The annual spring ritual of selling blocks of advertising for prime-time TV shows airing this fall just got a lot more interesting.
With so many viewers and ad dollars going to the Internet, TV networks have been trying to wow advertisers with their own digital offerings, such as streaming shows online. Two struggling mini-networks have consolidated into one, and no one really knows what to make yet of digital video recorders, which allow viewers to skip through ads.
Despite the changes swirling through the media industry, however, television has yet to be dethroned as the most powerful medium on the planet for reaching mass audiences. The challenge that networks have now is getting advertisers to continue paying as much money for ads as they have in the past.
Last year the networks’ overall take of about $9 billion in the “upfront” ad-selling season was down slightly from the prior year, with the exact numbers varying somewhat depending on the estimate.
And while networks will be taking friendly jabs at each other next week as they unveil their fall lineups to advertisers, they can all agree on one thing: Let’s not lose any ad dollars to rival media outlets like niche channels on cable TV or the Internet.
Jack Myers, a longtime observer of the television world and editor of MediaVillage.com, an industry Web site, says that even with more demands on viewers’ time, television remains the foremost place that advertisers want to be.
“Marketers are very reluctant to move money out of television, especially in the last year with broadcasters moving their shows online and to other platforms,” Myers said. They “don’t want to lose their position as dominant incumbent advertisers.”
Myers predicts a stable amount of advertising dollars going into network television this year, with any growth in online spending coming out of other media like direct marketing, promotional spending or newspapers. Other forecasters say total spending on network shows could decline slightly.
Just in the past several months, TV networks have been moving quickly to make their shows available in new ways, fully aware that advertisers are eagerly looking to reach people online.
Walt Disney Co.’s ABC has said it received tremendous interest from advertisers in participating in its two-month trial of streaming several shows online for free, which began earlier this month. Part of the attraction for advertisers: the streams feature advertising spots that can’t be skipped through.
Likewise, CBS Corp.’s CBS network on May 4 announced an online, ad-supported channel called “innertube” that will offer free, original programming as well as repeat episodes of some CBS shows. NBC and other networks are also rolling out various digital offerings of their own.
Part of the motivation here is defensive since networks don’t want to lose ground as Internet players like Google Inc. and the popular YouTube site gain traction in offering video online.
For many advertisers, sticking with hit broadcast shows that draw millions of viewers every week and then following them as they migrate online is the way to go, even though several of these forays, such as streaming “Desperate Housewives” and “Lost” over the Internet, are at a decidedly early stage.
Andy Donchin, who oversees purchasing of broadcast advertising at Carat USA, a subsidiary of the London-based media services firm Aegis Group PLC, says advertisers are eager to get represented on Web sites and on emerging digital distribution platforms like cell phones, but not at the expense of being on television.
“We’re not abandoning TV, we’re just trying to take advantage of other media,” Donchin said. “We’re trying to follow people as their consumption patterns change.”
In the latest sign of how advertisers are finding new ways to reach people, General Motors Corp., Comcast Corp. and CBS announced Friday that GM would sponsor free replays of the hit CBS show “Survivor” on Comcast’s video-on-demand service.
GM spokeswoman Ryndee Carney says the automaker will continue to look for ways to spend advertising money, though she added that this change “is not a significant shift” but more of an ongoing realigment as GM’s buyers use other kinds of media.
Carney declined to disclose the company’s specific advertising budgets, but said that television remains a “core part of our advertising plans.”
In addition to the blossoming of online media, advertisers are dealing with other big changes in the television landscape this year.
The DVR, or digital video recorder, has networks and advertisers worried that more people will skip through ads altogether. This year Nielsen began releasing data on viewership of shows on DVRs, but some say it’s too early to start using it.
“A lot of agencies are saying, we need a year to analyze the data,” says Steve Sternberg, executive vice president of audience analysis at Magna Global, a media services company owned by The Interpublic Group of Cos. Sternberg noted that Nielsen’s sample only has about 4 percent DVR users, versus 12 percent of U.S. TV households that use the playback devices.
Also this year, two long-struggling mini-networks decided to shut down and combine the best of each to form a new network. Shows from both UPN and The WB will be used on The CW, a joint venture between CBS and Time Warner Inc.’s Warner Bros. unit, which launches in the fall.
UPN and WB both cater to younger audiences, but Sternberg said they had relatively little overlap, with WB being big among female viewers and UPN reaching many black viewers with hits like “Everybody Hates Chris.”
Combining those schedules while pleasing both audiences will be the balancing act of the season, Sternberg says. “Will they get the whole audience themselves, or will many walk away?”