Cable Sports Take a Bite Out of Broadcast Ad Sales

Networks' first-half sponsor haul falls 8%

Gains in automotive and financial services spending weren’t enough to forestall a downward trend in advertising sales at the broadcast networks. Despite modest gains in television as a whole, broadcast spending in the first half of 2011 fell 7.6 percent to $10.8 billion.

According to a report issued by Kantar Media, a number of factors conspired to pull down network ad spending. In January, the shift of high-end BCS bowl games (Orange, Fiesta, Sugar) from Fox to ESPN produced a significant, one-time shift in dollars to cable. Moreover, Turner Sports’ share of March Madness revenue pulled as many as $200 million from CBS’ coffers.

Exacerbating the sports drain was a reallocation of TV budgets from broadcast to cable within the prescription drug, financial services, and consumer package-goods categories.

From Jan. 1 through June 30, clients increased their spending on cable networks by 11.8 percent, for a grand total of $10.8 billion.

That broadcast and cable networks pulled in roughly the same amount of ad dollars in the first half may come as little surprise to anyone who monitored the 2011-12 upfront marketplace. This year marked the first that cable gained parity with the networks; both sides wrote approximately $9.2 billion in advance business.

Despite concerns about unemployment, commodities pricing, and a general sense that the world is going to Hell, upfront sales appear to be holding firm. Mere days before the fall TV season is set to kick off, media buyers say that there has been very little breakage—in other words, few clients appear willing to walk out of the deals to which they committed in the spring.

That’s a good sign, obviously, although buyers warn that scatter is slowing considerably. Whereas broadcasters had commanded premiums of up to 40 percent in the second and third quarters, scatter is now pricing between 10 percent and 20 percent higher than rates agreed upon during the upfront. Cable scatter is trending between 5 percent and 10 percent.

Elsewhere on the TV dial, syndication expenditures in the first half surged 18.5 percent to $2.25 billion, a reflection of additional hours of monitored programming and larger budgets from auto insurers and CPG marketers. And despite year-ago comparisons that reflected the impact of the 2010 World Cup, Spanish Language TV still managed to grow 1.7 percent to $2.34 billion.

Television on the whole increased by just 1.8 percent, as the total amount of dollars invested in the medium added up to $32.9 billion. TV accounted for nearly half (46 percent) of all advertising expenditures.

Overall ad growth appeared to slow in the second quarter, as dollars increased 2.8 percent versus the year-ago period. In Q2 2010, ad spending increased 5.1 percent.

“Advertising grew at a slower rate in the second quarter, contributing to speculation about the durability of an advertising recovery that is into its second year,” said Jon Swallen, executive vice president of research at Kantar Media North America. “Key ad spend indicators are painting a mixed picture. On the one hand, a majority of media types actually improved their performance from Q1 to Q2. On the other, spending growth for the Top 100 advertisers stalled in Q2, and the ad market became more dependent on the comparatively smaller budgets of midsized advertisers.”

In the first half, expenditures among the top 10 TV spenders slipped 1.7 percent to $5.17 billion. Six of the biggest spenders cut their media investments to some degree, while two clients, Chrysler and Comcast, poured money into the tube. The automaker upped its first-half TV spending 60.3 percent to $461.4 million, while Comcast increased its outlay 37.8 percent to $488.6 million.

AT&T led all TV comers, buying $789.4 million in air time, down 3.7 percent versus the year-ago period. Other perennial big-spenders include Procter & Gamble ($762.7 million, down 11.3 percent; General Motors ($570.3 million, down 7.7 percent); Verizon ($478.1 million, down 22 percent); Johnson & Johnson ($431.7 million, down 15.2 percent); Ford Motor Co. (up 0.8 percent to $410.8 million); Pfizer ($397.4 million, down 8.2 percent); and McDonald’s (up 7.3 percent to $375.1 million).

Publish date: September 13, 2011 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT