Measured Network TV Ad Spend Fell Last Year

Bad News for Upfront Sellers: Big Marketers Cut TV Budgets

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NEW YORK (AdAge.com) -- Here's a sobering thought for sellers sharpening their sales pitches for the TV upfront: Measured spending on network TV fell last year for the first time since 2001.

The Big Six networks -- ABC, CBS, Fox, NBC, UPN and WB -- collectively took in $22.3 billion last year, down from $22.37 billion the prior year, as a half-dozen of last year's top 10 advertisers as measured by TNS, including Procter & Gamble Co., DaimlerChrysler and Johnson & Johnson, reduced their spending.

Freshly released figures from TNS Media Intelligence show that the Big Six networks, ABC, CBS, Fox, NBC, UPN and WB, collectively took in $22.3 billion last year, down from $22.37 billion the prior year.

Cutbacks from top marketers
What may well have contributed to the 0.3% drop was overall spending declines by a half-dozen of last year's top 10 advertisers as measured by TNS, including Procter & Gamble Co., DaimlerChrysler and Johnson & Johnson. What also hurt was a cutback from network TV's biggest spending category, the auto industry. Collectively the automotive industry spent $200 million less in U.S. measured media than in calendar year 2004.

The tallies are in line with last May's upfront, when advertiser commitments fell to $9.1 billion from $9.3 billion the prior year. That drop-off is logical, because the comparison is to 2004, an Olympics and election year. Still, the final tally is surprising to industry-watchers. Veronis Suhler Stevenson and PriceWaterhouseCoopers projected a 2% increase in ad revenue for network TV for 2005 even after factoring in the loss of the Olympics.

Also not boding well for the upfront is a more tepid reaction for big-event TV broadcasts in recent months. Media consultant Joseph Jaffe, a senior fellow at the Center for the Digital Future at the University of Southern California Annenberg School, cited weaker demand for spots at this year's Super Bowl as evidence of volatility in the network-TV market.

'Absence of growth'
So is this the beginning of the much ballyhooed end for network TV? Certainly not, said Marv Shapiro, managing director at Veronis. "Network TV is not going to see things growing as fast as in the past, but it will hold its own because it reaches the masses."

Irwin Gottlieb, CEO of media-buying operation Group M, offers a slightly different take. "The television market is healthy, but the degree to which money is moving from network into cable has exceeded the rate at which the total pie is growing."

Brian Wieser, VP-director of industry-analysis firm Magna Global, said, "We're seeing an absence of growth, which is different than the presence of decline."

Biggest loser
General Electric Co.'s NBC, which carried the 2004 Olympics, was the biggest loser among the networks last year, with a $1.17 billion decline in ad revenue to $5.7 billion. (The only other network to see a decline in revenue, according to TNS, was the WB, which went from $1.06 billion to $968.6 million). Yet the Peacock Network still placed second behind CBS's $6.36 billion in total ad revenue for the full year. ABC's ad revenue also rose from $4.66 billion to $5.17 billion.

None of the broadcast networks were able to comment, though each is making a huge push into subscription businesses that have long been the bread and butter of their cable brethren. Network parent companies such as NBC Universal and Walt Disney Co. (ABC) have made great strides selling their TV shows direct to the consumer to create dual revenue streams.

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