Commercial television networks are slashing their advertising prices in a bid to sell vacant space in the stalling market.
While Seven and Ten networks have budgeted for a weak Olympics quarter, Nine Network is struggling to make ends meet, not selling enough ad space to cover the millions of dollars it paid for the rights to air the London 2012 Olympics. Nine and Foxtel split the $100m bill to win those rights.
The free-to-air networks are reportedly resorting to offering special advertising deals to try to sell last-minute ad space.
Sebastian Rennie, head of trading at MEC Australia, told B&T: “There are definitely deals being done in the market, driven predominantly by the fact that the Olympics are on. The two non-Olympics networks have been open to trading beyond normal market circumstances for the Olympics period – but there is no surprise there.
“The market has been fairly soft all year. The basic issue is that there has been a real lack of visibility. That makes putting a long-term sales policy in place very difficult.”
Another media buyer told B&T: “We are coming across reductions in prices for TV advertising. The networks have been struggling to get advertisers on board. Advertisers are looking to spend money differently, wanting more return on their investment, so pulling back from TV and spending it on digital instead.”
Seven Network has prepared itself for a tough time during the Olympics.
“There is no question that the market is backing up,” Kurt Burnette, director of sales at Seven, told B&T. “To what degree, we’re unsure at this point. But we wouldn’t say it’s approaching disaster levels. The Olympics quarter is generally expected to be down.
“We set our rate cards based on where we think the audience is going to be and in preparation for the Olympics, so that means we do not have to severely reduce our rate position.”
Ten Network’s ad market share for the first half of 2012 is down by 14% compared to January to June 2011, based on SMI data. The network’s market share is currently 25.5%.
Ten is offering cut-price advertising space to try to claw back some dollars. A spokesman for Ten said in the Australian Financial Review: “There is some discounting, which isn’t unusual in such a market, but no-one’s discounting any more than anyone else.”
And, as reported in The Australian, Peter Wilshire, Nine’s group sales and marketing director, said: “We’re looking to the advertisers to allocate any late money in a short market, no question about that – that’s our job... The story is the economy. Business is doing it tough and they’re being discretionary in their ad spend attitude when navigating through a period with an extraordinary event like London.”
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