`Survivor’ beats `ER’ in advertising pricing

Oct 1, 2001  •  Post A Comment

The nearly $400 million in disrupted TV commercial time due to the terrorist acts of Sept. 11 could spell trouble for TV networks, upsetting TV commercial pricing throughout the season.
Coupled with an already sliding TV ad market, the tragedy is affecting the launch of the fall TV season, as a significant percentage of deals in the $6.7 billion upfront market have yet to be turned into firm orders by advertisers.
“Maybe one-quarter of the entire upfront hasn’t been ordered yet,” said one veteran media executive. This year’s weak upfront market translates into lower prices for 30-second commercials, which generally have fallen 15 percent to 20 percent from a year ago.
Advertising Age’s annual prime-time network pricing survey has a new leader: CBS’s “Survivor: Africa,” which is expected to average $445,000 for a 30-second spot, according to media buyers. For the first time, the most expensive regularly scheduled series at the launch of a season will be a reality program. This is the show’s second season, though it is in its third incarnation; it launched as a summer series in 2000. Since it wasn’t sold in the upfront last year, there isn’t any comparison pricing.
The upfront market showed its first big decline in a decade. Major networks witnessed program cost-per-thousand price decreases of 4 percent to 9 percent. Couple this with some audience-projection declines, and this means many programs’ 30-second unit prices have seen big drops.
Many of last year’s top shows witnessed lower pricing this season. NBC’s “ER” slipped to No. 2 from No. 1 in pricing, according to the survey, to $425,400. NBC’s “Friends” was next at $353,600. ABC’s “Monday Night Football” was priced at $330,200, in fourth place. NBC’s “Will & Grace” is next at $321,200. CBS’s “Everybody Loves Raymond” grabbed $305,600.
The survey results were based on media buyers’ estimates and input from some networks. CBS, which cooperated on the survey in past years, declined to do so this year. “Year after year, media buyers offer prices for reporters who then turn around and attempt to coerce networks into sharing proprietary information `to set the record straight,”’ CBS said in a statement. “There is little evidence that anyone tells the truth when leaking these prices.” Three rival networks, however, said Ad Age’s estimates this year were generally close to the mark.
In the upfront market-the spring marketplace for time bought ahead of the fall TV season-advertisers agree to buy time, which is then set aside for them; they normally turn those agreements into formal orders around Labor Day, before the season starts. But as the economy weakened, the upfront market extended from its usual May close into late June, and everything was delayed.
“This is highly unusual,” one TV network executive said.
As of last week, agency executives said many upfront deals had yet to be ordered. Agencies have submitted orders where advertisers need to be on the air in the first weeks of the season.
Some deals will go to order once the season is under way, said Dan Rank, managing director of Omnicom Group’s OMD USA, New York.
Networks are confident that most of the outstanding deals will turn into firm orders.
Some nervous midlevel TV advertisers have dropped their upfront advertising commitments altogether-something that harks back to last season, when a sudden weakening economy forced $400 million in advertising cutbacks in the last weeks of August. However, executives say this season’s canceled TV buys aren’t close to the level of last season’s.
Right now, there is little business being conducted in the fourth-quarter scatter market; scatter refers to time bought during the season for a specific quarter.
The next hurdle for the national TV market was scheduled to begin late last week, when advertisers were to decide whether to cut upfront buys for the first quarter of 2002. Typically, advertisers can drop up to 25 percent of their buys in the first quarter.
“It wouldn’t surprise me if some options were exercised to reduce spending for the year,” said Allen Banks, executive VP and executive media director for North America at Publicis Groupe’s Saatchi & Saatchi, New York.
Some TV networks, which were counting on the scatter market to improve their financial standings, are facing major troubles. CBS, which sold far less inventory in the upfront market in anticipation of a better scatter market, faces challenges amid the soft market. The network’s parent Viacom issued a statement two weeks ago warning advertising revenues would be hurt as a result of the recent events.
For TV buys that were pre-empted by news coverage of the tragedy, ABC and other networks are moving those buys to later in the year. According to Mike Shaw, president of advertising sales for ABC Television Network, 85 percent to 90 percent of the advertising money that should have run during the week of the terrorist acts is coming back.
For the fall TV season, newer shows garnered a wide range of commercial prices, depending on their respective time slots. “Inside Schwartz,” for instance, in arguably the most valuable spot on network TV-the NBC 8:30 p.m. (ET) Thursday time slot after “Friends”-pulled in $238,800 per spot, the highest for any new network show. NBC’s “Scrubs” was second best, grabbing a $213,000 price because of its powerful “Frasier” lead-in.
On the newer networks, which Ad Age has started to monitor for the first time this year, “Buffy the Vampire Slayer” is earning $62,000. The show is moving to UPN from The WB this year. “Buffy” is earning a bit less than its old companion show, “Angel,” which is pulling in $68,400 on The WB.
NBC remained the top network in terms of overall average 30second commercial price with $158,400. Next comes Fox at $154,600. ABC is third with $149,700. CBS is at $129,000. The WB grabbed $66,000, and UPN got $37,400.