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Threats to Advertising Didn’t Impact Deals

Dec 22, 2003  •  Post A Comment

In spite of advertiser concern about the growing threat of commercial-skipping technology and about shrinking broadcast network ratings, television advertiser deals generally had a business-as-usual tone in 2003.
Even as ratings were leaving broadcast TV and going to cable or other media, June’s vigorous $9.3 billion upfront television market was conducted at a pace similar to upfronts throughout the 1990s, and program pricing for the 2003-04 broadcast year climbed strongly-15 percent to 20 percent over the season before.
The major cross-media platform deals between media agencies and media conglomerates, predicted years ago as the wave of the future, didn’t expand in number during 2003.
The $1 billion deal made in 2002 between the media agency OMD USA and The Walt Disney Co. was not renewed. That deal put OMD clients’ TV, radio and outdoor advertising dollars into most if not all of ABC- or Disney-associated media companies. Only Viacom’s $300 million yearly cross-media platform deal with Procter & Gamble was renewed and increased. For the 2003-04 broadcast season, the deal will rise to $350 million.
A new but unproven advertising tactic got some attention during the year: consumer product placement in TV shows.
Marketers experimented by integrating products into TV shows and other media as a way to combat the growing popularity of digital video recorders, which allow consumers to skip commercials.
Cola-Cola, AT&T and Ford Motor Co., for example, continued their separate product placement-TV commercial deals with Fox’s “American Idol.” The “Coca-Cola Red Room” set on “Idol” is used to interview talent. TV viewers are reminded by the hosts to vote for their favorite contestants by calling a special AT&T number. Other segments featured contestants driving and washing Ford Focus cars.
But the new advertising strategy took some hits as well. While the NBC reality show “The Restaurant,” which debuted during the summer, scored fairly well among adults 18 to 49 with 4.0 Nielsen Media Research ratings, critics panned the mentions of the products that were placed in the show-specifically those of the three partners in the show: American Express, Coors Brewing and Mitsubishi Motors. Critics found the incorporation of products into the show either visually or verbally crass and obvious. No matter, NBC is renewing the show.
Some media agencies and advertisers looked to the past-the 1950s and early 1960s-as they helped networks sponsor and create programming. In December, media agency MindShare USA struck a deal with ABC to develop programming.
On the local front, broadcast TV station advertising fell into a funk as advertisers became nervous early in the spring and cut spending because of the war with Iraq. As a result, the $24 billion local broadcast advertising market of a year ago could be flat to slightly down by year-end, according to the Television Bureau of Advertising. Total local cable advertising sales should grow, however, 6 percent to 7 percent from $4.2 billion in 2002.