IMPACT OF THE GULF WAR : Some Firms Pull Ads; Networks’ Revenue Off
Several advertisers, including United Air Lines and the Army, said Thursday that they planned to at least temporarily halt advertising because of the escalating war environment.
“We have eliminated virtually all advertising for the time being,” said Joe Hopkins, a spokesman for United. “As people watch the news of the war, advertising would not get a favorable response.”
However, United will continue to promote the Hawaiian Open Golf Tournament scheduled in Hawaii this weekend, of which it is the principal sponsor. “We’ve already committed to do that advertising,” Hopkins said.
American Airlines was still doing “limited” advertising on Thursday, said Lise Olson, a spokeswoman. “The conflict is only a day old. We’ve got to get a sense for what the mood of the nation is.”
The Army had said previously that it would stop recruitment advertising once fighting broke out.
Another big advertiser, Sears, said it had temporarily requested that its network advertising be pulled. Yet a Sears commercial was broadcast on the West Coast during ABC’s Persian Gulf War coverage Wednesday evening. Executives from Sears and the network were still investigating Thursday why the commercial aired.
But overall, few advertisers have pulled their commercials. That’s probably because the initial news was relatively positive. If the news turns grimmer, “you’ll see the advertisers start bailing out,” said one network executive.
Meanwhile, the three major television networks may have lost more than $10 million in combined advertising revenue Wednesday when they greatly slowed or even halted the broadcast of commercials to air continuous coverage of the war.
Additionally, the high costs related to the extensive news coverage of the conflict will probably cost each networks another $1 million per day, analysts estimated.
“The networks lost many millions of dollars,” said Christopher P. Dixon, a media analyst with the New York investment firm Kidder, Peabody & Co. The cost of just one 30-second commercial during prime-time TV varies from $100,000 to up to $350,000. The networks will provide compensatory time later for commercials they failed to air. “They might not make it back until the overall war environment stabilizes,” Dixon said.
It was undetermined when the three major networks would return to normal programming.
ABC was the only major network that aired some commercials, on a limited basis, Wednesday night. A spokeswoman for the network said it received no calls from viewers complaining about the spots.
The networks had tentatively planned to resume regular programming some time Friday. But that appeared less likely in light of the escalation in the conflict Thursday.
It might seem that the lost ad revenue would be terrible news for the networks, already struggling in a soft ad market during a traditionally slow time of year. But some analysts say the sudden shrinkage of available advertising time may eventually allow networks to charge more because the supply available becomes more limited.
But one top New York advertising executive said the networks will suffer financially from the lost ads.