Response Magazine Site Response Expo Site Direct Response Market Alliance Site Job Board


   Log in

Everything Old Is New Again

1 May, 2009 By: Jacqueline Renfrow Response

Media buying in a recession means taking another look at the power of direct response.

Cable's Industry Niche

While buyers are making the most of advertisers' waning dollars, television networks are making adjustments to keep advertisers buying. According to ad sales experts, the networks, especially cable, still have competitive prices and are booking media — even if it's in the scatter market — thanks to niche programming and DRTV.

Cable is responsible for a growing portion TV ad market. And the number of cable subscribers continues to grow — up 2 million customers in 2007 and 1 million more in 2008. During the 2008 upfront, cable posted a CPM increase of between 5 and 10 percent and ended the year earning $26.6 billion, the highest revenue-generating market in media. Broadcast TV was not so lucky, dropping 3.5 percent, earning $22.1 billion in ad revenue. Even Internet revenue fell 6.4 percent.

Advertisers spent $1.4 billion on kids' programming in 2008, according to TNS Media Intelligence, and more than 90 percent of this went to cable networks. It seems in the category of children's television, the market has remained rather stable due in part to its key advertisers: movies, videogames, fast-food restaurants and discount retailers. Dollars in this year's kids upfront ad buys are expected to be about flat with last year's $850 million. But in this economy, flat isn't half bad.

For example, ABC Family is booking committed advertisers around family and children's programming. Teja reports that the network has only seen minor increases in drop-off rates from the upfront — from a historic perspective — and what is left in inventory can be resold in the scatter market. Teja does not predict an increase in drop-offs in 2009 and credits this to ABC Family's outstanding programming and the range of advertisers.

"We have a multitude of advertisers, so we're not as affected by losing automotive or financial advertisers," says Teja. Advertisers on the cable channel include package-goods and QSRs (smaller restaurants), both of which are holding up well. In addition, Teja does not anticipate an increase in the number of time slots for long-form paid programming because, he says, "We have quality programming we want to air." However, there have been adjustments to rates for long-form due to the economy.

ABC Family's ratings are up in 2009, and it is a top-five network across key demographics, which is what Teja says makes it a good ad buy. "We are doing well, considering. In short-form, more guaranteed rates are clearing, whether inventory is tight or open, and that's worked well for many advertisers," he says. In long-form, the network doesn't have an incumbency policy, so that allows flexibility for networks and agencies.

Still Teja credits DR as a strong force in the company's resiliency. "There's not a whole lot of people backing away from buying these infomercials — the industry is healthy," says Teja. "The bright side in these economic conditions is more emphasis on ROI, which is positive for the DR industry."

Other cable networks, such as Lifetime, are experiencing similar situations when it comes to media buying and planning. And Michael Lyons, vice president of ad sales for Lifetime Networks, describes the current situation as not that dire, when you look at the industry as a whole over the past decade.

"The past couple of years, the option rate was really low, clients didn't cut a lot of inventory," he says, citing a strong recent market. "Now it's higher, and more options are being taken at the last minute." While there is always a portion of the market that is optioned, the percentage has been low in recent years because the economy and market were strong.

Michael Lyons also refers to renegotiations as a new trait in the media buying and planning business that sprung up in the past decade when markets were strong and advertisers had the power to ask for better deals. "Now the business has changed, and you see these types of things, such as calling back and renegotiating. But it was unheard of 10 years ago."

In addition, he reports that there were enough scatter dollars and DR was healthy enough to cover any cuts made in the second quarter at Lifetime. Plus, the health of the types of niche advertisers on Lifetime has contributed to the cable network's success. Similar to ABC Family, Lifetime reports that there is not a change in the amount of media time segmented for DRTV. However, Michael Lyons has seen more advertisers move into the DR space. "Clients who have never used it are testing it — and are happy with it," he reports.

Turner Broadcasting's CNN also sees the current times as an opportunity. "The media business itself has more customers than ever before. More people are using media, even in a recession," says D'Alba. And that translates to more people buying media, he adds. "If you look at the space in the first quarter, many TV networks and media companies have been pleasantly surprised. The scatter may be breaking later, but it is breaking and — lo and behold — the response mechanism has never been stronger."

D'Alba attributes a lot of this to direct response, and, as he puts it, "It is not our parents' direct response anymore." He cites the recent merger of Turner's direct response network groups into one sales and marketing unit, run by Jason Baron, vice president of direct response, Turner Broadcasting, which he says has given the network a lot of leverage in the marketplace and the ability to represent all demographics.

Media buys are being placed closer to the start date, but D'Alba says this might be a shift in media buying that works and sticks. "If there is a longer buying cycle, there is more inventory to buy more strategically," he says. "Then we'll all see our business grow at the end of the day." Perhaps, it just took challenging times like the recession to make changes for the better.

1 2 3 

Add Comment

©2017 Questex, LLC. All rights reserved. Reproduction in whole or in part is prohibited. Please send any technical comments or questions to our webmaster. Contact Us | Terms of Use | Privacy Policy | Security Seals