily become obsolete. IP is the ability to bring deep consumer insights to clients in lockstep with brilliant creative ideas driving business results. Investment in data and analytics has been made with the understanding that they are tools in the service of creativity and content. Said no to the recent data company acquisition, just not worth it, wants open and unbiased. Building and investing in the Annalect and Omni platform for the last 10 years. People believe that the U.S. economy continues to perform well. At the same time, they recognize that the U.S. economy has never performed this well for this long at any point in the past, and so at some point you can expect some dips or some changes. Remain cautious—optimistic, but cautious.
• Interpublic Group (IPG): Organic growth of net revenue was 3% in the quarter. In the U.S., organic growth was 0.6%. Clients remain in investment mode when it comes to their engagements. The future of the industry rests on the ability to combine transformative data capabilities with creativity. Acxiom allows marketers get the best out of all their data assets, driving better and more efficient one-to-one connections with consumers at scale. Soft results in China and don’t see a big recovery in China on the horizon. Attended a number of the top-to-tops. Remove silos at IPG. The core competency of Acxiom is being able to target and cleanse the data that clients have within their own companies. Open architecture is a key principle at IPG, where agencies collaborate seamlessly on behalf of shared clients. Confusion is good for agencies, because, if clients are confused, they need someone to figure it out, and that’s what IPG does. Business is going in waves in terms of centralized versus local marketing.

• Comcast: Has 55 million valuable customers in many of the world’s most attractive markets. At NBC, on path to finish No. 1 in the U.S. for the sixth straight year in the key demographic of adults 18-49. The popularity and scale of this premium content and advertisers’ needs for trusted brand-safe environments drove NBCUniversal’s upfront to record levels this year. Advertising is a core strength. And, once again, led the market on both volume and price. The overall portfolio volume was close to $7 billion, an increase of 10% over last year, and average price was similarly strong. Helped shift the marketplace to embrace all video, unifying all screens, platforms and content, breaking down the historic barriers between linear and digital, which is particularly important as Comcast prepares to launch its ad-supported streaming service next year. To that end, recorded digital video sales show an increase of 50% over the prior year. For the last seven years, Comcast has been selling all channels together at the upfront. NBC at prime time was up about 13.5%. Maybe the most interesting is that now the biggest category of advertising at upfronts is from companies that are digitally native: the FAANG companies, Peloton, streaming businesses, businesses that basically exist on the Internet. Interestingly, those businesses find television advertising very, effective, and, because they’re so data-oriented, they can measure the impact of television advertising. So well over $1 billion this year came from digitally native companies that literally didn’t advertise four or five years ago, and that’s what happens when an advertising market is in good shape. You need a good economy, and then you need some new advertisers. Fortunate enough to have both. The advertising market is very healthy, and that’s part of the reason Comcast is very optimistic about the future of broadcast and cable channels. Hard at work on the streaming plans. Goal is to launch the service next April. Have over 500 people working on the service at present. The Office was important to NBC because, according to Nielsen, The Office is the No. 1 show on Netflix. It’s about 5% of all of Netflix’s volume.
• CBS: Revenue of $3.81 billion, up 10% year-over-year. Advertising was up 7%. CBS is producing 89 shows, up from 70 shows year-over-year. CPM increases across the network schedule were substantial in the upfront. Robust scatter market in the second quarter. CBS remains an important investment for pharma, financial and insurance companies. In late-night viewing, retail QSR and auto were especially strong. Brands and emerging categories such as direct to consumer companies like Chewy, Peloton, Uber Eats and others are turning to television advertising more than ever, using the unparalleled reach of broadcast to drive awareness and sales. The immediate and significant sales lift these brands have seen from their growing scatter investments for CBS has led to more robust planning and spending in the upfront. Companies like Amazon, Facebook, Google and Netflix are spending big, big dollars on network television. When they launch a new product, they advertise on network television. CBS is committed to providing brands and agencies with the most precise and insightful measurement, reflecting the impact of their advertising. Two-thirds of the All Access subscribers are taking the limited-commercial option.
• New York Times: Revenue of $436 million, up 5.2%. Added 131,000 net new subscriptions to the core news product. Digital advertising grew by 14% year-over-year, with a strong performance in direct sales, including The Daily and creative services. Don’t expect the second half of 2019 to be as strong in digital advertising as the first half. Digital advertising business is increasingly focused on large-scale, multimonth/multiyear partnerships with some of the world’s leading brands. Demand for advertising partnerships with The New York Times is strong. Indeed, in recent months, New York Times concluded some of the largest deals in history—deals from which the organization will see much of the benefits in 2020. These partnerships are distinctive and difficult to replicate, and they give real pricing power, pursuing them energetically and willing to accept the increased variability that comes with them. The Weekly, The Daily, Wirecutter and Cooking/Crossword products: These are evidence of the extensibility of The New York Times brand across verticals and across different media and of ability to delight and engage audiences. Unique advertiser proposition, which is grounded in brand safety and adjacency to IP that matters and is important, and an ability to launch creative ideas in the world of scale. Confident in strategy of combination of media and partnerships and services, and each of those things drives the others. Launched a pretty substantial price increase test on a population of users who have been with NYT a few years, and very pleased with the results of that test; it exceeded expectations. So there is subscription pricing power at NYT. Added a second ad into The Daily at the end of June and expect it to have a positive impact. There is real demand for audio advertising in association with quality unique content that has big audiences. Partnership with Verizon around 5G extends over many years. There are 150 million people engaging with NYT products at any moment and only 4.7 million who are paying. By the end of this year, will have something like 1,750 people involved in journalism in The New York Times, by far the biggest in history. Over the past six years, NYT has tripled marketing spend and gone from spending 100% on performance marketing, nearly half to move sentiment or get people to think differently about The New York Times.
