CBS Research Chief Sees Underlying Broadcast Nets Ad Revenue Rising in 2017, Talks NFL Ratings

CBS Corp. chief research officer David Poltrack - Getty H 2016
Courtesy of Getty Images

David Poltrack expects 2016 to end up 8 percent, followed by a 4 percent increase, or no change when not adjusting for the Rio Olympics, and says he sees "no evidence to justify" YouTube's premium ad rates.

CBS Corp.'s chief research officer David Poltrack said Monday that broadcast network TV advertising revenue should see no change in 2017, or 4.0 percent underlying growth when adjusting for this year's Summer Olympics, after strong growth in 2016.

Speaking at the UBS Global Media and Communications Conference in New York, he predicted that broadcast networks would see 2017 ad revenue gains, when adjusted for Rio de Janeiro Olympics spending in 2016, citing such factors as third-quarter upside compared to lost ad revenue from the Olympics and coverage of the presidential conventions this year.

A year ago, Poltrack had predicted that broadcast ad revenue would grow 9.5 percent, or 5 percent in underlying terms, in 2016 after a flattish 2015. On Monday, he revised that to 8.0 percent, or 4.0 percent in underlying growth. 

He said the upfront ad sales market was stronger this year and scatter market sales have remained strong in the fourth quarter, which also is carrying over in the first quarter of 2017. And he said audience deficiency obligations are at manageable levels. But he said that there was less Olympics spending from new, incremental buyers than he had originally expected. 

Poltrack also said that the TV ad market is showing "increased stability" compared to recent years. And he called on a redefinition of the boundaries between the terms TV and digital ad spending.

Poltrack on Monday also discussed the weaker NFL ratings early this fall season, citing "incremental competition from the coverage of the presidential race" as the key driver. He said average ratings have been up 15 percent since Election Day to 19.1 million from 16.6 million viewers, which was stronger than the gain over the same period in 2015. He said that "ratings are still running slightly below last year, but the gap is narrowing, and I believe it is going to narrow and probably eventually go away entirely." Overall, Poltrack said he does not see "any reason to conclude that there will be any seminal change in the strong ratings performance of NFL football."  

Here are some other highlights from Poltrack's popular annual presentation:

* Research shows that there is a "kicker effect” when TV ads are combined with digital spending, Poltrack said in touting broader research showing the effectiveness of TV ads. He argued there was no major move of TV ad dollars into digital, touting TV's scale.

"No other advertising medium can match television in reach," he said. "Digital advertising lacks scale and, therefore, works most effectively in combination with television advertising." Incremental sales per home reached via advertising was in research found to amount to 33 cents for linear TV, compared to 23 cents on mobile and 19 cents on display internet advertising, Poltrack said.

* He said longform video "is where the action is now in the digital sector," citing 2016 growth of 54 percent versus 16 percent for broader digital advertising. He said he expects another 40 percent growth, versus 11 percent, in 2017. And Poltrack argued that longform video belongs as much in the TV ad category as in the digital space, suggesting it should be defined and seen as a separate segment of the ad market.

He also said that the top new show, CBS' Bull, and other big new series were boosted by DVR, VOD and streaming catch-up viewing, which have added millions of viewers to audience figures. Streaming is the key growth driver here nowadays, Poltrack reiterated.

And he said that streaming is moving away from smartphones and tablets to Roku, Apple TV and smart TVs. A total of 92 percent of Netflix users said this year that they were streaming content on their TV sets, with 42 percent doing so on non-TV devices, Poltrack shared. The figure adds up to more than 100 percent because some consumers stream on different devices. The researcher said that raises questions about how to define Netflix streaming, saying: "Is that not television viewing?"

* He criticized Google and Facebook for their "walled garden approach" and said that YouTube is selling ads "at this extraordinary premium on a [cost-per-thousand ad rate] basis," adding "we see no evidence to justify that."

* Cable networks have seen original series draw lower ratings over the summer and early this fall season. He said lower subscribers play into cable trends “as cord cutting continues to take its toll.”

* Looking at the broader fall TV ratings season to date, Poltrack said that the presidential election debates and Election Night coverage preempted some top-rated shows and inflated cable news networks' performance. Other major factors were the historic seven-game World Series and NFL audience declines. Poltrack said that the sampling of new broadcast series has been up this season, though.

* Poltrack said all eyes will be on the planned first-quarter launch of the Nielsen Total Content Ratings.