Traditional Media Set For Lower Ad Spend; Radio Less Hard Hit.

Radio continues to withstand the onslaught on traditional media budgets according to an updated marketplace assessment. The MoffettNathanson Ad Tracker now projects traditional ad spending will decline 7.2% this year, down from the 5.9% estimate released earlier this year. But media analyst Michael Nathanson’s forecast says radio ad spending will decline only a third as much as traditional media overall.

Officially, radio is projected to skip 2.5% in 2017 with Nathanson saying the U.S. advertising industry is a “tale of two very different cities.” On one side are traditional media companies, their clients and agencies, struggling to grow; on the other, digital media continues its awe-inspiring, double-digit growth, he noted.

“Simply put, traditional media and agencies in the U.S. face the same problem. They have too much client concentration in sectors like retail, consumer products and auto that are not growing budgets, and not enough small-to-medium-size enterprises that continue to fuel online growth. The limited scale of their client base works as a major drag on growth as these industries experience structural headwinds,” Nathanson wrote in the report.

 In Q2 2017, the Ad Tracker details that digital ad spending increased 23% and claimed 128% of the market’s growth, compared with the same period in 2016. For the second quarter, digital media advertising accounted for nearly 50% of all ad spending. In contrast, total TV ad spend plummeted 18.6% in Q2 2017 and newspapers slipped 3.6%. Radio proved to be one of the more resilient categories in traditional media, down 2.9% for the quarter, while out-of- home was flat.

The top 200 advertisers still focus the bulk of their money in traditional media, so any changes in their ad spend hits traditional channels particularly hard. In 2016, the top 200 marketers represented 64% of all TV ad spending and 37% of all radio messaging. However, they were much less prevalent on digital media, accounting for only 30% of total online ad spending.

“So if your biggest clients are suffering, the pain is much more evident in media categories with a higher client conversation like TV,” the report said.

Read more in Inside Radio

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