Blogging By Dr. Philip Jay LeNoble discusses the sales and sales management structure of media marketing and advertising including principles, practices and behaviorial theory. After 15 years of publishing Retail In$ights and serving as CEO of Executive Decision Systems, Inc., the author is led to provide a continuum of solutions for businesses.
Prepare for the $20 billion upfront TV advertising marketto be delayed. Then prepare for more short-term decisions to be made in media buying for traditional TV and new digital TV platforms.
That’s the plan some TV advertising executives are mulling. Here are some reasons:
First, TV network production has been virtually shut down, and that includes existing as well as new TV series. For years, new TV shows have been a big promotional tool of TV networks to stir TV marketers into buying a new season’s worth of ad time.
All this has already impacted TV networks' upfront presentations for the coming season, virtually all of which have been cancelled.
Second, many TV marketers are looking at what they can do in the near-term, with plans for just two months, according toAd Age. This includes re-negotiating some deals made with TV networks, especially on major TV franchises, such as the recently cancelled March Madness event -- the NCAA Men’s Basketball Tournament.
Projections are the TV upfront advertising market -- which takes place June through August, where big brand marketers typically commit to spend around 75% of their yearly TV budget -- could be shifted until the first quarter 2021.
That would mean the fourth-quarter 2020 would consist of “scatter” deals, where advertisers might make short-length TV deals for just a 12-week period.
Upfront TV market has been used as a futures market — that is, securing inventory to be aired months ahead at a more favorable price. The sales strategy push here comes as premium TV-rated, wide-reach shows are increasingly more valuable against other media -- even with longtime viewing erosion.
Slow upfront market changes have been fueled by new digital media ad spending, where buying occurs on a near-term or nonstop basis, and where marketers can get immediate business outcome data from their campaigns.
For years, TV big brand marketers and their media agencies have wrestled with the idea of revamping -- or totally ending the upfront market.
Tremendous current economic and media disruption could make that happen.
Dozens of local newsrooms began laying people off this week out of fear that the economic hit of the coronavirus could severely impact their ad revenue.
Why it matters: Local news was already facing dire strains in the United States. The coronavirus and a pending recession could push the industry into near collapse at a time when people need access to local news and information more than ever before.
Driving the news: Despite the fact that local outlets are experiencing higher levels of traffic and viewership in years, many have wasted no time trying to get ahead of what will be a long, financial struggle.
So far there have been roughly 100 known local newsroom layoffs at outlets like the Monterey Country Weekly, the Sacramento News & Review, the Tampa Bay Times, Detroit Metro Times, Riverfront Times, Cleveland Scene, Orlando Weekly, San Antonio Current, and others, per Nieman Lab.
Many of the layoffs are occurring at small weekly or non-daily papers and community magazines, Nieman Lab notes.
Some have suspended publishing, like Riverfront Times and the Sacramento News & Review, Portland Mercury, The Stranger in Seattle and The Pulse in Chattanooga, Tenn. Others have instituted pay cuts for its employees.
Small broadcasters are already feeling the pain of the pandemic as advertising sales drop off. Neuhoff Communications, which has 20 radio stations, said advertising has been decimated as local businesses close their doors.
"Economically, this is devastating,” CEO Beth Neuhoff said in an email. “We are modeling daily on how to keep people when we have no money coming in the door.”
The company cut its 401K match on Monday, a move Neuhoff said felt “draconian” at the time. The next move is massive layoffs, she said, and she fears some advertisers may not be able to pay on time for the ads they’ve already sold and run.
By the numbers: "Right now – 2020 could end up 20-25% down in local advertising," says Corey Elliott VP of Research at Borrell Associates, a local advertising analysis company.
The irony is that "this is probably the greatest demand for local news that we've seen since before the transformation to digital ecosystem," says Harris Diamond, chairman and chief executive officer of McCann Worldwide, one of the largest global ad agencies.
"The local news organizations we are speaking to are reporting very significant new website traffic, as much as five times the daily average,” says Jim Friedlich, executive director of The Lenfest Institute for Journalism, a nonprofit that supports local news and is the owner of The Philadelphia Inquirer.
How it works: "Alt-weekly newspaper businesses are primarily dependent on local venues, bars, restaurants entrainment venues, for ad revenue and this evaporates that," says GroupM's Brian Wieser, one of the top advertising industry analysts.
"Local news generally, like local TV and general newspapers, is going to be more dependent on the automotive retail sector and retail more generally. Not a positive environment for them, but not the same as the alt-weeklies, which are less likely to have any revenue from the national brands who will keep advertising to some degree."
