Ad driven media

Much of the media sector is dependent on advertising for some, or all, of its revenues. This makes it highly cyclical as spending on advertising is easy to cut when savings need to be made, and returns on the same level of advertising are likely to be lower when consumer spending is lower.

The most strongly ad-driven media include free to air broadcasters (both radio and TV), free newspapers and advertising agencies. These are the most cyclical parts of the media sector.

Although trends in overall ad spend are important for the ad driven media, not all advertising is equally cyclical: local and classified advertising tend to be more resilient than display or broadcast advertising.

Business to business advertising is generally more cyclical than advertising aimed at consumers. This may not be true where the advertising is driven by a defensive industry, as might be the case for a trade magazine.

Many media channels have a mixture of revenue streams and the proportions of revenue coming from these streams affects both growth and stability of revenues.

Long term trends are at least as important as the cycles. Currently, new technologies are increasing the number of available TV and radio channels, fragmenting the audience. The internet and interactive TV have created new media that are further fragmenting audiences.