Strike Doesn’t Dent 2nd-Quarter Ad Buys

Jan 13, 2008  •  Post A Comment

Despite lower ratings and program schedules that are radically different than what was presented in May by the broadcast networks, advertisers are likely to hold onto nearly all the advertising inventory they bought in the upfront for the second quarter.
However, buyers caution, this is far from an indication that they are pleased with what the Writers Guild of America strike has wrought.
This week most advertisers will have to declare how much they’ll actually buy of the second-quarter advertising they agreed to take in the upfront. When advertisers buy in the upfront, they get an option to cancel about 25% of that commitment.
Broadcast executives say that so far, fewer options than usual are being exercised.
Some clients may not want to run their ads in the reality shows that will replace scripted programming as the writers strike takes hold. But buyers said that if they opt out of their upfront commitment, they face few alternatives and much higher prices.
“What you’re hearing is a big concern,” said Jason Maltby, co-president for national broadcast at MindShare. “If you cut because you don’t think the programming’s going to be there, what are you going to replace it with, because the upfront was such a bargain this year, relative to anything else you can get?”
Andy Donchin, director of national broadcast at media agency Carat, doesn’t anticipate many cancellations in the second quarter. What he does foresee is tough negotiations about exactly what clients will be getting for their money.
“It’s going to be somewhat of a fight to get the GRPs [gross ratings points] that you purchased because of the writers strike,” Mr. Donchin said.
Getting a schedule of new programming that will draw about the same number of viewers as the original schedule is the first part of the negotiation, he said. But it’s also important to get appropriate GRPs.
“The second thing is to maintain the integrity or the value of the schedule you bought in the upfront, and that could be a little tougher,” Mr. Donchin said.
Some clients made upfront purchases based on the environment and audiences attracted by certain shows, Mr. Maltby said. “Others are just looking for mass exposure. I don’t think you’re going to find any one-size-fits-all solution.”
With fewer ratings points available on broadcast because of continued audience erosion even before the writers strike kicked in, cable may benefit. Cable executives say they’re seeing few cancellations of ad time bought in the upfront.
“Nobody’s taking options. It was small last year, and it’s smaller this year,” said David Levy, president of Turner Ad Sales. “With scatter pricing anywhere from 15% to 30% above upfront, not many people want to get out of their inventory.”
Furthermore, Mr. Levy said, he hasn’t seen ad dollars that have moved from the broadcast networks to cable.
“I would assume that most advertisers are trying to work with the networks,” he said. “It could happen down the road. Right now, overall demand for TV is up.”
Sports programming, which hasn’t been affected by the strike and which also stands up well in the new commercial ratings (C3) environment, has been selling well.
Mr. Levy said in the second quarter, regular-season baseball is already 75% sold out and the National Basketball Association playoffs are 12% ahead of where they were last year, with strong prices.
“We are getting calls now about post-season baseball, which isn’t happening till October,” he said.
Cable is one alternative to broadcast while the writers strike is on. But media buyers are looking for other ways to reach consumers.
Rob Jayson, head of planning for media buying agency Zenith, estimates that if the networks air reruns, network viewership by young consumers could drop by as much as 50%.
Engagement with audiences could take an even bigger hit.
Mr. Jayson said the agency is telling clients they shouldn’t panic, but “we do want to start talking to them about the fact that there are supplementary thoughts that they should be considering in communications planning.”
For clients looking for awareness, Zenith is recommending Internet portals, search and place-based video in malls, theaters and arenas. For those looking to build brand equity, the agency is looking to build content partnerships with distributors such as Hulu, YouTube, or “any of those places where fresh content or consumer-directed content is available,” Mr. Jayson said.
“We talked about repurposing content as well,” he said. As part of that discussion, Zenith has approached cable and broadcast outlets about using some of their older content to create new programs. There’s also been discussion about using “new content, DVD offcuts, or whatever it might be, that the networks have. And we’re seeing some of that stuff coming up now,” Mr. Jayson said.
While he hasn’t seen much spending shift from TV, Mr. Jayson said the strike was providing a good opportunity for the agency to get clients to experiment with ways other than television to gain engagement with consumers.
“Will 100% of all the money in experimentation go back to TV? Perhaps not,” he said. “I think once clients realize that engagement is possible outside of TV and you can be a little bit more targeted in how you gain that, I think that will be great.”
Mr. Donchin said that in an odd way, as consumer complaints about missing their favorite shows grow, it validates network TV.
“Television still very much matters in our world,” he said. “I think TV is resilient. No matter how long this goes, I think people will come back to television, but I’d prefer not to test that.”

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