Yes, but: Diamond argues that big advertisers will want to stay in touch with people throughout this crisis, because it's unclear how long it will last.
"If local publications can still show that they have audiences, mass marketers and national retailers will be interested," says Diamond.
Be smart: News outlets, in an effort to get more people vital information, are beginning to drop their paywalls. But that provides a major business risk, says David Chavern, CEO of the News Media Alliance, a newspaper trade association.
There has been no bump in digital subscriptions, says Chavern — "and while we have seen a bump in digital traffic, the additional digital ad revenue is minimal because that system is dominated by Google and Facebook."
The big picture: Newsrooms are struggling with how to balance covering the virus while also ensuring the safety of their employees. For local newsrooms that are already strapped for resources, moving to a work-from-home framework can be a real challenge.
"Newsrooms need equipment and services needed to help work remotely; this category includes telecom costs, Slack subscriptions, Zoom or other video services, even laptops or other equipment," says Friedlich.
Our thought bubble: While there are some relief measures underway, it's likely they will not be enough to solve for the crisis. Still, this could be the push that the local news industry needs to really transition to digital.
“We will look back on these events as a moment at which the newspaper industry’s transition from print to digital accelerated meaningfully," says Friedlich.
The bottom line: "With the rapid drop in general ad revenue, overall revenue is dropping fast while costs and need are rising. This is on top of decades of financial stress. There is no fat in the system," says Chavern.
Hyundai Motor America, Toyota and General Motors have joined Ford Motor Co. in altering creative in response to the COVID-19 pandemic.
Hyundai Motor America announced it was reinstating its Hyundai Assurance plan earlier this week. The automaker has altered creative to detail the program. A new 30-second spot from Innocean broke today and is running in place of all other TV ads until further notice.
The voiceover states: “Nothing is more important than family, especially in uncertain times. In response to the recent world world events, we’re taking steps to protect our family with Hyundai Assurance. When you buy or lease a new Hyundai between now and April 30, we’ll cut your payments for up to six months in the event you lose your job this year as a result of COVID-19.”
Originally conceived in January 2009 as a result of the financial crisis, the Hyundai Assurance Job Loss Protection program was the first of its kind for an automaker in the U.S., says Hyundai CMO Angela Zepeda.
“Coronavirus has crossed borders, time zones, nationality, gender, age and income,” Zepeda says. “With people now working from home, practicing social distancing and trying to cope with the stress of potential harm to their health and the loss of their income, what was most important for a brand to say at this time, if anything?”
The automaker "pivoted and turned off [its] spring sales event campaign and [is] airing new Hyundai Assurance spots in national and local broadcast, as well as digital and social channels,” Zepeda says. “However, with the cancellation of sports and other key events, we have lowered our media investment in the short-term and plan to reinvest those dollars when we are through the crisis.”
"Toyota offers its condolences to all those who have lost loved ones, as well as our sympathy to any who have been affected by the COVID-19 (Coronavirus) pandemic," the automaker says in a statement. "We would also like to express our sincere respect to the healthcare professionals and government officials who are on the front lines day and night. In this spirit, Toyota is adjusting current sales event-focused advertising to reflect a more timely market message."
A 30-secondspotfor Cadillac from Leo Burnett details the procedures the automaker has put into place. It ends with the tagline: “At Cadillac, we have your back.”
The voiceover states: “Cadillac knows that we're living in uncertain times but also that we will get through by working together. That's why it is offering flexible payment arrangements. It is also extending OnStar Crisis Assist Services and in-vehicle WiFi data to all Cadillac owners for a limited time. For those in need of a new Cadillac, it is offering the ability to shop online and have your new vehicle shipped directly to your home.”
Another 30-secondspotwas created by M-1 Engage for Buick and GMC and has the tagline “Here to help.”
The voiceover states: “A lot has changed overnight, but Buick and GMC’s commitment to you remains the same. We understand you want to feel safe. So we are offering current owners complimentary crisis assist services. Should you need a vehicle, we’re offering 9% financing for up to 84 months with deferred payment options for up to 120 days. Plus you may have the option to shop online and take delivery at home. Visit our websites for the help you need.”
Chevrolet has a similar 30-second spot from Commonwealth//McCann.
American Honda said it is "has been making changes to the creative that is running" and that it "should be in full effect this weekend."
"We continue to assess appropriate adjustments to our marketing programs based on many factors, always starting with being respectful of what people are experiencing in their lives," American Honda said in a statement. "We remain focused on meeting the needs of our customers and supporting our dealers as they address extraordinary circumstances in their lives and businesses. Naturally, the sudden cancellation of live sports, music, travel, and other events with which we associate prevents people from life experiences they normally enjoy. Until those things are available again, we’ll look for appropriate ways to communicate and connect with people."
