Ad spending in 2002 on the rebound, says CMR

Jul 8, 2002  •  Post A Comment

The recent robust broadcast upfront, the rapid growth of Spanish-language television and the coming fall election season are leading the way as advertising continues its 2002 rebound, according to a new midyear estimate from Competitive Media Reporting, which expects overall domestic ad spending in all media to be up 2.5 percent for the year to $109.1 billion.
This year’s broadcast upfront sales were 14 percent above last year’s, according to CMR. “We are off to a good start this year, which suggests a rebound over last year,” said David Peeler, president and CEO of CMR, a Taylor Nelson Sofres company, speaking at AdWatch 2002, a one-day conference held June 25 in Manhattan.
However, not everyone who participated in panels at AdWatch was as optimistic as Mr. Peeler. The outlook is for a “modest increase off a very soft base,” said Alec Gerster, CEO, Initiative Media Worldwide.
There is a “moderate cautious reason to be optimistic,” said Dawn Hudson, president, Pepsi-Cola North America, who also noted that soft drinks, which are inexpensive pleasures, tend to do well in recessionary times.
The nature and the value of the upfront itself was another topic of debate at this year’s AdWatch, with most participants at both the buyers’ and sellers’ panels agreeing that the upfront is here to stay, though its customs and procedures may change.
Doing deals
Future upfronts may blur the distinction among broadcast, cable and syndication, and they may be organized demographically, with one upfront focusing on 12- to 24-year-olds and another on the 18 to 49 demographic, said Mark Rosenthal, president and chief operating officer of MTV Networks, which itself contains a fair spread of demographically oriented networks, from Nickelodeon and MTV to VH1 and TNN.
Dollars in future upfronts also will move “toward cable and its general entertainment networks, which aren’t getting `their fair share’ of the upfront pie now,” he said. In this upfront, youth-oriented niche networks are “red, red, red hot,” added Mr. Rosenthal, who spoke at the sellers’ panel.
“MTV aside, [the robust upfront] did not carry over into the cable side, at least in terms of pricing,” said Mr. Gerster, speaking at the buyers’ panel.
Upfront is a “bit of a U.S.-North American thing,” said James Stengel, global marketing officer, the Procter & Gamble Co. “We’ve moved away from that in many other countries. … We try to make the best of the situation [in the United States] by doing [deals] like we did [with] Viacom and Discovery. It gives them a commitment-upfront-but it gives us great flexibility.”
P&G’s cross-platform deals with Viacom and Discovery-for around $300 million and $50 million, respectively-represent what P&G would like in an “ideal world, that being strategic partnerships and alliances,” Mr. Stengel said. The Viacom deal was recently renewed for a second year, and the Discovery deal just closed [EM, June 17, 2002].
Mr. Gerster and Mr. Stengel agreed that consolidation on the agency side has been a positive development, required by consoldation on the sellers’ side. “It’s a global issue, not a U.S. [one],” Mr. Gerster said. “In some ways, what is happening in the U.S. is actually catching up with what has gone on in other markets. But it isn’t just about size.”
The prospective elimination of TV ownership rules and other regulatory changes lifting caps and limits means agencies may soon deal with single companies owning multiple networks and station groups reaching, say, 65 percent of the country and newspaper group and TV station duopolies in the largest markets, he said. The pending Publicis Groupe merger with Bcom3 Group “puts a large percentage of our business into one network,” Mr. Stengel said. “ We can start talking about where is P&G going and how can Publicis go there with us.
Hispanic TV grew by 14 percent last year despite the recession, according to CMR, which predicts another 10.4 percent growth for the medium this year. For network and spot television the 2002 growth estimates are 4.5 percent and 8.9 percent, respectively.