Logo

TV Advertising Prices: Networks Resist Discount Requests

Dec 21, 2008  •  Post A Comment

Prodded by clients struggling with the recession, media buyers are asking television networks to roll back advertising prices, both in the current scatter market and for ad time booked during the 2008 upfront.
Network executives, while sympathetic to their clients’ problems, say there’s enough demand in the market to keep prices near where they have been since the May upfront. But if the economy worsens, that could change in the second quarter and affect next year’s upfront market.
Ad pricing is certainly a subject that’s being discussed as companies look to cut costs. And media spending is a major expense for marketers.
“I think every client in town is trying to push every network to see if they can get lower pricing,” said Andy Donchin, director of national broadcast at media buyer Carat. “Everyone’s having discussions and we’ll see what the market bears.”
But so far there’s been little movement.
“While we recognize the concern in the marketplace, our clients continue to receive excellent value from our partnership and their upfront deals,” said Jon Nesvig, Fox Broadcasting’s president of sales. “There have been no renegotiations. In fact, our scatter market in fourth and first quarters has been at or above upfront pricing.”
Cable sales executives say in recent weeks they have been able to complete calendar upfront deals—four-quarter ad buys that begin in January—at prices in a similar range as the broadcast upfront in June.
“There’s no need to address clients that are on the books,” said Joe Abruzzese, president of sales for Discovery Networks, which completed several calendar deals with clients recently.
He said pricing has been well above upfront levels, but budgets are coming in very close to airdates.
“That’s what we’re going to be faced with, clients releasing budgets later and later. But we learned to live with that last year, and we’ll live with it this year,” Mr. Abruzzese said.
Buyers and sellers say that after a fairly slow fourth quarter, there is money in the scatter market now for the first few weeks of January, usually a quiet post-holiday period for many marketers.
“The fact of the matter is the market in cable has been solid,” said Mel Berning, executive VP for ad sales at A&E Television Networks. After the strong upfront, “I have a higher sellout right now for first quarter than we did a year ago.”
Mr. Berning said the network is talking to buyers about ways to help clients.
“There’s no question that there’s a lot of pressure on those buyers to deliver savings, but at the end of the day, the marketplace has got to justify that. The concept of just lowering prices has got to be justified in the supply and demand that we all see,” he said.
Indeed, national television appears to be holding up better than many other media.
“I still think advertisers gravitate back toward national television,” Mr. Donchin said. “People realize that national TV is still the most effective and efficient way to achieve mass reach and awareness.”
Beyond pricing, buyers are looking for other ways to show their clients they are getting more bang for the marketing bucks they still have to spend.
In some cases, clients might be satisfied with upgrades to where their spots run, or by higher audience guarantees, one buyer said.
At the same time, buyers are telling ad sales executives that if they provide a lower price now for scatter buys, there’s a better chance that when the next upfront rolls around, they won’t be looking at a lower budget.
“Flat is the new up,” one buyer said.
Broadcast and cable networks sold about $17 billion in advertising commitments in the 2008 upfront, a 4% increase from the year before. Projections for television ad spending in 2009 talk about overall revenue decreases of 7%-10%.
While some discussions have become heated, most buyers and sellers acknowledge that they’re in this together.
“The agencies and the networks, be it broadcast, cable or syndication, we have to work toward the common good of the industry,” Mr. Donchin said. “Nobody’s immune from the pressures of the economy.”
“A lot of what we hear is when the market’s strong and scatter prices are high, we don’t go back and adjust your upfront,” said one media buyer. “Clients have longstanding relationships with these networks. They’re not going to blow that up to save a nickel over the next six to eight months.”
Figuring out what happens next is anyone’s guess. One key marker will be when clients decide whether to exercise their options to cut back second-quarter upfront buys. Some buyers are dangling those options as a negotiating tool.
“There is the occasional veiled threat thrown,” Mr. Berning said. “We’ve got a little bit of time before we hear on the options.”
One buyer says he’s hearing that the second quarter is going to be a “disaster,” with many clients exercising their options to cut back upfront buys by as much as 50%.
One sales executive points to lower oil prices and the recent cut in interest rates by the Federal Reserve, saying he expects the economy will improve relatively soon.
Meanwhile, another ad executive, recalling 20% drops in pricing in 2001, fretted about what that might mean for the upfront.
“Their point of view is that pricing has been through the roof in scatter and they need an adjustment,” one ad sales executive at a cable network said. “But they need to be realistic. If they cut too much, we can’t make original shows, we can’t buy theatrical movies, we can’t market the right way. For the business, these trends are very unhealthy, but join the club. Three-quarters of the economy is in the exact same spot.”

