When it comes to predicting next year's TV advertising outlook, it's all in the eye of the beholder. Several media executives offered widely varying opinions on the 2001 ad picture at last week's UBS Media Conference in New York.
What they did agree on was that there will be some growth but it will be smaller than the gains made in recent years. "Soft landing" was the term used by more than one expert to size up the 2001 ad market.
For network TV, the projections ranged from a bearish 1% gain (for ABC, CBS, NBC and Fox combined) to a somewhat more bullish 7% increase.
On the low end was Robert Coen's prediction. The senior vice president and director of forecasting for Universal McCann, the media-buying arm of McCann Erickson Worldwide, expects it to be "very difficult" for the networks to surpass what he considers exceptional performance in 2000. That performance was driven by first-half online marketers, the Olympics and a generally robust economy, he said.
A 1% gain would put ad revenue for the Big Four networks next year at about $15.9 billion, Coen said.
CBS Executive Vice President, Planning and Research, David Poltrack projects a 7% gain in ad sales by the four major networks, to approximately $16.8 billion. He cited double-digit prices already locked up from the upfront negotiations last spring. As for Coen's prediction, Poltrack proclaimed it "mathematically impossible," saying, "There would have to be no scatter market to come in at that level."
And Poltrack's calculation doesn't factor in 13 weeks of Survivor II, which wasn't negotiated in the upfront. But he did caution that his 7% prediction doesn't take into account a possible strike by both writers and actors. Such a strike could have an audience-delivery impact of 5% to 10%, although there would be an equal or greater saving on the cost of entertainment programs not produced and aired, he said.
Between Coen and Poltrack on the optimism scale was Zenith Media Chairman and CEO John Perriss, who forecast 5% to 6% growth for U.S. television network advertising next year. Generally, he said, the ad business is headed for a "soft landing" in 2001, with respectable growth rates smaller than this year's.
Even Coen said the overall outlook for advertising is "quite good. Nobody is expecting a recession in 2001." Total U.S. advertising will "come close to matching nominal GDP [gross domestic product]." Thus, he said, the ad climate will fall in between the two extremes of exceptionally robust and recessionary.
Poltrack did acknowledge fourth quarter 2000 softness in the ad economy, attributing it to the late Olympics, which drained some money out of the scatter market. The Olympics also delayed the start of the new season, which in turn reduced make-good liabilities (with the exception of Who Wants to Be a Millionaire?). That added inventory created a buyer's market, he observed.
But things will turn around in the first quarter, Poltrack said, because there will be no Olympics to suck money out of scatter. He also pointed out that upfront sellout rates for the first through third quarters are historically higher than in the fourth quarter and, at least for CBS, advertisers are not opting out of upfront commitments beyond expected levels. "There is no evidence to support a continuation of the supply-demand imbalance into the new year," he said.
Coen predicts a down year for the national spot television sector. Sales will drop 1%, to $11.9 billion, he believes, noting the tough comparison with 2000, which had both the Olympics and the political elections.
Cable TV advertising should grow by 12.5%, to $10.1 billion, next year, Coen said. Syndication TV advertising should be up 6%, to $3.3 billion, and national radio 5.5%, to almost $5 billion, he said. Local television advertising will grow 3%, to $14 billion, while local radio will post a gain of 6.5%, to almost $16 billion.
2001 Ad Outlook
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Source: Universal McCann, New York. Note: Network TV estimate is for ABC, CBS, NBC and Fox combined.