In Depth

Assessment of the National Broadcast and Cable TV Marketplaces from Indie Media Shop. Plus, Get Ready for the Political Ad Tsunami

This week's Media Planner features an evaluation of the national broadcast and cable marketplaces from our good friends at media independent shop RJ Palmer. This information first appeared in their newsletter. From that same newsletter we then excerpt part of an assessment of upcoming political ad spending (in a word, the article says it will be 'tsunami-like").

The TV Marketplace, as RJ Palmer Sees It

The factors of a slow economy continue: U.S. bond ratings downgrade, anemic GDP, sovereign debt, stock market swings, threat of double dip recession. As predicted, a lot of advertisers moved their scatter budgets into the upfront of 2012, to hedge their bets against these uncertainties. The networks rode that wave. The cable networks really rode that wave. This meant upfront money increased and it remains to be seen if these are truly incremental dollars. So the big question still is whether there will be softness in scatter. Last year scatter spending was strong the first half of the year into 2Q, and the networks capitalized on that strength. By mid 2Q to 3Q, however, it petered out.

Another interesting observation about the 2012 upfront is, given this economic climate that somewhat mirrors (some would argue is worse than) that of two years ago, we didn't see significant cutbacks this go around. Two years ago, for the 2009-2010 season, advertisers cut a lot of their upfront commitments in a panic, to the detriment of their sales goals. This time, they seemed to think twice and cutbacks were less. Proof that advertising in a bad economy, particularly TV advertising, is still critical, in order for brands to stay afloat. Maybe advertisers learned good lessons about panicking.

Broadcast - So, for 4Q, thanks to the old fashioned rules of supply and demand, the networks are well sold. Why? They protected themselves and postured for a strong upfront while advertisers did the same and specifically for 4Q retailers, snagged crucial pre-Christmas inventory. Liability issues for new season primetime performances will eat up some inventory for NBC and the CW (see our research feature on the right), CBS remains in 1st place with the most shows in the top 25, ABC's making some inroads and FOX has enjoyed double digit growth on key demos.

Cable - It took 30 years for cable upfront spending to surpass the broadcast Prime investment ($9.45 vs. $9.2 billion if you'll recall). So will that leave any scatter money this year for cable? Currently 4Q cable is slow with avails in most dayparts. There are also pockets of underdelivery. During the past year networks like CNN, Turner and USA were off a little in their numbers. But cable vendors will continue to push for the same strength they saw in the upfront. If there is not too much movement soon however, sellers will begin to be more amenable.

And now, here are some excerpts from the artilce RJ Palmer calls "Politial Landslides in the Form of Ad Spending"

"Forget 'landslides.' RJP's D.C. expert, Debbie Waxler, VP, Associate Media Director, says
local TV political ad spending across the country is going to be tsunami-like."

"The last thing a client should be planning, for example is a test or roll-out in a hot market that's going to see major activity, only to find their inventory getting preempted when it gets even hotter."

"Momentum will continue right through the Republican National Convention, when they pick their presidential candidate (the week of August 27th in Tampa). On top of this, NBC's Summer Olympics coverage begins July 27th. This could lead to a 'perfect storm' of inventory lock-up and high rates next summer. Debbie says, 'If all the potential candidates, issue oriented organizations and PACs across the country took all their money raised for this onslaught of political spending, we could probably erase our national debt.' "

Debbie then goes on to site some stats from Moody's Financial Services that were cited in a recent report by rep firm Katz Televison's Continental Television Division:

• 2012 is all but certain to break TV ad spending records

• $2.7 Billion to be spent, up from $2.3 Billion in 2010 or growth between 9%-18%

 • The U. S. Supreme Court decision last year allows companies and unions to spend unlimited amounts of funds on supporting or defeating a candidate.#