• by Wayne Friedman , September 28, 2023

Although there are some signs the advertising business has been recovering, traditional and streaming TV fourth-quarter “scatter” ad inventory continues to be “depressed.”

This analysis comes from panelists at Wells Fargo Advertising Day, according to Steven Cahall, media analyst of Wells Fargo Securities.

“[The fourth quarter] looks to be remaining weak,” he says, “pacing down year over year and flat or down in the quarter versus [previous quarter].”

This comes after the summer television upfront market for the 2023-2024 TV season witnessed rare single-digit percentage declines of around 1% to 3% -- with even more uncertainty due to the writers' strike (starting in May and now ending) and an actors' strike beginning in July, which is still ongoing.

Television and streaming scatter market prices have been weak, according to many media-buying executives, since the fourth quarter of 2022.

Cahall added: “Linear scatter may be seeing weaker demand because TV ad buyers committed to more upfront volume this year at the behest of media networks, enticed by attractive pricing... and looser cancellation contingencies.” 

Traditional TV upfront deals placed for the fourth quarter are firm -- with no cancellation options, with the first quarter at a 25% cancellation rate; and second and third quarters at a 50% cancellation rate.

While the broader total ad industry picture seems tentative for the short term, according to Wells Fargo, there are better prospects down the line. “We don't think advertiser sentiment is improving...  with ad growth next year likely a bit below 2023.”

That said, “we also think the industry is setting up for [approximately] real GDP 2024 organic growth.”