The Race Is On
1 Oct, 2007 By: Response Contributor ResponseOn every station, that is. Election 2008 and other challenges give media buyers a run for their DR dollars.
Get ready for a spike in media costs — a super-duper one.
Well into fourth-quarter 2007, direct response media buyers already feel the sting of upcoming presidential primaries. With no clear Democratic or Republican frontrunner and nearly 20 states advancing their primaries to February 5, a juiced-up "Super Tuesday," now dubbed "Super-Duper Tuesday" by news reporters and political pundits, means amped-up political advertising. Couple that with today's unsurpassed audience fragmentation, and the result is astronomical media expenditures on national cable stations, all the way down to the local network level.
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Will DRTV response rates in the new year compensate for rising media costs? If past quarters are any indication, 2008 will be a challenge. The year started off with mixed results. According to DRTV data collected from TNS Media Intelligence (TNSMI), the first quarter of 2007 saw a record-setting $930,632,100 in short-form media billings.
It was also the ninth consecutive quarter showing an increase in short-form DRTV numbers. However, at the same time, long-form media billings dropped 2.3 percent to $309,910,000 from first-quarter 2006. This was the first decline in long-form first-quarter billings since 2004. For its biannual "Media Buying and Planning Guide," Response met up with media masterminds behind all the buying and selling to get a scope on the 2007 wrap-up and prospects for next year.
On the Buying Front
Spot advertising is riddled with obstacles, but some would argue, equal amounts of opportunity. Costs are up, inventory is low and demographics are scattered. In recent years, brand (and now political) advertisers discovered targeted advertising and response rates. Now that the secret is out, so are the corporate checking accounts, and the highest bidders win.
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"Both second- and third-quarter have been extremely competitive for long form," says Eric Stanton, executive vice president for Arizona-based JBT Media Management. "Pricing has been very aggressive for both national cable and broadcast media. On the short-form side, audience levels dropped across many networks creating more ADUs for the stations to make up to meet projections, thereby limiting direct response inventory."
In addition to political and brand advertisers in the DR space, Stanton points to another culprit for price hikes.
"Direct response budget goals are at all-time highs for TV sales reps. On top of that, the major broadcast networks cut back their production budgets this summer and ran unaired episodes of programs that had already been canceled vs. developing new and innovative programs," he explains. "When the general rate dollars are down, stations and networks typically look to direct response to subsidize their total station budgets. Unfortunately, the end result is that the DR reps have much less flexibility and fewer opportunities to offer agencies as much bonus weight or rate reductions."
Overall, long-form pricing was consistent with 2006.
"Short-form tended to be tight again in both second and third quarter, while long form remained fairly steady," says Rob Medved, president and media director for Cannella Response Television, and a member of the Response Editorial Advisory Board. "The long-form cyclical trend of a strong January fading into less responsive subsequent months was again disrupted this year. Although January was strong, we saw better response in relation to rate in both February and March."
Despite the price hikes and complaints of waning consumer interest reported in last year's Response Buyers' Guide, DR experts are pulling victories and keeping their clients in the game.
"Euro RSCG 4D DRTV posted record quarters in 2Q and 3Q 2007 in both long- and short-form," says Tom McCabe, vice president of business development for San Diego-based Euro RSCG 4D DRTV. "Inventory was more expensive than expected, but strong response is responsible for Q2 growth."
On the Selling Front
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