June 7th, 2006

The Accelerating Pace of Change in Advertising

by

A few weeks ago the ad industry was predicting that the 2006 TV upfront would hold flat — things are changing, but not that fast. Let me requote:

The 30-second spot, maligned as it is, “still works, despite TiVo and clutter,” says Andy Donchin, director of national broadcast at media-buying firm Carat North America. “[Let’s] stop talking about how the upfront is broken. It works for clients, it works for networks, and it works for agencies.”

“I see TV budgets holding,” says Heather MacPherson, a managing director of ad giant Ogilvy & Mather. “Most of the shift [to the Web] is coming out of print.”

“Overall, we are thinking flat,” says Betsy Lazar, who as executive director of advertising and marketing operations for General Motors (GM ) oversees one of the nation’s largest ad budgets.

No need to worry — it will surely take a while for the house of cards to collapse.

But today, just a few weeks later, we learn (from MediaPost):

THE REALITY OF THE UPFRONT is now clear and financially brutal: Program prices for many broadcast networks will be lower than year-ago upfront deals–an event that hasn’t happened in a number of years.

In a slow-moving market, about 20 percent of network inventory has been sold so far to advertisers, with CBS, Fox, CW, and NBC making deals late into Tuesday evening, according to media buying and selling executives.

Contrary to earlier reports, pricing is much lower than first assumed, with most deals lower in price than the upfront of a year ago. For example, CBS’ cost-per-thousand viewer prices (CPMs) are 1 percent below last year, say media buying and selling executives. Fox is registering flat pricing versus a year ago, while NBC will take a mighty hit, dropping anywhere from 5 percent to 6 percent in CPMs versus a year ago. The CW is posting CPMs about the same as WB prices last year.

“It’s slow, real slow,” says one veteran media-buying executive. “Agencies are in one place and networks are in another. The money is just not there. The market is much closer to negative than people think.”

I’ve made many predictions about radical change to media and advertising economics (here, here, here and here, for example).

No, no, I’m told — change won’t happen that fast.

Don’t be so sure.

Comments (6 Responses so far)

  1. presence of advertising online.  More pertinent to online advertising, particularly advertising to social networks that are forming, growing or shifting, are the points outlined in the last excerpt, which we found on Netanel Jacobsson’s Net. blog.The Accelerating Pace of Change in Advertising

  2. presence of advertising online.  More pertinent to online advertising, particularly advertising to social networks that are forming, growing or shifting, are the points outlined in the last excerpt, which we found on Netanel Jacobsson’s Net. blog.The Accelerating Pace of Change in Advertising

  3. TechCrunch » Blog Archive » Pubsub Implosion Blog search engine PubSub had massive layoffs today after last minute merger discussions with knownow fell apart. It looks like a shutdown is imminent.Publishing 2.0 » The Accelerating Pace of Change in Advertising the ad industry was predicting that the 2006 TV upfront would hold flat — things are changing Jon Udell: On business/education partnership Open source software development, as a profession, is an early adopter of a work style that can also

  4. Saying that there’s a downwards trend is one thing, but can you honestly call a 1 percent decline in CPM “financially brutal”?

  5. [...] I’ve been predicting for a while that the TV advertising house of cards would collapse, and McKinsey just huffed and puffed and predicted (to its big Fortune 100 advertiser clients) that “by 2010, traditional TV advertising will be one-third as effective as it was in 1990″ (from AdAge): That shocking statistic, delivered to the company’s Fortune 100 clients in a report on media proliferation, assumes a 15% decrease in buying power driving by cost-per-thousand rate increases; a 23% decline in ads viewed due to switching off; a 9% loss of attention to ads due to increased multitasking and a 37% decrease in message impact due to saturation. [...]

  6. TV advertising won’t collapse less all the TVs in the world disappear.

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