Spending on broadcast network television advertising was down 5.2% in the first quarter compared with the same period last year. That was despite the fact that overall ad spending was up 1.5% for the quarter, according to Nielsen Monitor-Plus.
However, last week's network upfront saw close to a $1 billion increase and price hikes averaging 15% or so compared with a year ago. What gives?
One powerful agency buyer has a theory why the network upfront thrives even while the economy—and spending—dives. "Advertisers are investing because CEOs are basically fighting for their lives," this senior ad executive insists. "There's a lot of money out there because they're afraid, if the economy doesn't turn around, they'll be blamed for going down without a fight.
"We are all very, very leery about the pricing," he continues, "and if a broadcast network tries to charge me double-digit increases, I'm going to shift money to cable, to syndication, to digital. But here's the dilemma: Advertisers are giving agencies more flexibility to move money elsewhere, but they still feel duty bound to increase spending as a way of fighting a lousy economy."
Jerry Solomon, former president/national broadcast, SFM, agrees. "CEO jobs aren't very secure," he observes. "They are there for the short term, and they'll take short-term solutions, which is why they'll inflate broadcast rates. But agencies are guilty, too. They get paid on commission and how little a buy costs. The cheapest way is broadcast. The question is: are they giving clients correct advice?"