[opendtv] News: Nets taking smaller piece of the advertising pie

August 29, 2005 12:00am
Source: Advertising Age

If network TV's second quarter is any indication, its future growth 
prospects are as flat as its screens.

A slew of separate industry data out last week showed ad revenue for 
the period was flat to down on last year. While the Olympics and the 
presidential election skewed comparisons with 2004, all trends point 
toward the flattening of ad growth for the big broadcasters. Decline 
is a distinct possibility in the longer term, too, and one report 
suggested total TV spending will fall almost $1 billion this year.

What's more, TV's share of the marketing pie is shrinking. While 
major marketers have spent more this year than in previous years-SEC 
filings show General Motors Corp., Yum Brands, Colgate, Gillette and 
Campbell Soup Co. all upping second-quarter marketing budgets-the 
extra money isn't filling network TV companies' coffers.

Brian Wieser, Magna Global's director-industry analysis, said last 
week when all the tallies are in, he expects the quarter will be up a 
mere 0.2% for network TV as a whole. Media investment bank Veronis 
Suhler Stevenson issued its annual Communications Industry Forecast 
in which it predicts minor growth in ad spending for broadcast TV in 
2005, just 1.9%. That report also projects that by 2009 broadcast 
networks will see a decline in their overall share of the total 
advertising pie from 22% in 2005 to 20.4% in 2009.

The Broadcast Cable Financial Management Association, which reported 
actual TV network revenue last week, said ad revenue for ABC, CBS, 
and NBC were down 1.8%, from $2.9 billion in the second quarter 2004 
to $2.85 billion for the second quarter 2005. (Fox does not report 
its numbers to the industry body.)

Also chiming in was the Cable Advertising Bureau-which compiled 
figures provided by PricewaterhouseCoopers, National Cable TV 
Association, Universal McCann, Veronis Suhler Stevenson and Wilkofsky 
Gruen Associates-predicting total broadcast spending this year will 
drop $800 million to $18 billion while network cable will rise from 
$13.6 billion to $14.8 billion over the same period.

SLOWDOWN FACTORS

The broadcast upfront for the 2005-2006 season also saw a fall-off 
from last year. Estimates of advertisers' commitments put the drop 
off at between $100 million to $300 million to $9.1 billion.

Veronis cited ad-skipping technology and increased competition from 
cable and the Internet as factors in slowing growth rates. Total 
spending on broadcast TV will rise from $43.1 billion in 2004 to 
$43.9 billion by the year end. Another reason broadcast TV will be 
hard pressed to grow: Pharmaceutical and food marketers are facing 
government pressure to change advertising tactics, and most experts 
expect that will prompt these players to cut broadcast TV ad spending.

Veronis predicts the consumer Internet segment will increase its 
share of overall ad spending from 6.3% to 10.8% by 2009. Ad spending 
on the Internet is expected to rise from $9.6 billion in 2004 to 
$12.6 billion in 2005, a much faster growth rate.

<<Advertising Age -- 08/29/05>>

<< Copyright ©2005 Crain Communications Inc. >>
 
 
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