Discounting Political, ’11 Spot Rev To Rise 4%

Expectations for the TV spot in 2011 are slightly more positive today than they were six months ago, although the optimism is tempered by concerns about how the crises in Japan will affect one of spot’s largest advertising sectors, automotive.

That’s the consensus of TVNewsCheck’s March survey of major TV station group sales executives, station reps and top media prognosticators BIA/Kelsey, SNL Kagan, Veronis Suhler Stevenson and ZenithOptimedia.

Total spot revenue will drop 6% compared to last year when political advertising flooded in, according to the survey. But when the biennial political dollars are factored out, so-called core spot will grow 4%.

The forecast is in line with the TVNewsCheck’s original forecast for 2011 posted last September. The consensus of that survey was that total spot would decline 6% while core would grow 3%, a percentage point less than the current forecast.

A stand-out first quarter is responsible for the improved outlook in core. Citing TVB’s historical numbers, one executive predicts that the quarter will be the first in a decade to see growth in national core in a decade.

“Assuming the Japanese nuclear situation doesn’t escalate, it would not be unreasonable to expect the auto category to see a 5% to 7% increase in ad expenditures in 2011, with the largest increases falling in the back half of the year,” adds Jim Beloyianis, president of Katz Television Group in speaking specifically of national spot. 

“Remember, auto did not have [full] access to station inventory the last half of 2010 as a result of the huge political advertising expenditures,” Beloyianis says.

Kathleen Keefe, VP of sales for Hearst Television, predicts that auto will move up 15% to 20% this year when local and national are combined.

Two other strong categories are telecommunications, which Keefe expects to improve high-single-digit to low-double-digit percentage points this year, and retail, which she predicts will be up a more modest 6%.

But the serial Japanese disasters are a real cause for concern for some. “If projected [auto] sales start to drop back to 12 million-12.5 million units due to lack of inventory, spot could be impacted 1% to 2%,” says Val Napolitano, CEO of Petry TV.

Napolitano points out that auto sales had been projected to reach 12.5 million-13 million units this year, up from about 11.5 million units in 2010. Because auto ad spend is tied to the number of vehicles sold, sales forecasts are closely monitored by TV salespeople.

Steve Gibson, SVP and CFO of Allbritton Communications, notes that because his group developed new business in other ad sectors when the auto business tanked during 2009, it is less reliant on auto today. The category shrank from a 26% share of total revenue in fiscal year 2006 to 17% in 2010 at Allbritton, Gibson reports. Nonetheless, he says, he’s confident that the auto category will be “outsized” this year.

Mark Fratrik, a VP at BIA/Kelsey, believes that the decline in total spot in 20011 will be steeper than the consensus 6%. He predicts it will be down 10%, citing the unusually strong political advertising last year.

Because political advertising involves a four-year cycle, 2007 is the best point of comparison for 2011. Both ’07 and ‘11 are before presidential election years and their fourth quarters butt up against early primaries.

In 2007, total spot was down 5.5% versus 2006, when it grew 8.5%, Fratrik says. “In 2010, there was much more political coming into the TV marketplace, and total television advertising [spot] revenues increased nearly 23%,” he says.

Napolitano is among those who believe 2011 will enjoy a healthy uptick of political advertising in the fourth quarter.

“The political category will be almost double what it was in ’07. The entire House is up for reelection next year, and several states will have very competitive Senate races, in addition to the primaries tied to the presidential race,” he says.

Napolitano notes that in 2007, political advertising represented 2.7% of gross billings in spot, and in ’09 the share doubled to 5.5%. And he expects the category could move up another 30%, to more than a 7% share this year.

Hearst’s Keefe holds a different perspective. “I don’t expect 2011 to be as strong as 2007, because in 2007 we had two parties wide open [vying for the presidency]. I can’t believe [a Democrat is] going to take on Obama directly for the presidential nomination.

“However, the Republicans have a wide-open field, and with all the different factions within the Republican party, it should be very interesting,” she says. “Our station in Iowa keeps us pretty well posted about who’s coming out there, and there are a lot of people.”