CNBC buyers press net for guarantees

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As the stock and ad markets boomed over the last couple of years, CNBC was able to force advertisers to buy its daytime market coverage with no ratings guarantees. But with the go-go years gone-and the seller's market also a memory-media buyers expect the policy to be reversed.

CNBC has been signaling buyers that it may offer some ratings commitments to its core financial services advertisers, while providing more expansive guarantees to advertisers in other categories to lure them as the ad market weakens.

But the General Electric Co. cable network insists it's doing business as usual.

"Our viewership right now is at record levels for our business day, so we expect to sell the same way we have in the past," said spokesman Paul Capelli. "It's not non-negotiable from a pricing perspective, but the non-guarantee vs. a Nielsen number during our day is part of our business model."

Networks typically offer advertisers minimum ratings guarantees to ensure that their ads will reach a certain number of viewers. If the ratings fall short, networks provide make-goods, in essence free ads, to meet the guarantee.

CNBC has declined to offer guarantees, however, since it maintains that many of its daytime viewers are business people who watch at the office or the health club and are not accurately counted by Nielsen. CNBC argues that its audience is actually 40% larger than Nielsen ratings indicate. According to Nielsen numbers, CNBC had an average daytime rating of 0.4 for its weekday (5 a.m. to 8 p.m.) shows from January through April 1 of this year, which translates to about 382,000 viewers. CNBC does offer some guarantees for its other time slots.

With the keen interest in the stock market in recent years, advertisers went along with the network's policy. CNBC raked in $424.5 million in ad revenue last year, according to Taylor Nelson Sofres' CMR, a booming 66% gain over 1999. CNBC said its ad dollars are still strong, up 16% for the first three months of 2001 vs. a year ago.

But now buyers are balking. Some charge that the network uses the out-of-home viewership argument as a smokescreen to cover for what amounts to bullying of financial-service advertisers, who view the network as an essential part of their media plans. In line with the general market downturn, CNBC is expected to have a difficult time seeking significant increases above the ad rates it charged last year. And media buyers cite the need for accountability, especially in the face of tight budgets.

"There's a formula for what they're doing, but it's so obvious they're taking advantage of their position," one said. Some buyers said they have even tried to convince their clients not to buy time on CNBC because of its "ridiculous manner of doing business."

CNBC's position has also been weakened because of the collapse of the dot-com market. A year ago, those advertisers, flush with venture capital, flooded the network to get their messages out to investors.

"A whole sector of advertisers simply disappeared," said Jeff De-Joseph, exec VP at Doremus Advertising, New York. "They're just not there anymore, which was one of the biggest factors for pumping up demand. Second, with the general tumble over the past quarter-and-a-half of capital markets, most every advertiser is at least examining scaled-back plans. So agencies are going to all media, not just CNBC, and saying, `What are you going to do for me if my budget is cut?"'

CNBC may have to soften the stance for another reason largely outside of its control: content. When Nasdaq was soaring, the network's programming environment was just right for financial services advertisers. But with CNBC now regularly reporting gloom and doom, advertisers may be wary of being associated with the downturn.

"If it's all bad news on CNBC these days," said one buyer, "is that necessarily the place [marketers] want to be?"

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