Tragedy hurts int'l ad marketplace
NEW YORK — An already gloomy advertising industry forecast has got darker with the tragic events of the last few weeks.
After the Sept. 11 terrorist attacks, the major U.S. broadcast nets aired for four days without commercials — and without ad revenue. In a typical week, the nets bring in about $300 million. And given the current tense political environment, many advertisers around the world are holding back on the blurb business. Media buyers in several categories, including airlines, travel companies and financial services, are especially reluctant to plug their brands during this national crisis.
Media research firm Myers Mediaeconomics recently downgraded its potential worst- case scenario of 2001 ad spending for U.S. broadcast by 6% (to $15.9 billion), with national spot TV dropping 20% ($9.8 billion) and local broadcast TV slipping 10% ($12.2 billion).
National cable TV nets look to be in a relatively strong position, with an anticipated drop of only 2% to $9.6 billion.
Paris-based Anima, which keeps track of statistics for such groups as pan-Euro advertising outfit IP, echoes the U.S. forecast. In July, Anima was predicting a 2.8% growth in total media ad revenues, but by September that forecast had flattened to zero.
“By then some of the bigger companies in Europe had begun to feel the impact of the dot-com turndown,” says Anima prexy Alain Neuville, “but we thought it would pick up in the fourth quarter.”
The attack on the U.S. has doused those expectations, says Neuville. “All of the TV and radio stations had to cut their advertising because of the special reports and that has affected at least 1/16th of the total ad revenues for that quarter.”
Neuville’s predicting a long-term period of recession for the ad and media industry. “It won’t be like the Gulf War in the early ’90s, but we are going to feel it.”
In the U.S., the ad market was already in steep decline before the terrorist attacks. During the recent upfront TV market for the fall TV season, ad commitments to the six U.S. TV nets were down by nearly 15% to $7 billion from a record $8 billion-plus.
However, pan-Euro broadcaster SBS CEO Michael Finkelstein remains skeptical about long-term recession.
“There will be some dislocations, particularly among the airline and multinational advertisers, but the stations we have are not directly affected by the terrible things that have happened in the U.S.,” he says. “We have experienced some downturn reflecting the softening of the economies but we’re expecting just a modest impact from the latest events.”
Canadian execs are optimistic as well.
One reason is that Canada never had a huge Internet industry and therefore wasn’t as affected by the dot-com crash that precipitated much of the media economy slide.
“We’ve been isolated from it,” says Brad Alles, senior VP of ad sales at Alliance Atlantis Broadcasting. “We’ve had an excellent fall and our competitors seem to be doing equally well. Conventional TV is not as robust, but they’re still moving forward positively in revenue. Specialty channels continue to be a growing area.”
Latin American media congloms might be harder hit. The entire region, Mexico in particular, is very sensitive to a slowdown in the U.S. economy, so a
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U.S. recession will have ramifications throughout the Americas.
Argentina is entering its third year of recession, and ad investment has been declining.
“Argentina hasn’t even touched bottom yet,” maintains Marcelo Salup, exec VP, international media director for ad agency FCB. “Rates on terrestrial television are down 40% — radio is down 70%.”
Brazil, the largest market in Latin America, has seen a softening of the economy this year, and Mexico, which has been the strongest in the region, is seeing its growth begin to slow. Mexican media giants Televisa and TV Azteca hike ad rates steeply over the past few years.
Televisa had been rumored to be planning a hike of as much as 50% for 2002, Salup says, but ultimately increased rates by half that.
With all the gloom, media execs have been looking for creative alternatives in a tough marketplace. Cross-platform deals and product placement have both become increasingly popular.
In the past six months, Viacom signed Procter & Gamble in a cross-media ad pact said to be worth $300 million and Bank of America sealed a similar multi-million dollar deal with AOL Time Warner.
Marketers are even going so far as to provide production money in exchange for product-placement opportunities.
Universal McCann Entertainment Group, a division of the media-buying arm of Interpublic Group, recently funded NBC’s reality skein “Lost.” The shop then passed along the costs to Coca-Cola, Johnson & Johnson and Lowe’s, whose products all appear on the show.
“With the changing broadcast model and the challenging economic times, this is when advertisers get most creative,” says Seth Bedell, co-founder and CEO of Beverly Hills-based Bedell McLean Branded Entertainment, a company that links brands with entertainment properties.
Demand for product placement on reality programming grew after the success of “Survivor” on CBS, in which advertisers such as Target, Reebok and Dr. Scholl’s showed off their wares.
In Europe, TV broadcasters also are moving to stave off the media economy slowdown.
Channel 5 in the U.K. will open its space to home shopping while Germany’s Sat 1 is going to split-screen advertising.
— Marlene Edmunds in Amsterdam, Brendan Kelly in Montreal and Mary Sutter in Miami contributed to this story