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TV Execs Irked by Late Ad Changes

Sep 29, 2003  •  Post A Comment

Advertisers this season have made adjustments to their TV ad spending commitments later than the broadcast networks have ever seen-which has some executives expressing anger.
“Advertisers were still making adjustments as of last week,” said one senior cable ad sales executive, speaking about the week of Sept. 15 to 19. “This year it’s very, very late. The new season has already started. There seems to be a lack of respect for how the rules work in this business.”
“Everyone came in late-it was such a long, hard summer,” said Bob Cesa, executive VP of advertising sales and cable program sales for Twentieth Television.
Some of the changes were cutbacks; others were additions to upfront buys.
Media buying executives estimate that overall a typical 1 percent to 2 percent of the entire upfront television market was cut by advertisers. June’s upfront broadcast advertising market was blistering hot, rising 13 percent to $9.3 billion. This means approximately $90 million to $185 million was cut. Cable networks’ healthy $5.5 billion upfront has seen cuts in the neighborhood of $55 million to $110 million, while syndication’s strong $2.2 billion upfront would calculate to a reduction of $22 million to $44 million.
Unilever U.S., Sears, L’Oreal USA and The Clorox Co. were among those making cutbacks, according to executives. On one major cable network, Unilever cut 29 percent of its upfront buy. The cable network executive said similar cuts occurred across broadcast networks, syndicated shows and other cable channels.
“[Advertisers] spent so much more money this year during the upfront,” Mr. Cesa said. “This was people protecting themselves. They tended to overcommit.”
A Sears spokeswoman would only say, “We do not share competitive information.” Executives at Unilever, L’Oreal and Clorox did not return phone calls.
Increasingly, television advertising sales executives are worried about these last-minute changes in advertisers’ media plans. Typically, when advertisers make upfront commitments in June it is with the intent to go to order. Orders are usually completed by early to mid August, and somewhat later for syndication and cable.
“No calls were made to us like, `Hey, we could have a problem,”’ said the cable ad executive. “You can’t tell me they only found out a day before they called [to place their orders] that they had a problem.”
The upfront commitments are actually called “holds”-which hold the inventory until it is actually ordered. For many years holds were virtual orders-where few if any changes occurred. Now ad executives say young media buyers don’t necessarily adhere to the historical honor system of the “holds” process. This is causing some havoc among sellers estimating and planning future ad revenue-especially in the fourth quarter.
“It’s too early to tell [about the fourth quarter],” said Jeff Lucas, president of advertising sales for Vivendi Universal’s Universal Television Networks. “It’s slow to materialize.”
While media buyers and sellers haven’t seen much money from advertisers yet, they say the six broadcast networks have set preliminary goals amounting to $445 million in fourth-quarter “scatter” revenue. This is about the same as a year ago. It breaks down this way: CBS is looking for $100 million; NBC, $150 million; ABC, $90 million; Fox, $50 million; The WB, $35 million; and UPN, $20 million.
Modest Increases
For the previous fourth quarter, the networks’ collective goal was around $400 million, according to media buying executives. Networks easily outperformed those projections and, in addition, posted wildly high CPM (cost per thousand viewers) increases anywhere from 25 percent to 30 percent.
Media executives expect this fourth-quarter period to be more modest, with only 5 percent to 7 percent increases for broadcast, higher for cable. Higher ratings from network summer programming in the third quarter are the reason. Here’s why: Typically networks give make-good commercial time to advertisers in the third quarter to honor upfront commitments made at the start of the season. These make-goods also spill over into the fourth quarter of the new season. But because of the higher-than-expected third-quarter ratings, networks took care of advertisers’ needs completely in that period. So now they have more inventory to sell in the fourth quarter.
“I don’t think there will be a premium in the fourth quarter,” said Mel Berning, president of national broadcast for MediaVest Worldwide, New York. “There isn’t enough pressure. You’ll see higher CPMs later in the year because there are higher sellout levels at the networks.”