Ad revenue for media companies should stabilize in 2025

The advertising market has positive momentum heading into 2025, especially for media companies with sports rights and featured live programming.

In conversations with media executives about their expectations for next year’s advertising market, live events such as sports and award ceremonies were the most talked about topics. The end of uncertainty surrounding the election also contributed to the improved outlook.

And even as consumers flee traditional TV bundles and more ad dollars are directed toward streaming, executives say in discussions with advertisers that traditional TV remains emphasized that it is important.

Overall, executives said they expect the market to stabilize and hope to overcome the downturn in ad spending of recent years.

“Normalization is the right way to say it when it comes to the advertising market,” said Mark Marshall, president of global advertising and partnerships at NBCUniversal. “Now that the election has been decided, many companies feel that there is no longer any uncertainty about the election.”

He added that the company saw more so-called scatter market budget coming in in the fourth quarter. In the industry, this is referred to as buying and selling advertisements closer to the broadcast date and those ahead of it.

“Our first quarter is looking very strong. I think the fourth quarter, in any election year, is going to be difficult for everyone, because a lot of… marketers are sitting on their hands because the airwaves and digital are congested.” Overtime at a media company. “I think that’s true for us and true for everyone.”

But despite the post-election increase in ad revenue and stable outlook, Nathalie Bastian, global chief marketing officer at Teads, said she sees many of the same trends.

Bastian noted that 2024 had important periods such as the Summer Olympics and the presidential election, which led to an increase in TV ad revenue. But she expects the same budget to carry over into the new year.

“What we’ve heard generally from some of our close partners is… media budgets aren’t growing, so (advertisers) are just going to have more choices about where they spend their money,” Bastian said. This makes sports and live programming even more important for media companies.

Overall, the global advertising industry, excluding U.S. political advertising, will exceed $1 trillion in total revenue for the first time this year and will grow 7.7% in 2025, according to a recent report from WPP’s media investment firm GroupM. This is expected to reach $1.1 trillion. group. Advertising on digital platforms (which includes retail media as a segment) is driving this growth.

Considered the “most effective form of advertising,” television is expected to increase global advertising revenue by nearly 2% to $169.1 billion by 2025. In contrast, according to GroupM, advertising revenue from “pure playback digital,” which includes platforms such as YouTube and TikTok, excluding “digital extensions of traditional media” such as streaming, will increase by 10% globally by 2025. It is expected to increase to $813.3 billion. .

The sport continues to attract large audiences and advertisers, with media companies paying large sums of money for the rights to the games.

According to advertising data firm EDO, commercials during live sports generated 24% more engagement than other programming.

“Live event coverage remains the cornerstone of media engagement, and streaming services need to step up their efforts,” said Tim Hurd, vice president of media at Goodway Group. “As more streaming platforms enter sports, it is important to keep viewers engaged by not only providing content but also improving the overall experience with personalized, non-disruptive ad units. It will be a challenge.”

comcastNBCUniversal announced that the Paris Summer Olympics generated a record $1.2 billion in advertising revenue. It appears to have worked, with the company reporting that it delivered more than 30 million total viewers across NBC’s television and streaming platforms.

Fox Co., Ltd. The company has already sold out its February Super Bowl ads, which reportedly cost about $7 million each, executives said. The 2024 Super Bowl had an estimated audience of 123.7 million viewers.

and disney announced that advertising for the Christmas Day NBA game sold out two weeks before the broadcast. The company added that it is “significantly on pace” for the overall NBA season when it comes to ad revenue compared to last year, and that the scatter market is “already seeing early activity” heading into the postseason. he added.

Viewership for women’s sports, particularly led by the WNBA, has also increased in the last year, meaning more opportunities for advertisers.

“This goes beyond Caitlin Clark, even though she’s a huge catalyst,” said Josh Mattison, executive vice president of digital revenue pricing, planning and operations at Disney Advertising. Ta. “This year has been a transformational year in terms of audiences.”

WNBA attendance will hit a record in 2024, and consumers are 16% more likely to engage with advertising during these games compared to last year, according to EDO. However, according to EDO, of the $8.5 billion that advertisers will spend on sports TV advertising in 2024, women’s sports accounted for only 3% of that, leaving plenty of room for growth next year.

The growing popularity of women’s sports and its importance to media companies was made clear this month. Netflix secured the United States’ rights to the 2027 and 2031 FIFA Women’s World Cups. Streaming giants, like their peers in legacy and digital media, are expanding their sports portfolios.

While consumers are cutting the cord and streaming services are acquiring sports rights, linear TV viewership still significantly outpaces streaming.

“Linear TV is still in decline in many markets, but not in all markets,” said Kate Scott-Dawkins, GroupM’s global president of business intelligence. He pointed out that there is. “When we talk about Total TV, there is still a lot of opportunity and I hope that there is a renewed recognition of how effective it is as a medium (for advertisers).”

Amy Leifer, chief ad sales officer at DirecTV Advertising, said the company expects continued growth in programmatic ad spending, or automated digital ad buying, in streaming.

“Despite the shift to streaming, linear TV still has a significant advantage in ad impressions and generates six times more revenue than streaming,” Leifer said.

Executives said they are talking with advertisers about how to consider linear and streaming together when spending ad dollars.

Leifer said DirecTV Advertising’s mantra is that “TV is TV,” regardless of delivery method. “Our focus in 2025 is to integrate digital and linear TV advertising by taking a comprehensive approach and developing a converged TV solution,” she added.

NBCUniversal’s Marshall and Disney’s Mattison said advertisers used to focus on streaming versus linear streaming. That’s no longer the case.

“The pitch[we made to advertisers]last year was that you can’t look at one versus the other. Once that’s rolled out on one platform, how do you bring digital and linear together? What you watch matters. That made a big difference,” Marshall said, noting that older viewers are more likely to watch linear TV, while younger generations are gravitating towards streaming.

Marshall said NBCUniversal’s Peacock is “not linearly cannibalizing” because there is little overlap in content between the two outlets. “It’s actually two different and different audiences,” Marshall said.

Mattison pointed to Disney’s broad sports portfolio and variety of platforms across linear and streaming, including television networks such as ABC and ESPN, and the streaming service ESPN+, which adds content to Disney+, as an advantage.

“The convergence[of streaming apps]is very good for consumers and will lead to growth for advertisers,” he said. “We’ve spent years building our streaming advertising technology, so we’re fortunate to be able to maximize audience reach, targeting and performance.”

“Probably a few years ago it was linear and streaming. Now I think it’s linear and streaming,” Mattison continued. “They’re kind of planned together. That applies to both the media side and the advertiser side.”

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder for all Summer and Winter Olympics through 2032.