Ad Sales Remain Strong Despite Slow Economic Recovery, Investors Told
Ad sales on pay-TV and broadcast networks should continue to increase into 2011 despite signs that the overall economy is still struggling to recover, executives said at a Goldman Sachs investor conference this week. Cable networks are attracting new advertisers to their programs, and the demand for political ads on broadcast networks should translate into increased demand from non-political marketers well past the elections, they said. CBS is selling ads at rates 30 percent higher than during the upfront ad buying season this year, CEO Leslie Moonves said. Demand is so high and inventory so scarce, that even without political spots, pricing would be up almost as high, he said.
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Marketers are buying spots for later in 2010 and in early 2011 to avoid competing for ad time with candidates, Moonves said. “What’s happening now is the inventory is getting pushed a little further out,” he said. “We can now see visibility into the first quarter and it remains strong.” Meanwhile, CBS’s one-time corporate sibling Viacom is attracting new marketers to its programming, CEO Philippe Dauman said. Auto makers, telecom companies and technology companies such as Yahoo advertised during the Video Music Awards for the first time, Dauman said. Brands are turning to advertising to win market share during the recovery, he said. “There’s an awful lot of pressure on the advertising side to get your message out and build market share."
Cable’s growing audiences is also fueling ad sales growth. As pay-TV networks attract more viewers, they will be able to increase the price of their spots, said Chief Financial Officer Brad Singer of Discovery Communications. A larger audience obviously translates into higher ad revenue because marketers pay per thousand impressions of their ad, he said. Networks also charge a premium to reach larger audiences, he said. “When your reach goes up, you get to charge more per thousand,” he said. “That’s why advertising accelerates faster than actual audience growth.” And that’s why Discovery is investing in building audiences at some of its less-watched networks, he said.
Figuring out how programmers will get paid for online TV viewing is critical before networks put their shows on the Internet, executives said. Nielsen or someone else needs to better measure online viewing so networks can charge advertisers for the viewing that happens there, Dauman said. “We're always saying they should be moving faster and would certainly be among a chorus who would urge them to move as quickly as possible."
Subscription TV models online are becoming more appealing to programmers. Hulu’s new Hulu Plus monthly subscription fee is interesting, Dauman and Moonves both said separately. “We're looking at Hulu Plus,” Moonves said. “A subscription service … makes a lot more sense to us than Hulu does, and I think that makes a lot more sense to a couple of the partners in Hulu, too.”