Ad buyers stick with spots

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Despite mounting concerns about strike-induced ratings shortfalls in the months to come, most advertisers are sticking with their upfront media commitments.

Most advertisers had until this week to cancel up to 50% of their upfront ad purchases for the second quarter. But with the deadline passing, few clients actually opted out, network and media agency sources said.

"Advertisers are very wary that they're not going to get the ratings points in the marketplace that they expect," said Steve Lanzano, COO of media agency MPG. "However, they probably have no better options. Advertisers want the ratings, not cash back, since they need the exposure to drive traffic. Cash back doesn't create sales."

The strike will begin to have a major impact on ratings in mid-February and March when the lack of original scripted programming will start to show in a big way. With the scatter market extremely expensive because of a lack of highly rated programming in the fourth quarter -- before the strike was even a factor -- it makes little sense for advertisers to pull out their money.

As for the networks, with the scatter market as strong as it is, they would be glad to give clients their money back so they could sell the spots for significantly more than they did in the upfronts.

"The networks don't care if advertisers exercise options or take money back," said Jason Kanefsky, senior vp group account director at MPG. "They can spin the inventory for a higher unit cost."

Even without exercising their cancellation options, advertisers can request cash back from the networks just days before their ads are scheduled to run during strike-affected shows. If repeats of the shows they bought air, they are entitled to make-goods for the ratings shortfalls but no cash back.

Make-goods seem to be the preferred option for media buyers right now, and strong ratings performances from NBC's "American Gladiators" and Fox's "Terminator: The Sarah Connor Chronicles" indicate that such a strategy could work for most advertisers, buyers said.

That may not be the case for those who bought such top-rated shows as "Grey's Anatomy," "CSI: Crime Scene Investigation" and "Heroes," who might find it challenging to make up for their lost ratings points.



"Those 15 shows that are really good shows, those ratings are never coming back," Kanefsky said. "Those advertisers may say I'm going to pull out because I can't get the ratings back."

For advertisers in those top shows, it could be worthwhile to get cash back and then buy a show like "American Idol" in the scatter market despite prices that might be about 20% higher than they were in the upfronts, buyers said.

There are other options, too. "Grey's" advertisers are being given the opportunity to run their ads during "Lost," which is taking over "Grey's" Thursday night time slot beginning Jan. 31. Such clients as automakers and movie studios could end up ahead with a more male-skewing audience than "Grey's," but those who were seeking a more female-oriented graphic might not want to advertise during "Lost."

If the networks' midseason series don't hold up with decent ratings, even lower-tier advertisers, who are staying put for now, could start asking for money back. Many already are scoping out syndication and cable opportunities as contingency plans.

"The extent to which advertisers recoup money from preemptions or other means will not be known until we get a better sense of the programming landscape and ratings impact when the full force of the strike is in effect," said Jason Maltby, president and co-executive director of national broadcast for MindShare.

As far as the upfronts go, most media buyers expect the upfront market to still take place after the writers return and the networks firm up their schedules, but they hope the strike has issued a death knell to the huge multimillion-dollar network presentations, parties and hoopla that takes place in May.

"Upfront presentations and parties are not in step with the current economic climate," Kanefsky said. "The TV business is in crisis, and vast amounts of shrimp will not solve it."
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