Ford Motor Co. was the first to launch a COVID-19 focused spot from Wieden+Kennedy on Monday. The spots details financial relief that current Ford Credit customers are eligible for if they have been affected by the pandemic.
It’s an understatement that everyone’s world has been turned upside down, including the automakers and their marketing partners.
It’s hard not to have a panic attack if you follow the stock market or if you’ve looked at your own investments in the past week. But I continue to offer the same observation: economic failure or growth won’t mean anything if we don’t survive.
I have several friends in the hospital. They aren’t elderly, they aren’t immune-compromised. Their health and recovery is at the forefront of my mind. As one friend put it bluntly earlier today: there won’t be anyone to rebuild the economy if we all die.
It’s encouraging to see the auto industry shutting down plants across the country. I believe in Michigan in particular, those closures should have come a week sooner than they did. We are currently at 15 deaths and more than 1,200 confirmed cases. Like other states, we have a huge lack of access to testing, so the numbers are certainly much higher.
Although Michigan’s governor issued a shelter-in-place order today, the number of people still leaving their houses amazes me. Too many seem to think whatever they do is “essential.” I have news for you: it's not.
At least one of the companies that handles the fleet of vehicles that auto journalists drive for test evaluations is still operating and delivering cars. DriveShop Detroit says they are protecting their employees by “observing a zero-contact policy.” But by insisting that employees leave their homes, they are endangering them, period. Are those employees stopping for gas? Are they touching fuel pumps that could be infected with the virus?
The virus can live on hard surfaces for 72 hours. I find it hard to believe the entire interior and exterior of each press fleet vehicle is being wiped down with bleach or a similar disinfectant. Journalists who continue to drive the vehicles are putting themselves and their families at risk — for what? To write a test-drive story about a car no one is going to be able to buy as the economy collapses?
Due the economic and social impact of the COVID-19 virus, U.S. demand for light vehicles has fallen significantly from a year ago, with Wards Intelligence partner LMC Automotive estimating a 20% decline in raw volume.
LMC has revised its baseline outlook for 2020 U.S. sales by slashing 1.6 million units from its pre-outbreak forecast to 15.2 million units, according to WardsAuto. The current worst-case scenario for 2020 has demand dropping to 13.7 million, which would the lowest total since 14.4 million in 2012.
There are still many unknowns with the virus, and it’s likely that number could drop even further.
As of this afternoon, there are still auto plants that have not closed their doors. It boggles the mind what the powers that be could be thinking. I am imploring those executives to do the right thing, not just for their employees, but for all who come in contact with them. It might be time for employees to walk off jobs en masse.
We must all save ourselves and save each other. The longer we drag our feet on a total quarantine, the longer we all will be dealing with this crisis.
Looking ahead to the big broadcast upfront period of presentations for the second week in May, ViacomCBS and NBCUniversal have cancelled their respective broadcast network events due to coronavirus concerns.
Other upfront events still scheduled at press time include Discovery, Disney’s ABC and ESPN and The CW.
Instead of its CBS Television Network live event in Carnegie Hall, CBS will do a video upfront special “to be posted to digital platforms on Wednesday, May 13, the usual day of the week CBS has its Carnegie Hall presentation."
NBCUniversal says it will stream an upfront presentation for the 2020-21 season to ensure the safety of all participants while also reflecting the increasingly direct relationship between NBCUniversal, its fans and its partners.
Jo Ann Ross, president/chief advertising revenue officer of ViacomCBS Domestic Advertising Sales, stated: “Our team has been planning for this possibility for weeks, and we have devised a digital showcase to unveil all of the premium content that we’re delivering throughout the company.”
Linda Yaccarino, chairman of advertising and partnerships, NBCUniversal, in a statement said: “This year's upfront presentation will ensure everyone's safety, while allowing us to give fans and marketers a preview of the upcoming season.”
This follows other TV network groups abandoning their live event plans, including AMC Networks and A+E Networks.
Major sports on TV networks could see big hits, with millions of advertising dollars in jeopardy, if game cancellations continue due to coronavirus concerns -- especially for the NBA and NHL.
Both leagues -- the NBA on Wednesday night and NHL on Thursday -- said they are suspending regular-season games temporarily.
Around $700 million in advertising deals would be lost to ESPN, ABC, and TNT should the NBA cancel the rest of its season, according to MoffettNathanson Research. On Wednesday night, the NBA said it is suspending the season “until further notice.”
