Field Reports1 Mar, 2009 By: Thomas Haire, Jacqueline Renfrow Response
2Q Upfront Cancellations May Open the Door for DR Media Buyers
By Jacqueline Renfrow (email@example.com)
NEW YORK — Advertisers are indicating that they will cancel a large portion of their upfront TV buys in the second quarter due to the recession, reports AdAge.com. Buyers and media executives predict the cancellations to be as high as 12 percent, well over the typical 2 to 4 percent in cancellations seen during a normal second quarter.
In the 2008-2009 upfront, marketers committed $9.2 billion to broadcast TV networks and $7.5 billion to cable TV. Though some sort of "leakage" is always expected, estimates between 8 and 12 percent are abnormally high. And while cancellation windows are usually finished by mid-January, many media outlets and buyers are still in negotiations and could remain in them through this month.
Since most household TV ratings are down, advertisers may be pulling out upfront money in an effort to get better, last-minute deals later. Since networks have fewer ratings points to sell, advertisers need to buy more time in order to reach the same number of consumers, which means supply is tightening — even with the threat by advertisers that they might pull out.
Scripps Networks Interactive said that it expects to cancel upfront sales this quarter in the double-digits, as opposed to cancellation rates of 2 to 5 percent in the first quarter. A&E Networks is bracing for about a 10-percent second-quarter cancellation rate. And the desire for marketers and advertisers to keep money on hand may continue into the fourth quarter. News Corp. expects fourth-quarter cancellations to be about 11 percent.