Advertisers are still taking money off the table, but some think the rate might be slowing. Third quarter cancellation options are underway with broadcast networks running at around 10%-15%, according to several agencies. Reps for broadcast networks had no comment. A slew of big marketers from Procter & Gamble to Unilever and Visa are rumored to have exercised options, though that money may reappear in the market as the season comes to a close. Across the TV universe, which includes cable and syndication, options are put at anywhere between 12% to 20%.
Carrie Drinkwater, senior VP and director of national broadcast at agency MPG, observed, “It’s likely to be worse than first, but not as much as second,” though she added the full extent of option taking was yet to be understood because of deadline extensions. Some agencies have been given until June to make their decisions on third quarter spending; cancellations are usually wrapped by May 1.
If that prediction proves correct, it’s likely to be a good sign for the vitality of the ad market since third quarter is generally seen as the heaviest period for cancellation option taking. June is the end of the fiscal year for companies such as Procter & Gamble and can involve marketers putting money back into corporate coffers. Another reason cancellations are generally heavier in the third quarter is that they were booked almost a year in advance when business conditions were quite different.
On earnings calls last week, few media chiefs were willing to shed light on the extent of option taking, though the standard line has been that its in the ballpark of second quarter which ran in the low-to-mid double digits for most.
Given that marketers are permitted to take back up to 50 percent of their commitments each quarter, the percentages aren’t as bad as they appear, since they relate only to half of the booked dollars.
Bill Abbott, newly named CEO of Hallmark Channel parent company Crown Media Holdings, reported that option taking was about half of what it was in the second quarter and that his marketplace was holding up pretty well. Abbott said: “We were able to replace cancelled buys and we were able to resell inventory at better rates. There’s a lot of negativity around economy, but I think the ad market, from a scatter point of view is not as bad. The market is holding up reasonably well.”
Mel Berning, executive-vp ad sales at A&E Television Networks, said he was still seeing how options were coming in, but said he was encouraged so far. Describing just how unpredictable the market is right now, Berning added, “We’ll see money registered on Tuesday or Wednesday, for a flight starting Monday. We’re seeing April money spent at end of March, and May money at the end of April. People are looking at sales expectations and they’re releasing the funds according to how they’re doing at the cash register.”