Matrix Local TV Sales Report

2012 Ad Recap: Total, +19.3; Core, +4.6

The core growth was particularly impressive given that political advertising displaced much of the other advertising in the fourth quarter, says Matrix Solutions President D.J. Cavanaugh, noting that the total revenue was up 30%, but core was flat with most categories negative in the quarter.

Local TV broadcasters expected that 2012 would be a big year with politicians and their supporters directing hundreds of millions of advertising dollars to them.

And it was.

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Advertising revenue for the year rose 19.3% over 2011, according to Matrix Solutions. Even with the political advertising factored out, "core" revenue was up 4.6% year-over-year, thanks almost entirely to the resurgent automobile industry, which continues to see TV as the best bet for making people aware of their brands.

The core growth was particularly impressive given that political advertising displaced much of the other advertising in the fourth quarter, says Matrix President D.J. Cavanaugh, noting that the total revenue was up 30%, but core was flat with most categories negative.

"So I look at all the [negative] categories in the fourth quarter and pretty much throw those out because, in some cases, they just couldn't afford to buy television," he says. "Political just sucks out inventory."

Matrix is a Pittsburgh-based supplier of customer-relations and sales management software.

Brand Connections

Matrix's quarterly local TV sales report, exclusive to TVNewsCheck, is based on sales data from more than 400 client TV stations. It includes revenue from station-specific websites and digital subchannels.

Political spending was nearly seven times (650%) greater than it was in 2011, according to Matrix.

[In a separate report last week, TVB said that TV stations took in $2.9 billion in political advertising in 2012. That represents 80% of money spent on TV overall (local and network) and 85% of the money spent on local TV (broadcast and cable).]

Auto in 2012 was up 16.1%, according to Matrix. However, Tier 1 (factory) auto spending was down 3.2% for the year after sharply falling 31% in the fourth quarter.

The Tier One decline was more than offset by healthy increases in Tier 2 (dealer associations) and Tier 3 (local dealer) spending. They were up 22% and 25%, respectively. In the fourth quarter, when most other core categories were running in the red, Tier 3 spending grew 35%.

Over the years, the automakers have vacillated between spending marketing dollars themselves on the network advertising and pushing them down to the associations and local dealers, Cavanaugh says. "Now, it looks like there's a shift, putting the money back into the local market, which I think is good for TV stations."

Other than auto, the only categories posting increases in 2012 of more than the overall 4.6% were furniture ( 4.9%), government and organizations (up 5.7%) and travel (7.%).

Without heavy political spending, Cavanaugh says, total revenue will be down in 2013, but the core should continue to be strong — around 5%. He points out the National Association of Automobile Dealers is forecasting an increase in car sales of 7% this year, from 14.4 million vehicles to 15.4 million. And that should produce a commensurate increase in advertising spending, he says.

It's hard to say how the other ad categories will perform, he says. "We're going to start to see [health insurance] exchanges popping up and start advertising in '13. If interest rates stay low, are we going to see more advertising around home buying, refinancing? And I think the other wildcard in this is telecom. Verizon, Sprint and AT&T — are they really going to continue to battle each other?"

Spot TV's challenge is to stay ahead of overall economic growth, he says. "If it can continue to show 4% or 5% growth year-over-year when the economy is doing 2% or so, I think they're doing really well. It bodes well for the business."


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