Toyota Boosts Networks, But Upfront is the Real Boon
The company announced that the first refashioned 2012 Camry was rolling off the assembly line Thursday and referred to it as "America's Car." Tagline! Massive national campaign to follow?
Hold it. Toyota's shares were trading down 4.5% amid another rugged day on Wall Street. Other large advertisers such as Ford (7%) and Macy's (7%) fell notably, too. (AT&T and Procter & Gamble were down much less, and Target had little trouble after expressing bullishness to analysts.)
So, the Toyota press release was being forwarded as the CNBC ticker offered a sense of doom on the office TV.
Networks need to worry, right? Share prices fall, companies cut back on marketing first, no?
Actually, even as executives might have personal portfolio issues, things should be fine at work.
Just need to get to Oct. 1 and all should be smooth until President Obama's new economic plan to be released next month turns things around by New Year's.
On one level, it's not exactly clear if the market ripples really mean companies are suffering or it's the Wall Street undercurrents that can send shares plummeting even with an impressive 10-Q are in play. The bet here is this is more about large-investor machinations.
Nonetheless, networks are in the clear because they won the upfront. Taking advantage of strong demand, they sold large chunks of their inventory - CBS CEO Leslie Moonves tossed out an 80% number - meaning exposure to any advertising pullbacks won't come until at least January.
That's when dollars could be pulled out of the market if marketers exercise options and cancel commitments. From October through the end of the year, the big money they've promised is pretty much firm.
If 80% of a broadcast network's inventory is indeed accounted for in the fourth quarter, that's enough to boost demand even in tough times.
Marketers could cancel some buys now, but after last week's Wall Street turmoil, Lee Doyle, CEO of MEC North America, told MediaPost there had not been any "drastic reaction."
Indeed, as Doyle indicated, any ad market troubles tend to come after the economy bumbles because of buys placed far ahead in many media. Nomura analyst Michael Nathanson hammered home how safe and successful networks should be from October to December on Wednesday, while altering predictions for ad revenues at the Scripps networks. He suggested that in the current quarter there would be more softness than expected -- increases of only about 10% -- followed by a "bouncing back" in the fourth quarter as the upfront monies come.
So, to harken back to another Toyota tagline, at least for now "Oh, what a feeling" is apropos on the sales side.