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Nets May Run Out of Make-Good Time

In week one, the writers strike already has TV buyers worried.

In the short term, they are seeing commercials on late-night shows reach far fewer viewers than expected, and they’re concerned that the networks don’t have enough unsold spots to make good on the under-delivery.

In the mid-term, they’re concerned that clients’ first-quarter marketing plans could be disrupted if they were built around a major TV buy that included an integration that might never get written and produced.

Long-term, they’re wondering if viewers who leave network TV because their favorite programs are unavailable due to the strike will come back when a settlement is reached.

“If it goes on for at least four weeks, you’re going to see a lot of agencies scrambling,” said Steve Lanzano, chief operating officer at MPG. “Agencies are going to start clamoring for make-goods, there’s not going to be enough [spots] for make-goods. I know it’s a shock, but you could actually see networks giving money back. It could get bad very quickly.”

Most network ad time is bought in the upfront market, where advertisers agree to buy a certain amount of advertising and the networks guarantee those commercials will reach a certain number of viewers. If the commercials don’t reach that many viewers, the networks give those advertisers more spots as make-goods.

This year, the networks carried about $200 million worth of make-goods from last season into the fourth quarter. On top of that, the market has been hot, and some buyers say the networks are greedily selling more spots than they should rather than stockpiling a realistic number for make-goods.

“They say, ‘Work with us,’” said Aaron Cohen, executive VP and director of broadcast at Horizon Media. “Some of them, like NBC, say they’re totally out of sale and they can’t give us anything in the fourth quarter.”

The shortfall began before the strike, but the strike will make it worse, he added.
“That’s a problem,” said Mr. Lanzano, noting many advertisers need to reach consumers during the fourth-quarter holiday season.

“Retailers need holiday [ratings] points,” he said. “Points next quarter don’t help them. If they don’t make their numbers now, they don’t make their numbers for the year.”

If the networks don’t have sufficient spots to make all advertisers whole, he said, “You could play this out and say there really aren’t guarantees, so what am I doing in the upfront marketplace anymore?”

NBC declined to comment. One executive at another network said some fourth-quarter make-goods remain to be doled out.

Last week, Fox announced it would postpone the planned January launch of “24.” In past years, advertisers such as Ford and Toyota integrated their products into “24” as part of major ad campaigns.

But this year, the writers strike could make that integration disappear, rendering other elements of the surrounding campaign less impactful.

If an integration is built into a network ad buy, and the integration doesn’t take place, what happens?

“That’s a good question,” Mr. Lanzano said. “You’re going to have to renegotiate the buy or get some sort of make-good.”

But the real worry is that a long-lasting strike will accelerate the erosion of network audiences.
“I’m afraid that if you lose viewers because of the strike, because the original content isn’t on the air, are we going to have trouble getting them back? I think that’s the last thing we needed,” said Andy Donchin, director of national broadcast at Carat.

And if they don’t come back, it’s not clear that other media can do what television has historically been able to do: aggregate a large audience in a short period of time.

“Where can we put this money to achieve the same reach as television? That’s very difficult,” Mr. Donchin said.

If the networks don’t stop the erosion, or if they hesitate in providing make-goods, Mr. Lanzano said, “Advertisers will find other ways of reaching people. [The networks] could significantly and permanently hurt their business.”

Comments (2)

tony almonte:

jack Myers has it right. Get off your wallets advertisers. This is your problem too. i hate it when you AD guys (STEVE!) just make this someone else's probelm. Create a fund that is matched by studios and writers themselves until the value of digital media becomes more apparent.

Peter Bright:

It's very simple. Every dollar has one hundred units. How many are here for some of the "Pie"?

Divide 100 by the number of those wanting pie. Somebody paid for the making of the pie, give him twice what everybody else gets, someone created the pie, give him the same, someone gave the pie an image, give him half of what the previous guys got. Everybody else gets paid out of what's left.

OH, DAMN! Everybody wound up with pie on their face!

Oh, well. Hopefully it tasted good.

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