Ad spending on broadcast TV takes a tumble
Fall's No. 1 network, NBC, is ahead of the rest on three nights
October 28, 2016
A handful of new shows are off to a promising start on broadcast this fall.
But unfortunately, while ratings may be decent, ad spending is not.
The TV season got off to a rough start in September, with broadcast spending down 13.2 percent compared with last year.
That’s according to Standard Media Index, which analyzes 70 percent of total national U.S. agency spend exclusively from media holding groups and large independents.
It found that a single category is behind a great deal of the declines. Fantasy sports sites FanDuel and DraftKings had been advertising heavily on television until earlier this year.
But, facing legal challenges in several states, they’ve cut way, way back on ad dollars.
Versus last September, the two companies have spent almost $100 million less on cable and broadcast.
“The daily fantasy sites are facing a number of very significant lawsuits that will result in substantial fines and had threatened their very survival,” notes James Fennessy, CEO of Standard Media Index.
“The restrictions that lawmakers will impose on them will make their life a lot tougher, and the extraordinary amounts they advertised last year is unlikely to ever be repeated due to the guidelines they must now operate within.”
Primetime ad spending was down 16 percent in September, and the average cost of an ad, excluding sports, tumbled from $93,300 last year to $86,000. That’s a 7.6 percent drop.
Things may not get any better as the fall goes on. Fennessy says low ratings for the NFL will result in makegoods having to be issued for both Sunday and primetime games if the numbers don’t improve.
That means the networks will have less inventory to sell, because they’re setting it aside for football advertisers.
“Soft ratings for the start of the NFL season are leading to an increase in the makegoods the networks are running as they begin to pay back the guaranteed impressions they have promised advertisers,” he says.
“We think that this will influence midseason revenue and average unit costs for the networks. We will start to see these numbers in the coming weeks.”
The losses come after robust spending during August on the Olympics. That buoyed broadcast to its best level in years.
Elsewhere during September
Digital led the overall gains in September, with an increase of 14 percent vs. last year. That included a 44 percent jump in social and a 30 percent rise in video.
Internet radio also saw a healthy 21 percent bump.
But traditional media suffered, as usual. Magazines were off 14 percent, newspapers down 26 percent and radio off 3 percent.
Out of home was the only traditional category to rise, up 8 percent.
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