Although political and the Summer Olympics bode well for local TV, there are a number of factors that will affect advertising in 2016, particularly in markets that don't have tight races. TV stations need to be ready for challenges like changes in ad agency operations and problems with collections, as well as maximize digital opportunities.
Political Just Part Of Mix For Success In 2016
The Presidential election and Summer Olympics are two good reasons to be optimistic about 2016 local TV ad revenues. In fact, Kantar Media’s Campaign Media Analysis Group (CMAG) is forecasting local stations will capture as much as 75% of the $4.4 billion that will be spent on political TV advertising.
But we all know that national estimates are not a good proxy for the situation in any given market, particularly when it comes to political advertising. An analysis by The Cook Political Report shows that more than 80% of the 2012 TV political ad spend occurred in just seven states.
Where are the hot markets for 2016? CMAG expects “Stations and (cable) systems in Boston, DC, Colorado, Florida, Nevada, New Hampshire, North Carolina, Ohio and West Virginia will be flooded with orders from some combination of presidential, Senate and governor advertisers.”
Of course there are a number of considerations that will determine just how much of the TV spend will be local and whether or not it is concentrated in these markets. As CMAG notes, they include such factors as “the number and location of likely competitive congressional races; the number and location of presidential battleground states; the total amount of money likely to be raised and spent in all races, including for governor; the proportion of total spending likely to go to TV; and how that TV ad spending is likely to be split between local and national, broadcast and cable.”
In discussing the outlook for Congressional and Senate campaign spending, the Cook Report said it expects “little or no growth in spending on statewide and House races” and nine “toss up” Senate seats, compared to eleven in 2012. In examining the 12 gubernatorial seats up for election in 2016, it finds only three “look competitive right now.”
There just aren’t any guarantees on how much political ad revenue any station will ultimately generate. That, combined with the knowledge that savvy media credit departments already have strict policies to ensure they comply with the laws regarding political advertising, is why MFM’s BCCA subsidiary, the media industry’s credit association skipped political advertising when preparing the agenda for its upcoming BCCA Media Credit Seminar being held October 8th in New York.
A station’s credit and collections managers may not be the first executives that come to mind when you want to get a handle on the coming year’s top challenges and opportunities. But they should be. Closely aligned with both the sales and finance departments, your credit and collections executives can provide the holistic view essential to ensuring your station maximizes its ad revenues by receiving prompt and full payment on the ad inventory it sells.
So what do the industry’s media credit executives view as the hot issues for 2016? Global economy makes it even more challenging to predict the outlook for consumer spending, which in turn will influence who will be spending more money on advertising next year. That’s why BCCA has asked Richard Hastings, a nationally recognized macro strategist at Seaport Global Securities, to advise Seminar attendees about the factors that are likeliest to affect ad-supported media in the coming year. Here’s the leader board based upon the topics they have selected for this year’s seminar.
1. Market Transitions Shaping New Roles at Ad Agencies – With most media buys being placed by ad agencies, it’s critical to align all aspects of the ad sales operation with the agency’s media buying needs, which are currently undergoing a tremendous transformation. As Havas Media’s U.S. CEO Lori Hiltz noted in an Advertising Age article earlier this year, “The collision of content and distribution is forcing mass advertisers to reconsider their go-to-market model.” Attendees will be hearing more about how changes are affecting the role of today’s ad agencies from three Havas executives participating in the Seminar’s opening panel.
2. Digital Media Sales Opportunities – Several sessions at the Seminar will follow on this agency discussion by delving into the changes media providers must make in order to seize the media sales opportunities created by these trends. They include a presentation by Eileen Sweeney, AR Manager for Outbrain, concerning the differences and similarities between the approaches toward credit and sales at a pure play digital media provider compared to TV stations and other cross-platform media providers.
Programmatic media buying represents one of the biggest transitions affecting digital media credit and sales. We will be shining the spotlight on best practices for synchronizing a media provider’s credit management and traffic and billing systems with these new services. In addition, we will look at how BCCA’s new automated Media Whys credit report can help to accelerate the turn-around time for credit approvals.
3. Financial Management Trends – Most media buys require the media provider to offer credit unsecured by a bank, a credit card, or collateral that can be turned into cash to satisfy the debt. This fact of media life means credit and collections managers must work closely with the ad sales department as well as the company’s finance and accounting department, which is responsible for monitoring and reporting the amounts of account receivables on the company’s financial statements.
With that in mind, the Seminar will include an update on the benchmarks used to monitor accounts receivables, including DSO – Day Sales Outstanding, led by Scott Jenkins, Senior Manager of TWDC Collections for ABC Networks/Disney Worldwide Services. We’ve also asked Deb Donaldson, VP & Corporate Controller for Bonten Media, to provide an overview on what credit managers should be looking for when they review a company’s financials.
4. Latest Bankruptcy Developments – No matter how thorough the credit check, there are going to be times when the client’s circumstances change and the company files for bankruptcy protection. Bankruptcy experts from Lowenstein Sandler LLP will discuss “The Changing Face of Chapter 11” using examples from Relativity Media and Filmed Entertainment (aka Columbia House). They will also provide an update on MDC Partners.
This one-day event will provide an opportunity for media credit professionals from across the country to come together to share ideas and best practices for the ever-changing media credit and collections function. To encourage those discussions, our closing reception is open to reception-only registrants as well as seminar attendees. The Seminar will also host a mini-expo for companies and organizations that support the industry’s credit and collections programs to provide updates on their products and services.
Thanks to the leadership of Robert (Bob) Warner, Director of Corporate Credit & Collections for Media General, who is serving as Chair of this year’s Media Credit Seminar, and our outstanding Seminar Committee, we have assembled a lineup of industry experts who are well-positioned to address these top-of-mind issues for the industry’s credit and collection professionals. We are also very grateful to our sponsors for their role in helping us to control the costs for this event. More information about the BCCA Media Credit Seminar may be found on BCCA’s Web site, at http://www.bccacredit.com.
We hope you’ll encourage your company’s credit professionals to join us for this important event. As you can see from the topics I’ve outlined above, the discussion will prepare you and your team for the obstacles and opportunities that can make 2016 a banner year for your ad sales operation, regardless of how much political advertising comes your way.