MoffettNathanson says Disney’s ESPN could lose around $241 million for the rest of the regular season, with ABC giving up $240 million for expected NBA playoff games. TNT could lose an estimated $211 million in advertising for the rest of the season, including playoffs.
For all of 2019, Walt Disney networks collectively pulled in $884 million in advertising revenue.
Twenty-one percent ($644 million) of ESPN’s total advertising revenues ($3.03 billion) comes from NBA programming, with 36% of TNT’s total advertising revenue ($1.55 billion) coming from NBA programming ($562 million).
Concerning the potential advertising loss, Michael Nathanson, media analyst of MoffettNathanson Research, writes: “It seems clear that advertisers would not be charged for units that never run. Given the premium value of these commitments, we would assume that advertisers would not move these commitments into regular run of schedule[d] ad buys."
“Due to the importance of high profile sports to these ad buyers, we have a hard time seeing why and where these dollars would be re-deployed.”
For the NHL, national TV advertising on NBC, NBCSN and NHL networks is estimated to have pulled in around $85.4 million so far this year, says iSpot.tv.
Last year, national TV advertising from all NHL national TV exposure pulled $559.8 million, per iSpot.tv, from all regular-season and playoff games.
In the U.S. since ad revenues are heavily transactional locally, national and regional, local-direct will be the savior for all concerned! People still have to work and eat and pay bills! Philip Jay LeNoble, Ph.D.
COMMENTARY
U.K. ITV Ad Revenues To Drop 10% In April -- Where Will U.S. TV Networks Land?
TV advertising amid virus concerns will take a hit for specific networks -- some of which are already teetering in recent ad results.
Can we model where they might be going -- roughly -- based on what non-U.S. based TV networks are projecting? Not exactly. And yet there is some context to consider.
Looking at the ITV network in United Kingdom, the big independent ad-supported channel, the company says April advertising revenues will drop 10% as the coronavirus outbreak halts travel companies’ spending on marketing.
That’s a big drop. And while there may be different dynamics in Britain versus other countries -- in Italy, which has seen a sharp rise in Covid-19 infections -- there could be meaningful ad declines.
The United Kingdom isn’t where Italy is right now -- perhaps more akin to where other countries, including U.S., where the virus hasn’t spread with big infection numbers.
ITV’s update came as it released its annual revenue results, which grew 3% to £3.3 billion ($4.3 billion) in 2019, while pre-tax profits fell 7% to £530 million ($691.6 million).
TV Watchhas mulled the idea that network TV media buys might fall as well -- but this wouldn’t be for all existing deals, especially those made during the upfront period in spring/summer 2019. That’s because the second-quarter option period has come and gone.
But it could affect near-term “scatter” TV deals — made with a lead time of a few days to a few weeks.
Plus, the third-quarter period can be subject to a 50% cancellation by TV marketers for upfront deals made a year ago. Looking forward, this year’s upfront market, processed in June/July/August, will see its true indicators in the fourth quarter, which are 100% non-cancellable.
U.S. TV networks are already under pressure from fractionalizing media. Cable TV networks have seen regular 2% to 3% annual declines in subscribers, which translates into ultimately viewers.
All this equates to stagnant or slight declines in advertising revenues: NBCUniversal witnessed ad revenue down 1.5% (excluding political spending, up in the low-single digit range) in its most recent reporting period.
Other results: ViacomCBS had ad revenue dropping 2% to $3.03 billion in the fourth quarter -- also due to political revenue drops. WarnerMedia was down 2% in the period. Discovery Inc.’s U.S. advertising grew only 1% to $1.05 billion, which followed declining growth over the last few quarters.
With these ad revenues already in a fragile state, whither the falling numbers to come?
The main uncertainty in the coronavirus outbreak in the United States now is how big it will get, and how fast. The Centers for Disease Control and Prevention’s Nancy Messonniertoldreporters on March 9, “many people in the US will at some point, either this year or next, get exposed to this virus.”
According to infectious disease epidemiologistMarc Lipsitchat Harvard, it’s “plausible” that20 to 60 percent of adultswill be infected withCovid-19 disease. So far, 80 percent of cases globally have been mild, but if the case fatality rate is around 1 percent (which several experts say it may be), a scenario is possible of tens or hundreds of thousands of deaths in the US alone.
Yet the speed at which the outbreak plays out matters hugely for its consequences. What epidemiologists fear most is the health care system becoming overwhelmed by a sudden explosion of illness that requires more people to be hospitalized than it can handle. In that scenario, more people will die because there won’t be enough hospital beds or ventilators to keep them alive.
