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MoffettNathanson: TV Advertising Makes Surprising Comeback in Q3

Lebron James
(Image credit: Mike Ehrmann/Getty Images)

NEW YORK—TV advertising experienced one heck of a comeback in the third quarter of 2020 after a record downturn in the second quarter, according to a new report from MoffettNathanson, blowing past the research company’s own projections and looking to continue into the fourth quarter of the year.

In Q2 2020, during the early days of the COVID-19 pandemic, MoffettNathanson reported a decline of 28% in aggregate TV advertising. This most recent report shows that Q3 saw an aggregate TV advertising increase of 3%, about +1,900 bps better than what MoffettNathanson originally predicted back in March. Based on these findings, MoffettNathanson now expects that growth to continue into Q4 at about a +2% clip, which would be about +600 bps better than it initially estimated.

When looking for why such a turnaround has occurred, MoffettNathanson said that it found three primary factors.

First, the third quarter brought an unprecedented return of every major sport, including the NBA and NHL playoffs, the start of the MLB season and major PGA tournaments. These events, which in a typical year would primarily take place in Q2, were shifted to Q3 because of the pandemic. The return of sports brought high CPM (cost per thousand impressions) inventory to the advertising market.

The second factor was a surge in local, regional and national ad spending in the run up to the 2020 general election. MoffettNathanson estimates that political ad spending for TV was up 75% from 2016, especially in key swing states. The news cycle also helped boost ratings for news networks like CNN, MSNBC and Fox, which in turn drove monetization, the company said.

The final factor was the return of brands that had pulled advertising during Q2.

PLUS: Broadcast TV's Dominance in Political Ads Will Persist, Gray TV's LaPlatney Contends

With sports back on their normal schedule and reports of vaccines that could be ready sometime in 2021, MoffettNathanson believes the TV ad market will continue to be strong over the next three quarters, particularly with the postponed Summer Olympics on the way.

“Relative to our estimates at the beginning of the pandemic in 1Q 2020, the recovery in digital and TV ad growth has been much stronger than expected,” the report reads. “... We had expected TV to benefit from political spending at the end of the year, but had not anticipated such a rapid return to positive growth by 3Q.”

An additional finding from MoffettNathanson’s report noted that outside of digital, TV was the only media type that did not post a loss in advertising year-over-year.