Advertisers to Get Guaranteed Ratings at NBC
NBC, which last year abandoned its longstanding practice of guaranteeing audience levels for its programs, will again promise advertisers that its shows will achieve specific ratings.
The move follows a particularly lackluster quarter for network TV advertising and a controversial decision last season to change the ratings guarantee system.
After nearly a decade of shrinking audiences, all three networks last year stopped guaranteeing ratings levels and instead adopted a policy that relied upon a program’s historical viewing patterns.
But the plan backfired, according to Pierson G. Mapes, president of NBC Television Network. “We drove dollars out of our medium and into cable, independent TV stations and Fox . . . and want to rectify that.”
Industry sources estimated that the three major networks have lost between $100 million and $200 million in advertising revenue this season due to the policy change.
NBC’s about-face is based in part on a starkly different set of economic realities for the network than existed only one year ago. Advertising revenue has plunged for NBC due to both a decline in its ratings and the recession. NBC and the other networks, in an effort to reverse the soft market, have slashed ad rates more than 50%.
The decision was welcomed by advertising agency executives, who had criticized the current policy as complicated and unwieldy.
“We were all unhappy with the way this was just forced upon us,” said William Croasedale, executive vice president at Backer Spielvogel Bates advertising agency in New York. “But when you’re in a down economy, you’ve got to make nice-nice with your customers.”
The new audience guarantee system was unilaterally adopted by the networks last year because they had been forced to give back tens of millions of dollars in free advertising time to sponsors when actual ratings did not meet guaranteed levels.
All four networks are now preparing for the so-called up-front market in the spring, when they sell a majority of their advertising time for the coming season. Last year, ABC, CBS, NBC and Fox sold a total of $4.2 billion of advertising time in the up-front market.
ABC and CBS have not decided whether to follow NBC’s lead.