TV ad industry grinds to virtual standstill
By JOHN HEINZL
Thursday, September 13, 2001
The television advertising industry has ground to a virtual standstill as major Canadian and U.S. networks pre-empt commercials to devote non-stop coverage to the terrorist assault.
That is depriving the networks of millions of dollars in ad revenue, but news coverage takes precedence in such extraordinary circumstances, say advertising and broadcasting officials.
"Everything we do has to take a back seat to the news stories," said Sunni Boot, president of Toronto media buyer Optimedia Canada Inc. "This is unprecedented and may we never ever have to relive it."
Major networks have dropped all or most commercials to focus on disaster coverage and are reassessing their plans frequently as events unfold. CBC spokeswoman Ruth-Ellen Soles said the main network would continue simulcasting Newsworld's commercial-free coverage until 2 a.m. Thursday and that Newsworld would continue running without ads for now.
Running ad-free isn't solely a network decision. Advertisers have little interest in airing commercial messages when viewers are grappling with such a grave incident, media buyers say.
"Do I want to advertise a Mercedes now? No," Ms. Boot said.
To prepare for the resumption of normal programming, Optimedia is adjusting its advertising buys and plans to hold back spots that might be considered in bad taste in the context of the attacks.
Media buyers are also negotiating "make-good" slots with networks to compensate for the pre-empted commercial time.
"There are pre-emptions in the normal course of events, but obviously not to this sort of magnitude where entire days have been pre-empted," said Hugh Dow, president of media buyer M2 Universal in Toronto.
At least one ad campaign has been cancelled. Coors Canada was planning a retail promotion this fall called "Party on the Peak" that would have sent contest winners to New York for a concert at the World Trade Center, which was destroyed in Tuesday's attack by hijacked commercial airliners.
In the United States, major TV broadcasters will lose millions of dollars in ad sales for each day they provide non-stop coverage of the attacks in New York and Washington, analysts said.
General Electric Co.'s NBC, Viacom Inc.'s CBS, Walt Disney Inc.'s ABC and News Corp.'s Fox are among broadcasters that dropped most commercials to cover events.
The continuing coverage comes as the TV networks' parents are struggling to maintain revenue and profit growth amid slumping advertising sales.
"Tomorrow [Thursday] night, if NBC goes blank, they are going to get hurt pretty bad," said Tom Decabia, a media buyer with Advanswers PHD in New York.
NBC's Thursday night programs include Friends and ER and it is the most lucrative night because high audience ratings let NBC charge the highest rates for commercials.
Cable TV networks such as AOL Time Warner Inc.'s Cable News Network is also providing coverage without commercials. Analysts estimate the channel could be losing $500,000 (U.S.) a night.
The TV companies also face higher costs in paying employees overtime to broadcast throughout the day.
An increase in viewers during a national crisis likely won't help a TV network raise advertising prices because news programs without commercials are excluded from the ratings of Nielsen Media Research, which are used to set ad rates.
A 30-second TV commercial typically costs from tens of thousands of dollars to $1-million or more for special events such as the Super Bowl.
Some newspapers are pulling advertisements to focus on news developments, publishers said. Those ads include any advertisements by airlines involved in crashes, said Gannett Co. spokeswoman Tara Connell. Gannett publishes USA Today, the largest U.S. paper by circulation.
"Travel ads have been cancelled," Ms. Connell said. "Auto dealers are backing off. It's too early to know if this will really hurt."
With a file from Bloomberg News