Procter & Gamble, the nation’s biggest advertiser, is cutting back substantially on its first-quarter ads on national TV.
The Cincinnati-based packaged-goods company, maker of Tide detergent and Crest toothpaste, over the past few weeks informed broadcast networks, cable networks and syndicators that it is exercising many of its options not to buy millions of dollars’ worth of the TV time it agreed to purchase during the upfront market last May.
Advertisers generally can opt out of as much as 50 percent of the ad time they buy in the upfront from individual sellers.
Network ad sales executives said P&G is exercising options to drop holds at every broadcast and cable network, and some were hit harder than others, with P&G taking back as much as the full 50 percent allowed at some outlets.
P&G spokeswoman Molly Marburger declined to say how much of its ad dollars the company is taking back.
“Each quarter we typically reconcile what the brands’ updated needs look like versus the inventory we bought, and then adjust our inventory,” she said. “We have been working with the individual networks to adjust our buying appropriately for the January-February-March quarter.”
The news wasn’t all bad for the networks. “I can’t comment on the actual number of what we’ve pulled back, but I can tell you that our January-February-March TV spending is up versus a year ago,” she said. “So TV obviously remains an integral part of our marketing strategy.”
According to Nielsen Monitor Plus, Procter & Gamble spent $223.5 million on broadcast network television in the first quarter of 2004, $223.7 million on national cable and $86 million on national syndication.
Mid-November is the time when advertisers tend to exercise their options, and ad sales executives said that until P&G’s move, the number of options was lower than usual. The big move by P&G left options a little above the 3 percent to 5 percent rate considered normal in the ad market. “It wasn’t that bad,” one cable ad sales executive said. “Options were so much less than a year ago.”
Resale Value
On top of that, P&G tends to buy ads at relatively low prices, which means that if the scatter market is strong, they can be resold at higher rates.
Some ad buyers said that after making its adjustments, P&G has been known to come back to the scatter market and buy additional time. “It’s really hard to anticipate,” Ms. Marburger said.
After a record-setting upfront, the fourth-quarter scatter market has been quiet. “The last couple of weeks have been encouraging. It’s been very steady. You start the week with nothing working, then seven or eight deals come in and you accomplish something,” said one sales executive. “We’re cautiously optimistic the first quarter will be OK.”
Andy Donchin, director of national broadcast at Carat USA, said the fourth-quarter market has been moving in “dribs and drabs,” and that none of the networks are begging for business.
Mr. Donchin expects there will be money to spend in the first quarter. “The option pickup was less than [the networks] anticipated. That encourages me that the first quarter could be a little stronger,” he said.