39 Comments

  1. As rolls swell in the recession, workers find firms are contesting claims by alleging wrongdoing or quitting in a bid to not pay benefits.

  2. Great post!

  3. I am aware of. Its very challenging to differentiate between both of these. They are both United states haters, hell bent on it’s break down. Often criticize The nation and People in the usa persistently. This is a hint, Barack obama stands out as the one currently being successful in eliminating This country.

  4. I love the way you write and also the theme on your blog. Did you code this yourself or was it done by a professional? I’m very very impressed.

  5. Dreamin. I love blogging. You all express your feelings the right way, because they are your feeling, focus on your blog it is great.

  6. You make blogging look like a walk in the park! I’ve been trying to blog daily but I just cant find writing material.. you’re an inspiration to me and i’m sure many others!

  7. Love the blog here. Nice colors. I am definitely staying tuned to this one. Hope to see more.

  8. Love the blog here. Nice colors. I am definitely staying tuned to this one. Hope to see more.

  9. I love the way you write and also the theme on your blog. Did you code this yourself or was it done by a professional? I’m very very impressed.

  10. Many thanks for the great posting. I am glad I have taken the time to see this.

  11. Love all the opinions expressed here! How is everyone? Love how everyone expresses whatr they feel 🙂

  12. Love all the opinions expressed here! How is everyone? Love how everyone expresses whatr they feel 🙂

  13. Amazing freakin blog here. I almost cried while reading it!

  14. I love the expression. Everyone needs to express there own opinion and feel free to hear others. Keep it up 🙂

  15. Love all the opinions expressed here! How is everyone? Love how everyone expresses whatr they feel 🙂

  16. Kudos to you! This is a really good blog here and I love your style of writing. How did you get so good at blogging?

  17. Interesting layout on your blog. I really enjoyed reading it and also I will be back to read more in the future.

  18. Love the blog here. Nice colors. I am definitely staying tuned to this one. Hope to see more.

  19. I like your blog.

  20. I would like to start my own blog one day. This was a really nice blog that you made here. Keep up the success 😛

  21. Kudos for the great article. I am glad I have taken the time to learn this.

  22. Thanks for your insight for the great posting. I am glad I have taken the time to see this.

  23. Thanks much for the great document. I am glad I’ve taken the time to learn this.

  24. I love your blog.. very nice colors & theme. Did you create this website yourself or did you hire someone to do it for you? Plz reply back as I’m looking to create my own blog and would like to know wheere u got this from. thanks

  25. Love all the opinions expressed here! How is everyone? Love how everyone expresses whatr they feel 🙂

  26. Me and my husband very much enjoyed this article, we are sitting down right now to a cup of tea and talking with the laptop beside us. Just some questions: When did you get into blogging? How much is hosting per month? How much are you reeling in per month? How many visitors do you usually get? Have you heard any big success stories with people blogging? Appreciated, we’ll be checking back but you can e-mail us aswell.

  27. Nice!! Great Ifo. Great People. Great Blog. Thank you for all the great sharing that is being done here.

  28. Dreamin. I love blogging. You all express your feelings the right way, because they are your feeling, focus on your blog it is great.

  29. Great wordpress blog here.. It’s hard to find quality writing like yours these days. I really appreciate people like you! take care and see you soon

  30. Nice blog subject. thanks for letting me add something!

  31. Nice!! Great Ifo. Great People. Great Blog. Thank you for all the great sharing that is being done here.

  32. I would like to start my own blog one day. This was a really nice blog that you made here. Keep up the success 😛

  33. Nice!! Great Ifo. Great People. Great Blog. Thank you for all the great sharing that is being done here.

  34. I would love to seek out out how quite a few a huge number of bucks Trollback + Provider were handed above for their incredibly lame logo. I suppose I did some thing like that in college 13 years in the past.

  35. Thanks for your insight for the great written piece. I am glad I have taken the time to read this.

  36. Hey, really enjoyed this post! Shed light on a few things I didn’t understand. Thank you.

  37. I am happy to discover so loads of helpful information at this point into the post, we need increase extra techniques inside this regard, thanks for sharing

  38. Finden Sie günstige Ferienhäuser

  39. Great wordpress blog here.. It’s hard to find quality writing like yours these days. I really appreciate people like you! take care and see you soon

Leave a Reply to Get Backlinks Cancel Reply

Email (will not be published)