A disastrous inundation of hospitals can likely be averted with protective measures we’re now seeing more of — closing schools,canceling mass gatherings, working from home,self-quarantine,self-isolation, avoiding crowds — to keep the virus from spreading fast.
Epidemiologists call this strategy of preventing a huge spike in cases “flattening the curve,” and it looks like this:
“Even if you don’t reduce total cases, slowing down the rate of an epidemic can be critical,” wrote Carl Bergstrom, a biologist at the University of Washington in aTwitter threadpraising the graphic, which was first created by the CDC, adapted by consultantDrew Harris, and popularized by the Economist. The chart has since gone viral with the help of the hashtag#FlattenTheCurve.
Flattening the curve means that all the social distancing measures now being deployed in places like Italy and South Korea, andon a smaller scale in places like Seattleand Santa Clara County, California, aren’t so much about preventing illness but rather slowing down the rate at which people get sick.
The CDCadvisesthat people over age 60 and people with chronic medical conditions — the two groups considered most vulnerable to severe pneumonia from Covid-19 — to “avoid crowds as much as possible.”
“If more of us do that, we will slow the spread of the disease,”Emily Landon, an infectious disease specialist and hospital epidemiologist at the University of Chicago Medicine, told Vox. “That means my mom and your mom will have a hospital bed if they need it.”
So even if you’re young and healthy, it’s your job to follow social distancing measures to avoid spreading it to others, and keep the epidemic in slow motion. “The more young and healthy people are sick at the same time, the more old people will be sick, and the more pressure there will be on the health care system,” said Landon.
Hospitals filled with Covid-19 patients won’t just strain to care for those patients — doctors may also have to prioritize them over others. “Right now there’s always a doctor available when you need one, but that may not be the case if we’re not careful,” says Landon.
Staying home helps prevent the US health system from being overloaded
At this point, with the virus spreading in America, the top priority is making sure the health care system avoids being flooded with very sick patients who need ventilators and intensive care.
“From a US standpoint, you want to prevent any place from becoming the next Wuhan,” says Tom Frieden, who led the CDC under President Barack Obama. “What that means is even if we’re not able to prevent widespread transmission, we want to prevent explosive transmission and anything that overwhelms the health care system.”
Remember, America’s hospitals and doctors are already dealing with their usual caseloads duringa pretty bad flu season. Now they have to be ready to handle any Covid-19 patients who come their way.
There are serious concerns about the US system’s capacity to handle a severe outbreak. Covid-19 is a respiratory illness and in its most serious stages can require patients with pneumonia to be put on a ventilator. But there might not be enough ventilators to meet that need if the outbreak becomes too widespread.
The Johns Hopkins Center for Health Securityreported in 2018that, according to US government estimates, about 65,000 people in the United States would require ventilation in an outbreak similar to the flu pandemics of 1957-1958 (which killed 116,000 people in the US) and 1968 (which killed 100,000 Americans).
The maximum number of ventilators that could be put in the field in the United States is about 160,000. So under those scenarios, there would theoretically be enough capacity to meet the need.
But if the coronavirus outbreak gets worse, we could quickly run out. In a situation more similar to the Spanish flu pandemic (675,000 dead in the US), about 742,500 people in the United States would require ventilation, according to government estimates. We don’t have that many.
The health system is much more than ventilators, of course, and the concerns about capacity apply to the rest of it, too. AsHuffPost’s Jonathan Cohn reported,US hospitals have about 45,000 beds in their intensive care units. In a moderate outbreak, about 200,000 patients may need to be put in the ICU, but under a more severe outbreak, it could be nearly 3 million.
And while all 3 million of them would likely not need treatment at the same time, we again need to account for the ICU patients hospitals already had before coronavirus arrived, as Cohn noted:
On the one hand, those are total numbers, for the duration of the epidemic. Even under the most dire scenario, it’s unlikely that 2.9 million people would need ICU beds all at once. On the other hand, ICU beds in the U.S. are already pretty full, thanks to the normal crush of patients with influenza and other major medical problems.
As a result, hospitals are routinely at capacity, forcing backups of patients “boarding” in emergency departments for hours or even days, waiting on the beds there until inpatient slots become available. And that’s before any influx from COVID-19.
Hospitals are already doing what they can — rationing surgical masks, preparing to stand up temporary facilities, etc. — and they will take more extreme measures if they can’t handle all the people with Covid-19 plus their more routine patients.
But one thing people can do to help is stay home if they are feeling unwell and especially if they received a formal Covid-19 diagnosis and advice to self-quarantine. That way, the US health care system can focus on the patients who really need it during this outbreak.
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