Spot TV Ad Market Showing Better-Than-Expected Traction

With the TV industry scheduled to meet today in New York City for its annual ad forecasting conference, buyers say the spot TV market is showing signs of better-than-expected advertising demand.

Comparisons to 2002 were expected to be pretty tough, as the Winter Olympics in Salt Lake City and a banner political season boosted local television's ad revenues. But after weathering a poor economy and the war in Iraq, at least one indicator is showing that spot TV is on the upswing.

July's ad spending rose 8% to $1.51 billion compared to the same period a year ago, according to data from Nielsen Monitor-Plus. Year-to-date spending grew 4.95% to $11.08 billion compared to the same point in 2002.

July & Year-To-Date Spot TV Ad Stats

July    Year-To-Date 
Commercial Units(:30s) +0.2% +0.4%
Spot TV Ad Dollars +8.1% +5.0%
Cost Per :30 +7.8% +4.4%
Spot TV Advertisers +1.5% +2.5%
Avg. Spot TV Ad Budget +6.5% +2.3%
Source: Nielsen Monitor-Plus
*30-second spots.

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Few buyers doubt that the local broadcast television ad market is recovering, but the pace of that recovery has been a little spotty, with inventory and pricing tighter in some parts of the country and not as good elsewhere. Buyers identified Los Angeles, Atlanta and the rest of the Southeast and Dallas as particularly hot. Other areas, including New York and the Midwest, are lagging. There seems to be more short-term buying. And some categories, particularly automotive and fast food, may not be picking up the pace just yet.

Pricing in the hotter markets seem to be up over 3%, according to an informal survey of buyers. In other markets, pricing is either flat or very slightly up.

"It looks like we're experiencing a healthier year-to-year situation as opposed to last year's fourth quarter," said Lynn Cortelezzi, director of local media at Empower Media Marketing in Cincinnati.

Maribeth Papuga, senior vice president of local broadcast at Mediavest in New York, said Tuesday afternoon that she felt there was a recovery under way but that it wasn't progressing as quickly as some, particularly the local stations, might have predicted.

"I don't think the market is going to take a southward turn, but it's going to get progressively better," Papuga said. She didn't predict that the fourth quarter was going to be on fire but a recovery in spot TV would move forward in 2004, aided by tightness in political spending market-by-market as the primary season progresses.

Cathleen Campe, senior vice president of spot broadcasting at Ruben Postaer and Associates in Santa Monica, Calif., noted the regional nature of the recovery.

"It's coming but it seems like it's slow," Campe said. "If you look overall in the country, it's OK. Some health is coming back into the marketplace. It definitely feels more positive."

Advertisers, who normally would be shelling out money for spot TV buys in the end of the third quarter and throughout the fourth quarter, seem to be holding on to their money a bit more than normal this time of year.

"There are a lot of people who are concerned, being very cautious, because they're not quite sure how the rest of the year is going to unfold," said a buyer who asked not to be identified. The buyer said that a lot of the fourth-quarter business is still hanging around, waiting to be placed.

"I would have thought more would be done now," the buyer said.

Campe said that it might be happening to an extent in some markets, particularly for companies whose ad budgets are based completely on sales and aren't really sure how much money they have to spend.

Today in New York City, the Television Bureau of Advertising will hold its annual fall forecasting conference. The TVB, which tracks and measures ad spending on the local level, will release its prediction on spot TV buying for the rest of the year and into next.

Campe's bullish about 2004 because of heightened political spending, the summer Olympics and an economic recovery gaining steam.

"I think the spot market will be healthy. With political spending, the Olympics and the shaking off of the last few years [of economic bad news], it's going to be a pretty good year for local television," Campe said.

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