So Far, Soft Broadcast Network Ratings Not Scaring Off Advertisers

By John Consoli -- Broadcasting & Cable, 11/30/2012 2:29:33 PM

ABC, CBS and Fox are down a combined 19.5% in primetime ratings in the preferred 18-49 demo through the first nine weeks of the new TV season. But advertisers, like a table full of poker players, continue to ante up, and do not look to be holding back ad dollars from broadcast either in fourth quarter or, it appears, first quarter.

Granted, Q4 scatter buying has been softer than it was last year, but that's due more to heavier fourth-quarter commitments in the upfront this year by many marketers, along with the large chunks of cash spent by major advertisers during the Olympics telecasts on NBC this summer.

Meanwhile, media agency execs say first-quarter cancellation options by their clients show nothing abnormal compared to past years. As a whole, advertisers usually cancel in the range of 4%-8% of their Q1 holds from the upfront and those are the levels that are being taken, according to media buyers.

"Cancellation options were due to be acted on around Nov. 1 for first quarter but were delayed a bit because of Hurricane Sandy," one media buyer says. "But right now, as the options are being exercised, there is nothing abnormal. No major pullouts by clients."

Through the first nine weeks of the broadcast season, for all live-plus-same-day primetime programming, based on Nielsen data, NBC is averaging a 2.8 18-49 rating, up 21.7% from a 2.3 last season. CBS is averaging a 2.3 18-49 rating, down 17.9% from last season's 2.8; Fox is averaging a 2.2, down 26.7% from last season's 3.0; and ABC is averaging a 2.1, down 12.5% from last season's 2.4.

And that hasn't scared off marketers who need to spend money in the fourth quarter, particularly retailers, but also the technology category, where the competitive battle for holiday business between Apple and Samsung has resulted in a sizable amount of scatter dollars being dumped into broadcast network coffers like big money stocking stuffers.

"The heavy spending by Apple and Samsung and other tech companies has been driving fourth-quarter scatter," one buyer says.

When ratings are down and demand is up, pricing usually gets inflated because the networks have to give out make-goods for ratings shortfalls, which further tightens available commercial time. That hasn't happened this year. While in certain situations advertisers may be paying double-digit increases above upfront pricing to get into individual higher rated shows, most primetime inventory, according to media buyers, is selling for mid-single digit increases over upfront pricing.

That's because most advertisers did commit to more dollars in fourth quarter in the upfront and they can now sit back and cherry-pick with an urgency to buy. Meanwhile, the major retailers and tech companies who may want more scatter inventory spend enough dollars and have enough clout where the networks are not going to hold them up and risk the wrath of future spending cuts down the road.

Many of the retail advertisers have been getting make-good commercial units from the networks for several weeks now. "The networks in many instances, rather than selling their inventory at lower prices, would rather use it for make-goods," one buyer says.

"Most of the good inventory is already sold out anyway," another buyer says. "But we are still getting phone calls from network sales people to see if we still have some money to spend. Some clients do. There are some that operate on calendar year budgets and have some marketing dollars left to spend before the end of the year."

But don't expect the broadcast networks to sell only their higher rated shows when soliciting media buyers. "If you want to get into The Voice on NBC, you also have to buy The New Normal," one buyer says. "If you want scotch, you have to take the water with it."