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National Spot Sales Disappoint

Mar 29, 2004  •  Post A Comment

As the first quarter of 2004 comes to an end, the revenue from local television advertising across the United States appears to be off to a surprisingly weak start. The main reason is that politicians simply did not spend as much money as expected on advertising during the primary season.
“Most of our stations have been reporting the first quarter has been somewhat disappointing because the political money was not so hot,” said Sue Johenning, executive VP and director of local broadcast for Initiative Media. “It took everyone by surprise.”
Currently, the local broadcast advertising market is up 5 percent to 7 percent, according to the Television Bureau of Advertising. Media agency executives said the market should be more robust-especially in a major presidential election and Olympics advertising year, when local television dollars typically climb a hefty 10 percent to 15 percent vs. the previous year. Media agency estimates put total local TV broadcast advertising dollars at $24 billion for 2003.
The problem with the primary races, especially the presidential race, has been that most were decided so early that fewer local TV advertising dollars were spent than expected. After John Kerry grabbed a big lead with major early primary wins, subsequent state primaries went uncontested as Democratic candidates pulled out.
“This is unusual,” said David Robinson, CEO of O’Leary and Partners, an Orange County, Calif., advertising agency. “There should be more of a halo effect from political advertising.”
Local TV advertising has been somewhat hurt in other categories as well-including automotive and some retail companies. “Our clients’ budgets are flat,” said Jean Pool, executive VP of operations, North America, for Universal McCann. “Much of this has to do with the economy.”
Amid the gloom and doom, some still see reason for optimism. The Television Bureau of Advertising, whose members are major TV station groups, has a different and more positive analysis. It said the first quarter is on pace to be up 7 percent, over its previous prediction of a 5 percent hike. It said January sales were flat vs. the same month a year ago; February was up 14 percent; March, so far, is 7 percent higher vs. a year ago.
All this is good news, said TVB President Chris Rohrs: “The market is extremely strong. Most of our station groups are reporting that it looks to be a strong year.”
Mr. Rohrs said categories such as automotive, telecommunications and political advertising are spending heavily. And there is more to come. President Bush, for example, has yet to spend much of his $140 million advertising war chest, noted Mr. Rohrs. Overall, TVB expects the local broadcast TV advertising market will be up 10 percent to 11 percent for the year.
At the start of 2004 the bureau expected political advertising to bring in $1 billion-about the same level of political ads as the record year of 2002. It still estimates about $1 billion for 2004. For the Olympics this year, TVB anticipates $400 million in advertising. But only half, or about $200 million, will be actual incremental advertising dollars to stations.
Last year total local TV broadcast advertising dollars slipped 1 percent to $24 billion, mostly due to concerns surrounding the Iraq war. Local television advertising in 2002, another major political year with senatorial and house seats up for election, witnessed a 12 percent gain in ad dollars over 2001.
Positive Signs
This year’s big February advertising sales numbers may have more to do with special TV events. The Super Bowl, which is typically played in January, was played Feb. 1. “The Academy Awards,” which traditionally airs in March, was moved to February.
There are other positive signs. Nervous TV station general sales managers have been somewhat happier in the past several weeks-especially in markets such as Los Angeles, Houston, Orlando, Fla., and Cleveland, which are just now seeing a marked improvement in political advertising. “I’m much more optimistic than six weeks ago,” Ms. Johenning said. “Things have definitely picked up.”
But this does nothing for the missed opportunities in the political primary season. “You can’t go back and capture that money,” Ms. Johenning said.