As the advertising association prepares to announce its choice of a new leader, its annual Forecast Conference yesterday made it clear that there’s plenty to be done. First is reversing the erosion in spot TV’s share of the car dollars. Also a priority is keeping poltical ad dollars at TV stations and out of cable.
The board of the Television Bureau of Advertising has settled on a replacement for Chris Rohrs, who is stepping down as president of the trade group at the end of the year. But it was not quite ready to make the introduction at the TVB Forecast Conference in New York yesterday. It had something to do with squaring things with the current employer.
But I hope he or she quietly attended the annual event. The challenge the new boss will face was clearly set forth by the series of speakers.
The reports were encouraging, but not great. We may have hit bottom on the recession, Standard & Poor’s economist David Wyss told the assembled broadcasters, but we’ll spend the next several months “bumping along the bottom” as we begin a long, slow recovery.
According to Wyss, the housing market that led us all into the economic abyss is stabilizing and credit is much looser than it was just a few months ago.
However, the heart of the U.S. economy is consumer spending and most folks are being rather stingy right now, he said. They are paying down debt and, most untypically, saving money, he said. “I still don’t think consumers are out there spending their hearts out.”
Certainly not on cars, which is (or was?) the No. 1 ad category for broadcasters.
Phil Brady, president of the National Automobile Dealers Association, said that only between 10.1 million and 10.4 million light vehicles will be sold this year, down from 13.2 million last year and 16.9 million just four years ago.
But as Wyss said, this year is the bottom. Sales will rebound to 12 million units next year and 15 million in 2012 — about where they were in the late 1990s, Brady predicted.
To a large extent, auto ad dollars are a function of vehicles sold.
Jon Swallen, of TNS Media Intelligence, said total automobile ad spending has plummeted from $20.2 billion in 2004 to a projected $9.8 billion this year. What’s worse for stations, stations’ share of the dwindling pie has already gone down this year — from 26 percent to 18 percent. And it’s not new media encroaching on the stations, but the broadcast and cable networks.
The increasing vehicle sales that Brady talked about over the next few years will restore many of the lost ad dollars, but there is no telling whose pot they will end up in.
Job One for the new TVB president will be to reverse the erosion in spot TV’s share of the car dollars.
The news was better on the political advertising, another key category.
Evan Tracey, another speaker from TNS Media Intelligence, said that current trends are likely to continue and that’s good for television. Candidates, parties and advocacy groups will spend more money and most of it will go to TV.
“Don’t fear the Twitter,” Tracey said. The Internet, with all of its blogging and social networking, is unlikely to cut into TV’s share of the political dollars in any meaningful way.
The Internet is great tool for fundraising, he said, but not for persuasion, getting people to the polls and getting them to push the right buttons (or pop the right chads or whatever).
Tracey said the political category could generate $1 billion this year with all the fuss around health care and cap-and-trade legislation, and it could more than double to as much as $2.6 billion next year when 37 state houses and a third of the Senate will be up for grabs.
In the political world, the threat comes from cable. The Cabletelevision Advertising Bureau has been out there trying to convince political media consultants that it’s smarter to spend money with local and network cable than with TV stations.
In fact, Tracey noted that much of the early advocacy money this year has gone into national cable. Nonetheless, Tracey also said that stations should do well when the lawmakers get down to the short strokes on legislation. Groups will then want to target individual senators and representatives and the best way to do that it through spot TV.
TVB, I am happy to report, has already recognized the threat. Executive Vice President Abby Auerbach announced that the TVB has formed a task force of reps, broadcasters and staff to counter cable’s pitch. Once TVB gets the research and presentation together, task force members will begin making calls on the political consultants.
It’s a good move. This is money that stations and the incoming TVB regime cannot allow to slip away.
Now to the bottom line.
Even with the expected increases from the auto and political sectors and the worse comps in memory, TVB forecast that total station revenue will grow between 3.6 percent and 6.1 percent next year. Not much when you figure that so far 2009 is down 26 percent from last year.
Those are not the kind of numbers that are going to bring new money into the business or provide assurance to lenders.But it’s a start on the long road back. Let’s hope the new president is up for the journey.
Harry A. Jessell is the editor of TVNewsCheck.You can contact him at [email protected].