Advertisers are making big cancellations in their third-quarter 2020 deals made a year ago -- at around 20%. Historically, network TV cancellation levels on a quarterly basis have been around 2% to 5%.
Going forward, what’s to prevent these TV marketers from coming back into the “scatter” market -- near-term deals made just before the third-quarter market starts July 1 -- especially if there is lower scatter-market pricing to be had?
Nothing. But it will be tough to do.
Scatter pricing being lower than upfront pricing is a rare occurrence. And to be sure, this is not something TV networks want -- as it would upset the whole longtime, upfront-scatter market dynamics.
TV advertisers aren’t the only ones looking to make a better deal for previously committed media dollars.
A report in The Wall Street Journal suggests $150 million in advertising spent by big TV/video marketers -- prior to the launch of Quibi, the mobile-first streaming platform -- might want better pricing as well. This includes sponsors such as PepsiCo, Walmart, Yum Brands, Anheuser Busch InBev and Taco Bell.
Seems an initial, first-year subscriber target for Quibi was around 7 million subscribers. To date, the app has been downloaded 4.2 million times, with 1.5 million of those from a three-month free promotion.
That means Quibi has its work cut out for it. In addition, it will need to offer “make goods” of sorts for those marketers -- perhaps offering more frequency of those spots, or media scheduling extensions beyond the first year, or worse -- cash back.
Quibi launched in April with some big backing -- not just from top brand advertising but $2 billion in private financial investments.
As for linear TV: As it concerns big-brand TV advertisers, buying near-term deals in the scatter market -- at lower-than-upfront pricing -- will be difficult for other reasons, such as available supply and demand. This is because many TV marketers shifted media schedules in March, April, and May into the third quarter, so inventory supplies are less.
In addition, TV networks have slotted more audience deficiency units, so-called "makegoods" -- into the third quarter period, further limiting inventory supplies.
Where does the big brand TV money go then?