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As TV networks pitch shows, advertisers seek flexibility
May 14, 2015 / 9:53 PM / 2 years ago

As TV networks pitch shows, advertisers seek flexibility

May 14 (Reuters) - Madison Avenue executives will bring a tough message when they sit down with broadcasters during their annual spring bargaining sessions over the next few weeks.

The need for flexibility - to place an ad on the fly, not months in advance - is driving advertisers to carve more money from upfront television budgets and direct it to online, mobile and social media, several ad executives said.

“Every client is looking at ways to deliver reach in other media channels,” said Barry Lowenthal, president of The Media Kitchen.

“I don’t think anybody assumes that TV budgets are going to look like what they did last year.”

Every May networks showcase their best TV programs to get advertisers to commitment a bulk of their budget in advance. Media buyers and networks will sit down over the next several weeks to hash out deals for the fall-to-spring TV season.

But digital advertising is proving to be an enticing alternative since ads can be directed to desired audiences in a matter of minutes.

“We ran a social campaign on Instagram and the post got 172,000 likes,” Lowenthal said. “Probably more people saw it. That is bigger than a prime time cable rating. If I can buy that kind of engagement why wouldn’t I?”

Last year TV advertising grew almost 4 percent while digital advertising increased almost 19 percent, Standard Media Index estimated. The pace worsened during the first quarter compared to the same period in 2014 when the Olympics took place: TV advertising fell 6 percent, while digital advertising rose 23 percent.

“The idea of flexibility is more important to marketers than just about any other element of the marketing mix,” said Jason Kanefsky, executive vice president of strategic investments at Havas Media North America. “It’s one of the reasons digital has come along as far as it has.”

Television still represents the largest slice of advertising revenue but digital advertising is growing quickly, chipping away at TV’s dominance. Estimates from research firm eMarketer show that advertisers are expected to spend $70.6 billion this year on TV and $58.6 billion on digital media including mobile.

One media buying advertising executive said that while the percentage shift is small, it is continuous. A steady decline of the overall billions committed to television of 1 to 2 percent over several seasons starts to add up, she said.

“The networks are acknowledging the model is different,” Kanefsky said, adding that they are all talking about big data that will help advertisers target more directly.

However, the networks are still unwilling to talk about upfront flexibility. “That is holding back upfront dollars,” he said.

Reporting by Jennifer Saba in New York; Editing by Richard Chang

Our Standards:The Thomson Reuters Trust Principles.
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