Ad pulls from YouTube show money shift to TV: Corus CEO

The fallout from Alphabet Inc.’s placing of advertisements next to unfavourable content is in line with an ongoing trend of some advertisers shifting money from digital back to traditional television, broadcaster Corus Entertainment Inc.’s president and CEO Doug Murphy said Thursday. “I would characterize the news about the environmental risk with digital as very consistent with what we’ve been saying for a number of quarters now,” Murphy said in a conference call with analysts following the release of the company’s second-quarter earnings. He was replying to a question about controversy surrounding Google ad placements next to offensive material that have pushed some companies to pull ads from the search engine’s YouTube video site. “We are seeing some advertisers pulling up their tent and redirecting some buys over to television,” Murphy said, which he characterized, along with with radio, as “safe” and “tried and true” places for brands. He added that he doesn’t expect Google or Facebook Inc. not to come up with an answer to these issues considering their size. “They are going to find ways to protect against that, I would imagine,” Murphy said. In response to the controversy, Google announced that it would give companies that advertise on its platforms more control over where their ads are placed. The trend of ad spend moving away from digital to traditional has been highlighted in the past by both Murphy and some analysts. Earlier this year, Deloitte Touche Tohmatsu Ltd.’s director of technology, Duncan Stewart, said in a report that the trend suggests TV “remains a completely important and legitimate way to reach large audiences in a cost-effective way.” “Naturally, the improvement in ads has been discussed for a while now, and there is a broad market expectation of a turnaround here starting ,” Canaccord Genuity analyst Aravinda Galappatthige said in a Friday note, alluding to Corus’ projected growth in the second half of year. He added he doesn’t see why low single-digit TV ad growth is unattainable, partly given “the general rebound in TV ads we are seeing in the US as the flow of ad dollars to digital platforms appears to have slowed somewhat.” “It is not unnatural to see positive corrections that occur after a sharp swing in allocations into new digital platforms, perhaps too prematurely in some cases,” he said. In a Thursday note, RBC Capital Markets analyst Drew McReynolds also projected TV advertising growth in the third and fourth quarter this year. On Tuesday, at a conference held by a trade association (4A's) representing advertising agency business in the United States, Taco Bell’s chief marketing officer Marisa Thalberg said the fast food company will spend less on digital and more on TV ads in 2017 compared to the previous year, according to a Campaign US report. The report noted the company is trying to figure out how to use digital more effectively. “I don’t know if it’s a permanent shift, more of some of the ongoing swing back and forth,” Murphy said on the call. He said there was a perception a year and a half ago that the ad market would choose either digital or traditional. Now, he said, it’s more of a mix of the two. In the meantime, Murphy said his company has been working on offering a “compelling substitute” or a “complement to digital.” Early last month, the company began selling its users’ cookie data to better help advertisers target audience members. The company reported numbers Thursday for the three months ended Feb. 28, with total revenues increasing 86 per cent to $368.2 million compared to $197.7 million in the same quarter last year. Television revenues increased to $335.8 million from $163.4 million, but radio revenues fell to $32.2 million compared to $34.2 million over that year. Corus attributed the revenue increase again mainly to its acquisition of Shaw Communications Inc.’s media division in April 2016. Radio revenues faltered due to tough economic conditions in Vancouver and Alberta as well as “ratings challenges” in Winnipeg, though the company reported stable Ontario markets. Advertising and subscriber fees carried the load for revenues. Year-over-year advertising revenues jumped to $225.9 million compared to $77.7 million, while subscriber fee revenues increased to $125.5 million compared to $89.6 million in the same quarter in 2016. Those gains were offset by lower merchandising revenues, which were down to $16.7 million in the quarter compared to $30.3 million in the comparable quarter last year. Total profit from all segments increased 29 per cent to $102.7 million in the quarter compared to $79.6 million in the same quarter last year. That was also mainly attributed to the Shaw Media purchase. Breaking that down further, television profit increased to $101.3 million compared to $81.4 million a year ealier, while radio increased to $6.3 million compared to $5.1 million a year ago. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Ad pulls from YouTube show money shift to TV: Corus CEO

Broadcast | April 6, 2017

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Ad pulls from YouTube show money shift to TV: Corus CEO

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