Television Week and Ad Age ran stories last week under the headline:
TV Networks Resist Discount Requests from Advertisers
Advertisers struggling through tough times and tightening budgets have been asking the networks to reduce their rates, whether for ads bought in advance during the upfront market last summer or for scatter ads being bought now. For most marketers who use national TV, media costs make up the bulk of their marketing budget.
Advertisers are, understandably, trying to stretch their ad dollars. But the networks are exhibiting an arrogant and short-sighted "take it or leave it" attitude, claiming there's enough demand now for them to hold the line on their prices.
Have the network sales execs taken soie pages from Detroit's playbook? Never mind what the customers (advertisers) want. Give them the same old thing at higher prices.
As the recession continues and budgets get tighter, many experts are predicting that the nets may be facing a much less robust market for the 2nd quarter. Weaker sales in the spring could impact the prices they'll be able to get in the next upfront market in June/July. With so many channels out there, some advertisers who feel railroaded by the major networks may just put their money elsewhere, like on other cable nets where the sellers are showing some cooperation and understanding of their customers' situation.
The networks are a business too, of course, and say they need the added revenues from higher ad rates to enable them to produce content that viewers and advertisers want. Does that mean more reality shows and more Leno in prime time? Both formats are much less costly to produce than scripted series.
I'm seeing forecasts that network revenues will be down by 7 - 10 percent in 2009 as ad spending continues to tighten. So is the solution to charge more for fewer viewers?
TV may remain king for a long time, but online media continue to make inroads. Ignoring customers' pleas for help hardly seems like the way to build relationships and loyalty, which may come in handy a few years down the road when TV isn't still the advertising king.