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Slow ad build for 2002

Dec 31, 2001  •  Post A Comment

The start of the new advertising year is marked by a strong end to 2001 and a low level of cancellations for first quarter 2002.
But the general state of the economy isn’t causing wild enthusiasm along Madison Avenue or Broadcast Row.
“I don’t see the cavalry riding in over the hill here to rescue first quarter,” said Mel Berning, president, U.S. broadcast, for big spender MediaVest, summarizing the widely held view of both analysts and agencies. “It’s not to say that the back half of the year can’t pick up.”
“We’ll probably be in a flat mode for several quarters,” said Bill Cella, chairman of Magna Global USA, another huge TV spender. “It’ll probably take three or four quarters for the market to start picking up significantly.”
Initiative Media told its clients in a recent report that scatter ad rates stayed up in the fourth quarter, not from an influx of new money, which would signal new economic strength, but because supply was reduced as ratings declined.
In prime time, “Four of the six networks lost audience compared to last year-down 5 percent overall,” Initiative said. “Ninety percent of advertisers wanted to `make good’ that [post-Sept. 11] lost time [when network schedules were pre-empted by news coverage], further reducing the inventory.”
As for those lower cancellation rates, Initiative points out, “Advertisers were so cautious in their [upfront] spending that no one overcommitted … leaving the cancellation rate down.” That’s in contrast to the previous year, when advertisers feared exorbitant scatter rates and overcommitted in the upfront while retaining the option to cancel later.
Thus indications at this juncture point to another buyers’ upfront marketplace in 2002.
Rupert Murdoch is telling senior News Corp. staff that good times are not imminent. Mr. Murdoch recently said 2002 will be “very difficult,” according to a CBS MarketWatch report.
Ad sales for the high-profile sporting events of the first quarter may be doing well, but it remains to be seen whether that will be at the expense of other high-priced sports events. “There are a lot of expensive sports rating points to be covered in the first quarter,” Mr. Berning said, pointing not only to the Super Bowl and the Winter Olympics but also to the postseason wild-card and other playoff games. “A lot of supply of high-priced rating points [is] out there that needs to be soaked up,” he said.
At NBC’s networks, pricing is up, said Keith Turner, NBC’s president of advertising sales. The Olympics are in “pretty good shape,” he said, speaking just before the recent holiday break, and the first-quarter “money working so far is ahead of where it was a year ago.”
The year 2002 does begin with strong ad sales at both NBC and Fox for the Winter Olympics and the Super Bowl, respectively. The Winter Olympics was 94 percent sold out as 2001 ended, according to one recent report. That final 6 percent still could represent as much as $60 million worth of inventory, according to a senior buyer’s estimate. According to a seller’s side estimate, however, the unsold inventory would represent around $44 million.
Nationally, the spot sales business was hit hardest of all market segments in 2001, down as much as 25 percent, according to analysts. The cable segment of that business, hit hard last year, expects to rebound in 2002.
At spot cable rep firm National Cable Communications, the projection is for an 8 percent increase in sales over 2001, said Andrew Ward, executive VP and director of sales. “I’m expecting first quarter to be flat or slightly down from last year,” said Mr. Ward, who, like many other ad sellers, noted that buyers are continuing to buy much closer to airdate than they have in the past. “Second quarter we expect will be stronger; the back half of the year will be [even] stronger, especially with the political season coming around the corner.”
Hallmark Channel’s first quarter is “on plan,” said Bill Abbott, executive VP, advertising sales. First-quarter options were “very, very light,” under 5 percent, he said, “although client spending was so far down in the upfront that there wasn’t an awful lot to option out.”
The biggest difference between first quarter 2002 and first quarter 2001 is that this year, “Clients are placing their dollars much closer to airdate,” he said, a “week or two before clients want to get on air.”
That’s generally because agencies are being kept on a “tighter leash” by their clients, as more than one buyer observed.
Upfront 2002 will be “more of a return to normalcy,” Mr. Abbott predicted. “It’s in everyone’s best interest for the marketplace to settle down and even out a little bit.”
“Advertisers at some point need to come back in,” NBC’s Mr. Turner said. “They have cars to sell, movies to show.”
In 2002, there will be the inevitable new product launches-new cars, new pharmaceuticals, new high-tech gadgets-and the second half of the year will include a big-bucks election season, too. But most of all, the quarterly comparisons in 2002 will not be with the best year ever in advertising history. Whatever else happens, 2002 may not seem so bad when compared with the year just ended.