• Viacom: Revenues of $3.36 billion, up 3.7%. Domestic advertising revenue rose 6%. Strongest upfront pricing in five years. Upfront CPM increases and effective upfront price increases into the high single-digit range heading into fiscal year 2019. As a result, upfront pricing is in a significantly better position versus where it was heading into 2018. Seeing high single-digit scatter to scatter premiums and scatter to upfront premiums approaching 30%. AMS continued to scale in the quarter, with revenue increasing 84% year-over-year, more than offsetting linear headwinds and fueling domestic ad sales growth. Viacom delivered strong upfront results, with high-single to double-digit price increases—the highest rate of change in over a decade—and doubled agency commitments across its digital, social and advanced advertising portfolio. The strength of Viacom’s brands and demand for its AMS portfolio, especially Pluto TV, drove significant shifts to Viacom’s premium digital video inventory.
• IAC/Dotdash: Dotdash revenue increased 23% year-over-year to $37.7 million. Saw 28% higher traffic, resulting in strong advertising revenue growth, as well as growth in affiliate commerce commissions. Challenge anyone to find a digital publisher who is doing what Dotdash is doing right now—really growing, accelerating margin, building brands, also investing for the future. The lowest ad density on the page is relative to competition, but having more effective ads and seeing that play out with repeat rate among advertisers, who spend more individually because of the ad performance. It’s a unique thing among publishers for Dotdash to say to the advertisers, “Just come and try the DotDash product, and, if the product works, spend more money—and if it doesn’t, don’t.” DotDash works because the content has intent embedded into it. It’s not just news. We don’t really do news. It’s content with intent, and therefore that that is going to end up performing for the advertiser. The more content, the more growth of the business.
• News Corp: Revenue of $2.47 billion, down 8% year-over-year. There is clearly a fundamental shift underway in the content landscape. One consequence, other than intensifying regulatory scrutiny of Big Digital, is a gradual transference of value to content creators. Still at a relatively early stage of this tectonic transformation, but there will surely be an ongoing transfer of value to creators in coming years. News Corp began partnering with companies such as Apple and Twitter, which recognize the value of the content. The Wall Street Journal recorded 14% growth in digital-only paid subscribers, who now account for over 69% of the total subscriber base of 2.6 million. Advertising trends improved for The Wall Street Journal, and, in July, both print and digital advertising revenue were higher than a year earlier. Advertising revenues at Dow Jones in the quarter was flat, a notable improvement from last quarter led by an improvement in digital advertising, as anticipated. For the quarter, digital advertising accounted for 40% of total Dow Jones advertising compared to 39% last year.
• Discovery: Revenues at $2.89 billion, up 1.4% year-over-year. Achieved 6% domestic advertising growth year-over-year. HDTV, Food, TLC, ID and OWN are the top networks in America for women. These networks have made Discovery the No. 1 media company for women 25-54 across all of TV. Produces over 8,000 new hours of original real-life programming a year. Ambitions are to create strong multiplatform ecosystems, driving opportunities for multiple revenue streams from advertising, subscription revenue, sponsorships, ecommerce retail and a growing suite of DTC platforms and regions. The television industry is far from dead, U.S. or abroad. Contrary to what many believe, Discover is getting real meaningful growth from the core TV business around the world, and it feels sustainable. Had a robust and comprehensive upfront sales season, delivering record numbers behind healthy CPM increases, reinforced by the prominence and resonance of the brands, the value of brand-safe and mobile-first go apps. Advertisers are finding that television is the most effective platform to really sell product.
• J2: Revenue of $322 million, up 12% year-over-year. Digital media saw growth out of display advertising of nearly 4% with subscription revenues up over 30%. Long-held strategy to increase the amount of recurring revenues at J2. Continued improvement in the display advertising portion of the business and continuing strong growth in the media subscriptions. Expect to remain an active acquirer of businesses. For digital media metrics, the sequential and year-over0year decline in visits and page views are substantially attributable to the Snapchat traffic, which constitutes a small amount of digital media revenue. Pharma market continues to be pretty strong. The pipeline of the FDA has never been stronger, and so the volume of drugs that are getting approved or have been approved and therefore have marketing budgets attached to them are pretty substantial.