The Telegraph
Since 1st March, 1999
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Ad spending poised for growth

Los Angeles, Aug. 27: Advertising spending is showing unexpected vitality in a lackluster economy, led by broadcast television networks that have hiked their rates by about 10 percent since early June.

Last month, some analysts voiced concern that advertisers would become skittish after the stock market plunge in July, followed by the financial collapse of WorldCom Inc., whose MCI telephone service is a leading advertiser. They predicted that some advertisers would cancel or scale back on orders placed during the spring for commercial spots on network TV.

“There’s more money coming into the market—it’s amazing,” said Bill Cella, chairman of Magna Global USA, which negotiates ad packages with networks on behalf of advertisers. “Advertising recovery usually comes two quarters after a recovery in the general market. But it seems like a total reverse here.”

The outlook appears to be improving across several media sectors. CMR, a unit of Taylor Nelson Sofres, which tracks ad spending, reported Monday that advertising spending for all media was down just 0.2 per cent, to $ 53.7 billion, during the first half of 2002, compared with a year earlier.

Spending in network TV is up dramatically. The six major broadcast networks booked a record $ 8.1 billion in advertising commitments for the prime-time TV season that begins in mid-September.

According to four key ad buyers, advertisers have been reaffirming those orders placed during the so-called “upfront” sales season in late May and early June, when about 80 per cent of the network’s prime-time inventory is sold. In some cases, advertisers who wanted to expand their orders were told they would have to pay the price.

“If the networks extended the orders, they did it at a higher price,” said Tim Spengler, director of national broadcast for Initiative Media which handles network TV advertising for Home Depot Inc., Bayer Corp., Bell South Corp. and Coors Brewing.

Mike Shaw, ABC’s president of sales and marketing, confirmed Monday the network’s rates have climbed along with competing networks since the upfront sales season closed in early June.

Rates for all of the networks have jumped by about 10 per cent since June, TV executives said, with some increases to new advertisers as high as 25 per cent above the rates set during the upfront, according to WB executives.

The first two regular season games of ABC’s ‘Monday Night Football’ are sold out, Shaw said. CBS and Fox Broadcasting Co. executives said they’ve sold more than 85 per cent of their spots for weekend National Football League telecasts for the entire season. And CBS executives said advertisers have expressed interest in college basketball, which doesn’t start until December.

“It’s prime-time, daytime, news, sports, kids programming. All of the day-parts seem to be healthy,” said ABC’s Shaw. “This is broad-based strength.” According to the CMR report, Spanish-language broadcasting posted the greatest increase, 26.7 per cent for the first half of 2002.

Radio and newspaper industry also showed gains. Radio advertising moved up 7.5 per cent over last year, and spending in newspapers increased by 6.3 per cent.

I don't feel there’s any less interest in Nasdaq, either in the US or globally. People still believe in a lot of the major companies in our market. They may be wiser and may ask a lot more questions about valuation than they used to. But they still believe in them.

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