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Media Tallies First Round of War-Related Losses
$100 Million in Ads Pulled in 48 Hours


During the first 48 hours before the all-out assault of Iraq began, network, cable, local and syndicated TV outlets lost $100.5 million as

advertising was pulled or blacked out, according to Advertising Age estimates.

Much heavier losses are expected to hit TV networks and other media sellers, particularly magazines and newspapers, as the war progresses.

Less than expected

The initial advertising losses were significantly less than earlier forecasts, as many TV and radio stations continued to run commercials and some regular programming schedules between March 19 and 21, when air strikes against Baghdad intensified.

"It's different from what we initially expected," said Jim Hoffman, senior vice president of ad sales for NBC News and MSNBC, speaking as the all-out attack began. "When the war first started on Wednesday, we were all waiting for this 'wow' thing to happen. But, obviously, it was delayed, and it was probably appropriate to run commercials at that time because it was pretty soft; we weren't seeing the pictures we are seeing right now."

But no matter when ads fully resume, the networks are bracing for a big hit. "This time it is a real economic cost to them," said Mel Berning, executive vice president of national broadcast for Publicis Groupe's MediaVest Worldwide, New York.

Cash back?

Because there's an extremely tight marketplace, networks have sparse inventory to offer make-goods for advertisers' media buys that didn't run last week. In addition, since the conflict began at the end of the first quarter, broadcast networks need to move spots that were pre-empted into the second quarter, where the cost per thousand typically commands a price premium over the first quarter. That could even force broadcast networks to give cash back to advertisers.

To protect their financial flanks, some networks are taking a hard line against advertisers seeking to also cancel commitments in entertainment programming. "We aren't arrogant people -- we service our clients," said a veteran advertising executive. "But we are operating a business."

At least initially, however, it was expected that cancellations in entertainment programming would be rare. "I don't get the sense advertisers are looking to get off the air," said Rino Scanzoni, president of national broadcast for WPP Group's Mediaedge:cia, New York. "There is not a mass defection at this time. It's a very fluid situation."

Case-by-case

Executives for Walt Disney Co.'s ABC and News Corp.'s Fox declined to comment, while an executive from General Electric Co.'s NBC didn't return phone calls. A spokesman for Viacom's CBS said, "We are working with advertisers on a case-by-case basis in an attempt to be sensitive to their needs."

Media agency executives expect networks to allow advertisers to escape from their prime-time commitments, particularly those with ads especially sensitive to the war, such as airlines, cruise lines and the armed services. "I would be stunned if a network didn't work with a category where their business would be affected by the war," Mr. Berning said.

"Even if there wasn't a war, if advertisers asked to pull their ads, we would make every attempt to try and get them out," Mr. Hoffman said. "If we really can't, then people have to stick to their initial agreements."

Wall-to-wall news

While most major networks returned to entertainment programming March 20 -- CBS, for example, broadcast NCAA basketball tournament games with advertising during prime time -- the cable news networks ran wall-to-wall news coverage with no advertising. AOL Time Warner's CNN has been advertising-free since the start of the bombing last week. "Our advertisers are our partners and we are going to be flexible," said Greg D'Alba, executive vice president of sales and marketing for CNN networks. "We are hoping most of them will come back."

Cable entertainment networks, for the most part, have been programming with their regular schedule, which could help them attract some new ad dollars, said Mr. D'Alba, should advertisers try to distance themselves from war coverage on the big broadcast networks. Cable may also benefit because with broadcast-network inventory so tight, returning advertisers may have little choice but cable.

Print, too, is steeling itself for sustained economic damage. Widespread pullouts at magazines were not yet reported, but a leading executive was blunt when asked whether booking had slowed last week: "Like someone pulled a cord out of the wall."

Ads pulled from 'Time'

Ed McCarrick, publisher of Time Inc.'s weekly Time, said last week that "about six" of his magazine's committed advertisers, which total around 40, were pulling out of this week's issue. "It's not a massive, wholesale pullout by clients," he said.

A statement from a spokeswoman at Time Inc.'s People said "less than a dozen" advertisers had pulled out of this week's Academy Awards-themed issue. She would not divulge how many advertisers were staying in, but said that last year its Oscar issue carried around 100 ad pages.

Posted on aef.com: March 27, 2003

 

Wayne Friedman, AdAge.com. March 24, 2003

Copyright © 2003 Crain Communications Inc.. All rights reserved.