In this article, we will look at the 10 Worst Marketing Stocks to Buy. Let’s look at where National CineMedia, Inc. (NCMI) stands against other worst marketing stocks.
Overview of the Marketing Sector
The marketing and advertising industry is a vital part of our economy, playing multifaceted roles in facilitating market efficiency, nurturing creativity and innovation, and driving growth. According to a report by Solomon Partners, global advertising growth for 2024 is expected to fall between 4.6% and 7.2%. This amounts to nearly double the anticipated growth rate of 2%- 5% for 2023.
The Paris Olympics and impending US elections are the primary reasons behind this surge in growth anticipation. The report further highlights that out-of-home advertising is expected to have the highest ad spending growth year over year, at 7.2%. Digital ad spending takes the second spot, at 6.3%. On the other hand, print ad spending is expected to fall by 4.6% year over year.
Trends in the Marketing and Advertisement Sector
Macroeconomic improvement in the second half of 2023 and a positive economic outlook for 2024 are further expected to drive this growth. Inflation is also cooling down in 2024. In addition, the Federal Reserve cut interest rates recently by 0.5 percentage points. Since economic instability is typically cited as a primary reason behind advertisers’ spending cuts, the expectation of rising economic stability and growth is highly likely to fuel advertising spend.
A study by Dentsu revealed that the top twelve global markets are highly likely to increase their advertising spending by 13% as a percentage of GDP in 2024. This suggests that advertising spending exceeds macroeconomic growth.
According to estimates from IBISWorld, industry-wide revenue in the advertising sector has been growing at a compound annual growth rate of 2.7% over the past five years. It is expected to reach $70.1 billion by 2024, increasing by 1.9%. Profit is also anticipated to grow by 6.6%. According to a report by Mordor Intelligence, the online advertising market is valued at $257.97 billion as of 2024. It is expected to increase to $431.76 billion by 2029, growing at a compound annual growth rate of 10.97% in the forecast period.
However, with the market becoming increasingly saturated with political content, the landscape is anticipated to become more challenging for non-political companies attempting to get their message across.
Artificial Intelligence and Marketing
Similar to other areas of life, AI is changing the marketing industry at unprecedented speed. According to a January 2024 Foundation AI Survey, nearly 84.8% of the marketing pros respondents claimed to use AI in their workplace. In addition, a significant majority said that they use AI to improve their performance on a daily basis. The most common usage of AI in the industry is content creation, as cited by around 87% respondents. Other popular applications of artificial intelligence among marketing respondents included keyword research (42%), email marketing (39%), social media (39%), and note-taking (36%). When asked about the importance of AI to their job, 32% voted in favor of it being “very” important. 33% claimed it to be “Moderately” important, while 9% said that it was “very” important.
According to a report by McKinsey, around 75% of the value delivered by generative AI use cases could fall across four key areas: marketing and sales, customer operations, software engineering, and R&D. A suitable marketing use case is the application of generative AI to generate creative content, including personalized emails. The measurable outcomes of this application are likely to slash the expenditure of generating such content, along with an increase in revenue by using specially curated creative content with high efficiency.
McKinsey identified 63 generative AI use cases across 16 business functions, calculating a total value of economic benefits in the range of $2.6 trillion and $4.4 trillion per annum when applied across industries. This is one of the primary reasons why marketers across the globe are scrambling to advance their AI capabilities. Marketers are increasingly leveraging AI-powered tools to personalize content for higher engagement, automate tasks, and expedite content generation, all adding to efficiency and cost-reduction.
Our Methodology
To list the 10 Worst Marketing Stocks to Buy, we used the Finviz screener, ETFs, and related articles to compile a list of 20 marketing stocks. Next, we narrowed our list of stocks by selecting those with high short percentage of float. Finally, we ranked the stocks in ascending order of their short % of float. We also included the number of hedge funds for each stock for additional insight.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Worst Marketing Stocks to Buy
National CineMedia, Inc. (NASDAQ:NCMI)
Short % of Float: 6.1
No. of Hedge Funds as of Q2 2024: 12
National CineMedia (NASDAQ:NCMI) is a media company that operates in the American cinema advertising sector. It boasts 18,400 screens in more than 14,400 theaters in 190 Designated Market Areas nationwide. The company presents several formats of The Noovie Show, depending upon its theatre circuit of operation. This includes Post-Showtime advertising inventory after the advertised showtime, and the selling of advertising on its LEN, a series of screens in movie theatre lobbies.
National CineMedia’s (NASDAQ:NCMI) platform also manages other kinds of advertisements and promotions in theatre lobbies. These include digital online advertisements managed through its Audience Accelerator, which functions across several Noovie complementary out-of-home venues, such as restaurants, convenience stores, and even college campuses. It also functions across Noovie digital properties.
The company shows positive consumer engagement trends, with the cinema industry thriving in 2024 and the box office landing $1.9 billion. The company managed to reach its primary target audience, comprising Millenials and Gen Z, who accounted for nearly 70% of its total viewership in Q2. This translates to around 30 million individuals. National CineMedia (NYSE:NCMI) added 11 new advertisers with significant major cinema advertising campaigns year-to-date. In addition, its platinum advertising offering in Q2 fiscal 2024 made the quarter its second-best quarter ever, standing right behind Q4 2019.
Its sales also increased by more than 15 times in the Q2 fiscal 2024 as compared to the same period in 2023, highlighting the company’s strong profitability model. Public interest in this exclusive offering is continuing to grow, with advertisers from several premier categories planning to include their campaigns in the coming quarter. These categories include entertainment, government, and dining. In addition, an increasing interest in experiential marketing is also driving demand and opening up new opportunities for the company.
Overall, NCMI ranks third among the worst marketing stocks to buy now. While we acknowledge the potential of marketing companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NCMI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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