• by Wayne Friedman , September 16, 2005

Just days before the official start of the new season, network advertising executives are reporting some slightly bullish sales news. But at the same time, other media agency executives are calling for caution in the weeks to come.

The first indication comes from the process that converts advertisers' commitments, or "holds" made in the upfront, into orders. "There has been almost zero breakage--best I've ever seen--and a number of advertisers have been adding to their upfront [buys]," said Jon Nesvig, president of advertising sales for Fox Broadcasting Co. Typically, "breakage" is what happens when advertising commitments are dropped by the time the fall season begins--which officially starts in a week and a half.

Customarily, 1 percent to 1.5 percent of commitments made in the upfront market are dropped by the time the season begins. At a $9 billion broadcast network prime-time upfront market, this would translate into breakage of $90 million to $135 million.

While there is little breakage, another network executive said some advertisers are slow in converting to orders.

"Given the economy, everyone is a bit anxious," said Lyle Schwartz, senior vp of media research for Mediaedge:cia. "I've heard advertisers questioning the marketplace. What I'm led to believe is that holds-to-order are going slow."

Increasingly, media buying and selling executives say advertisers are moving into a "just in time" mode of business--that is, making decisions at the last possible moment to give them the best options. This means making ordering decisions days before the season officially commences in a week and a half.

Meanwhile, advertisers are finally grabbing what they can in the always tight closing days of the third-quarter scatter market. "We've got a nice $2 million in business in the last couple of weeks," reports Bruce Lefkowitz, executive vp of advertising sales for Fox Cable Entertainment.

Early returns for the fourth-quarter scatter market have some broadcast networks seeing positive signs.

"It's early, but we are pacing some 15 percent above last year at this time for the fourth-quarter scatter business," said a network advertising sales executive who wouldn't be identified.

Media buying and selling executives said that kind of money is probably headed to a network such as NBC--all because that network is cheaper and not as well sold as the other networks.

A mediocre upfront market has led many to estimate that advertisers have been holding back money--dollars that would be coming into the scatter market starting in a few weeks. Steve Grubbs, CEO of PHD North America, said: "It should be firming up."

Some media buying executives say all this may change in the months ahead.

The economy is an anxious mode, said Schwartz, because of rising fuel prices and the ripple effect of the Hurricane Katrina disaster on the Gulf Coast. That could have an effect later in the season.

"It may not bother the holds, but it may bother what happens later in the scatter market," said one media agency executive.