Spot television advertising may find itself getting a powerful rush from an imminent infusion of drug money, among other new and developing categories in 1998. In August, the Food and Drug Administration's surprise decision to allow prescription-drug advertisements on-air without verbose descriptions about side effects made it clear that hundreds of millions of dollars in advertising revenue were at stake. It could not have come at a better time for broadcasters.
Some TV station executives say that while local and national spot dollars should be up overall, they are expecting automotive spot advertising to be down in 1998. "We think [automotive spending] will be down, maybe by as much as 10 percent," says Paul Quinn, vice president and general manager for Pulitzer-owned NBC affiliate WGAL in Harrisburg/Lancaster, Pa. Automakers, the predominant client of spot television, are starting to worry about an international glut of cars that could adversely impact the U.S. market.
"I am looking at pharmaceutical as a replacement for the automotive [category] for exactly those fears," says Victor Miller, an equity analyst at Bear Stearns in New York, adding that "it should bring in $1 billion in incremental business."
Media buyers are predicting single-digit cost-per-thousand increases. "I think we should be seeing CPM increases in the 3 to 5 percent range," says Liz Bratman, senior vice president at New York-based Creative Media.
Laura Silton, senior vice president/director of local broadcast at McCann-Erickson Worldwide, says CPMs will increase "around 4 percent." Still another media buyer predicts CPM gains of 6 percent, but requested anonymity, fearing backlash from clients and stations.
Many TV executives take comfort in the anticipated spike in pharmaceutical ad spending. Other newly deregulated industries, such as telecommunications and utilities, are also expected to boost their advertising budgets. "Ohio, Delaware, Pennsylvania and Maryland will all see electrical-power companies enter [spot advertising] soon. Long-distance service wars are also brewing," says Quinn. "These are all wars that will be fought on TV."
Barry Baker, president of Baltimore-based Sinclair Broadcasting, agrees that "pharmaceutical could become a whole new category." He believes spot TV growth rates should hover between 5 and 7 percent for national spot and 6 and 8 percent for local spot. Some TV analysts, including Melissa Cook of Prudential Securities, are forecasting less robust gains. "We could see a 3 to 4 percent increase in national spot and a 5 to 6 percent increase in local spending," Cook says.
Additionally, 1998 should provide "an even flow" of growth from both political advertising (election year) and Winter Olympic dollars, according to Television Bureau of Advertising president Ave Butensky. He says that much of 1998's political spending will come from non-candidate, issue-based advertising. "In 1996, political spending reached $390 million; $75 million of that was from issues advertising. We should see similar numbers [in 1998]," says Butensky.
Still, some media buyers and station group executives remain skeptical of any great benefit from an Olympic year. "Often you see the reverse happening. I think it softens up the quarter around it," says Rick Glosman, a partner at New York-based SFM Media, referring to the tendency of advertisers to concentrate their ad buys solely on the Games.
The most creative idea in spot advertising this year-the anti-spot-may well catch on in other markets in 1998. Tired of being handed its head in late news every Thursday night as a result of NBC's prime-time juggernaut lead-in, executives at WRTV, McGraw-Hill's Indianapolis ABC affiliate, decided to try something different: commercial-free, single-sponsor news. "We doubled our share in two of the three nights we tried it," says Marc Dunlap, general sales manager at WRTV. "It also drove up the price of our other avails in news."
Dunlap declined to say if WRTV made money on the venture.
"It's an interesting idea," says SFM's Glosman. "We'll see more of it if it improves the stations' revenues."