While networks work to woo advertisers this spring, the outlook doesn’t look too bright.
TV ad-sales season is echoing what many had feared – there’s a steadily declining market for commercials. Lower audience numbers and increased competition for ad dollars from online outlets are leading to even lower financial commitments for the fall season. Analysts expect that the ‘upfront’ commitments are likely to be flat compared to last year, unless there’s a big improvement in the economy.
Broadcast networks are expected to see a 2% to 3% drop in commitments, according to Magna Global, a research and ad-buying unit of Interpublic Group of Cos. Money flowing into cable channels, however, could rise to 4% to 5%, bringing the total average to an increase of 1%.
Viewership declining? The reason for the drop is due to declines in viewership, especially among the coveted 18 to 49 year old demographic. Many TV networks saw a drop in viewers. CBS average prime-time audiences through March 30th were down 19% and ABC saw a drop of 6%. However, Fox saw an increase of 3% and NBC was up 22% (mainly due to the Winter Olympic games).
Media buyers see more potential in cable opportunities and for online networks, but some broadcast networks remain bullish on their upfront potential. NBC’s President of Advertising Sales, Linda Yaccarino, who benefitted from increased ratings in the last year, said she was aware of and keeping an eye on advertising sales for video websites, but wasn’t “sweating them.”
CBS Corp. CEO Leslie Moonves was also optimistic. He stated he was “pleased” with the ad pricing going into upfronts and “as we head into the rest of the season, post-Olympics, everything is looking great.”
What will really happen next season? However, industry observers noted that these positive predictions from the networks are part of the process and should be taken with a grain of salt. The annual “upfront” ad sales are a good indicator of what to expect with the TV economy. Typically, the upfronts can cover as much as 80% of the networks’ fall season ad time. With tepid upfront projections for another year in a row, the TV economy may be affected permanently.