Slow Start to Ailing TV Ad Market

May 29, 2006  •  Post A Comment

While the networks hope the upfront market will rev up this week, buyers insist they like a slower pace.

The week after the broadcast network presentations were completed, buyers and sellers reported that little if any new business has been done and that only a few client budgets had trickled over to the networks-the first step in negotiating prices.

The main reason: no settlement of the ratings issue. The buyers want to base deals on Nielsen Media Research’s data on live viewing, while the networks want deals based on live plus viewing within seven days on digital video recorders.

One buyer said there was little happening in those negotiations.

“It’s just really waiting for them to cave,” the buyer said.

Other factors are at work as well.

“There are a number of things that are delaying the market. That’s just one of them,” said Marc Goldstein, CEO of MindShare. He said agencies are taking time to do their audience estimates, evaluate client needs and discuss added value.

“All of these things are in active dialogue,” he said, adding, “There is no major rush to get things done.”

While buyers say there is pressure on several networks to try to bring in ad commitments quickly, the unusual pace of the market has them in unfamiliar territory.

“The networks can’t figure out how much money is upfront, how much is scatter, how much is going to be two-quarter deals,” said Jason Kanefsky, VP and account director of MPG. “Usually they have a much better sense of the reality of the marketplace in terms of dollars in the upfront.”

TV Take May Dip

Mr. Kanefsky expects this year’s upfront to be lower than the $9.1 billion committed in last year’s market.

“My sense is that advertisers are definitely moving money out of television for sure and they’re moving money into scatter for a whole host of reasons, ranging from financial flexibility to idea generation.”

Gambling that prices won’t rise sharply in the scatter market is likely to be a good bet in most dayparts, he said.

“In daytime and early morning there’s not a lot of supply and there’s demand, and if ratings dip you can get burned. And there’s high demand for some syndicated shows, like ‘Oprah.’ Overall, I don’t think you’ll get crushed in scatter,” Mr. Kanefsky said.

NBC’s redoing its schedule also factored into the market’s sloness.

“Everybody’s got to go back and redo their audience estimates,” one buyer said.

Eventually the ratings issue will be resolved and one of the networks will propose pricing to entice buyers to rush to make deals. But this year, for a change, buyers might not bite.

“I think it’s different this year,” Mr. Goldstein said. “Let’s assume someone cuts an early deal. I don’t think that will trigger a stampede as it has in the past.”