Television network ad sales executives said they are taking a day-to-day approach as some advertisers pull their campaigns, others quickly change the commercials they're airing and other push commercials they'd planned to air in March and April back to later in the year.A E president Paul Buccieri at last years upfront with Robin Roberts and President George W. Bush.
At this point, it's hard to calculate how much ad revenues were lost in the first quarter due to the coronavirus outbreak, executives said. As the second-quarter starts, they expect more of the same with a key milepost coming about May 1, when advertisers who bought third-quarter commercials in the upfront can exercise options to cancel those orders.
Even more uncertain is the 2020-21 upfront. Live presentations have been canceled and networks are looking for new ways to make their upfront pitches to media buyers and clients. But it is unclear when marketers will be able to decide how much they want to spend on advertising with consumers stuck at home and many businesses closed to stop the spread of the virus.
Were trying to have the philosophy of taking things two weeks at a time not to get too far ahead of ourselves and make decisions on where things are going to be a month or two from now, said Peter Olsen, executive VP for ad sales at A E Networks. Everyones been really reasonable. The conversations have been very understanding on both sides.
At Crown Media, which runs the Hallmark Channel, advertisers in the hardest-hit categories including cruise lines, airlines and hotels move quick to cancel their ads as consumers were urged to stay home, said Ed Georger, executive VP for ad sales.
WORKING WITH ADVERTISERS
Other advertisers have taken different approaches. They want us to work with them in a variety of ways. Some advertisers just want to push bank their schedules a little bit. Others may want to have broader shifts into other quarters. Weve worked with people. Weve had people donate their time to charitable organizations. Weve been working with the Red Cross for example, and the Ad Council," Georger said.
Ed Georger
Most clients are taking a day to day approach, looking at their own businesses and how the crisis is affecting their relationship with consumers.
I think the more that we see advertisers adjusting their message and thinking about their business more long-term the less were going to see the desire to just outright cancel," Georger said.
In the meantime, networks are doing business in the scatter market, where some advertisers are buying ads. Georger added that there's a need for inventory for direct-response ads, although that market is soft because there is so much supply with traditional demand down and viewing up.
Hallmark is also looking to increase its own promotion with some of the ad inventory it has on its hands.
We think that theres value in some messaging that we would do as a network to give support and encouragement to our viewers, Georger said. Were working with Hallmark cards to create a branded campaign that will really support the viewers and let them know that you know, as as a network, were there for them and remind them of some of the positive things in their lives. A message the Hallmark brand is uniquely able to deliver.
Media buyers are also busy accessing their clients' needs and trying to figure out how to reach consumers as TV networks are forced by the crisis and the benching of live sports big changes in their programming lineups.
HOW LONG WILL IT LAST?
Across categories and industries, there are a variety of reactions and explorations from cancellations, to postponements to creative re-expressions. To make a meaningful forecast on scatter and options, in general, there are two components that need to be clear: how definitively and quickly brands will respond and second, how extended the crisis will last, said Matt Sweeney, U.S. chief investment officer at GroupM.
With that said, we are confident there are and will be viable investment alternatives, and these alternatives could open different doors and paths to engage with customers. We are in dialogue with clients and partners daily, and it's assuring to see the elevated collaboration, said Sweeney.
Media agency Magna recently forecast that national advertising revenue will drop 13% this year, hurt by the Coronavirus crisis, with most of the decline occurring in the first half.
The network ad sales departments have had to figure out how to function from home, with offices close to slow the spread of the virus.
I give kudos first of all to our IT department. They jumped into action and really got everyone in the company set up pretty quickly to be able to function from outside the office, Georger said. With clients changing schedules and what commercials they want to run, traffic departments are also carrying the load.
I tip my hat and give large praise to the traffic department and the IT department that equipped them and gave them the ability to be able to do their job, Georger said. Its the beginning of the quarter which is always a pressure time, but now you add to that the constant adjusting of schedules. Theyre doing an amazing job.
The traffic guys are the heroes right now. Theyre working like crazy right now, added Olsen.
Olsen said that by approaching the business in two-week increments, the company has been able to put some guardrails around the fallout.
There's definitely an element of business as usually going on, said Olsen. Some advertisers are buying in the scatter market. There's certain categories that are seeing minimal disruption and then clearly there are some that are dealing with very acute challenges.
THIRD-QUARTER OPTIONS
The next inflection point that will determine how much ad sales will be disrupted in the second half
