As expected, with little political and no Olympics spending, national spot advertising sales are way down from the first quarter last year. But most anticipate a strong telecommunications sector and some see rebound in auto spending.
There’s just no getting around it: National spot sales are always tough in the first quarter. But this 1Q may win the prize as the most exasperating of all.
The problem? Deals have come in “maddeningly late,” says Chris Rohrs, president of the Television Bureau of Advertising. “Advertisers are signing off on budgets with their agencies later than ever. They’re considering their options until the last possible minute. It’s never been as late as it is now.”
Without the Olympics and heavy political spending this year, all recognize that 2007 will be a down year overall in national spot—off as much as 10% or 12% from 2006. And those grim figures certainly hold true for the first quarter, which is without the winter Olympics spending that was filling the vaults of NBC stations at this time last year.
But if you exclude revenue from political campaigns and the Olympics from the equation, spots watchers and station reps believe the first quarter—and perhaps the rest of the year—will match last year’s take. In other words, core spending will be flat, just as it was in the fourth quarter of 2006.
“There’s a silver lining” this time around, says Val Napolitano, president and CEO of Petry TV. Spending by telecommunications companies is picking up some of the slack in the automotive sector, Napolitano says.
What’s more, the quarter is one week shorter this year than last year. “That one week is an 8% loss,” Napolitano says. “So if we’re flat, we’re really ahead.”
No matter how you slice it, buyers definitely feel they have the leverage. “We see a lot of room for negotiating in national spot,” says Mary Barnas, executive vice president and director of local broadcast for Carat USA. “It’s a good year for our clients.”
TV reps indicate that the movie business could be off as much as 8% over the same quarter last year. Packaged goods will continue its downward slide, ending up down somewhere between 5% and 15%. Fast food could be flat, at best, or decline as much as 7%.
There seems to be no consensus on two key categories—auto and telecommunications. Some believe auto may be down as much as 10% in the quarter; others, that it could actually tick up a few points.
Leo MacCourtney, president and CEO of Blair TV, is among those who predict a significant drop and he attributes much of it to the fact that the auto makers were “big Olympics advertisers” last year. However, he adds, he expects the domestic manufacturers to pick up their spending as the NCAA men’s basketball tournament kicks in on the CBS stations next month.
Rohrs is more optimistic, predicting that auto spending will be up low-single digits in national spot for both the year and the first quarter. Later this month, Toyota is introducing its first, full-sized truck, the Tundra, he says. “That will touch off a full-fledged truck war that will go through 2007.”
Expectations are even more polarized in the telecommunications sector. Some reps say their business could be up as much as a 50% in the quarter compared to 2006.
“We used to say that that automotive drives the business. But now it’s telecommunications that’s ringing the bell,” says Michael Spiesman, president of Continental Television Sales, which is part of the Katz TV Group and represents stations in middle or small markets.
Others are not so enthusiastic, expecting a flat scenario, or at best, only a 2% gain.
Jack Myers, publisher of the Myers Media Business Report, notes that the fluctuation in the projections may boil down to geographical differences. “Where AT&T, T-Mobile and Verizon compete, spending will be greater. Where AT&T and Verizon are going head to head with Comcast and Time Warner, spending will be greater,” he says.
Some reps are also anticipating that AT&T will vastly increase its spending, as it promotes the rebranding of two new assets: BellSouth and Cingular.
While the retail category showed double-digit declines in both the third and fourth quarters, rep executives are much more positive for the first quarter, with predictions hovering between a drop of 2% and a gain of 5%.
There are two factors offsetting the long-term trend of retail dollars shifting from spot to network: Wal-Mart is moving dollars from local to national spot, and retailers on the whole are advertising with an eye on consumers who have holiday gift certificates to burn.
The financial category is also exhibiting some growth, with most expecting gains for 4% or 5%. That’s thanks to the perception that consumers have a lot of discretionary money to spend, and that homeowners are making the shift from variable to fixed interest rate loans, the reps say.
Most believe that the first quarter will be the toughest for core spot sales. Among them is Bill Spell, VP of sales and marketing for Cox Television. “I would agree with the statement that the first quarter will be our biggest challenge,” he says. “But we have a saying here: ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“Hope is a terrible business plan.’ “