Here’s how the blocking and tackling gets done. Rather than engage in any postmortem equine flagellation, we’ll skip the familiar bit about how sports all but singlehandedly drives ratings, and instead take a deeper dive into the far more esoteric rules that govern the summer upfront bazaar. That live sports is kitted out to withstand the worst of the turmoil in the ad market is a function of massive reach, dumb luck and an age-old procedural wrinkle that prevents marketers from trying to wriggle out of their fall TV commitments. While it seemed almost an afterthought at the time, Bakish’s throwaway line about the resilience of TV should provide investors with a measure of reassurance, as it subtly underscored the near-hermetic unflappability of the sports ad market. If you’re wondering about the compensatory tailwinds to which Bakish alluded, the Paramount boss went on to characterize the ad turbulence as a “short-term challenge,” thanks in large part to “a very tight supply” of TV inventory. “Well, look, we see both headwinds and tailwinds in advertising,” Bakish said last week, before noting that the slowdown in the ad market is a direct function of “the state of the macroeconomic environment.” The CEO of CBS’ parent company confirmed that the microchip shortage is still hampering auto spend, while the packaged goods category (i.e., the straw that stirs media’s drink) is “managing through inflation issues, which is really impacting ad spending as look to protect margins.” While everyone from David Zaslav to Lachlan Murdoch deployed “headwinds” during this month’s earnings calls, Paramount Global chief Bob Bakish tempered his message to investors with a multidirectional approach. While not an agonizing drop, comparisons to the same period in 2019 are a lot rougher, with Q2 ad investment down 20% versus that pre-COVID interval, which works out to a loss of $2.4 billion. In the second quarter of this year, national TV ad spend was down 1% year-over-year to some $9.4 billion, according to Standard Media Index data. The pain of tucking into an insufficiently pre-soaked breakfast cereal is already being felt. While the metaphor du jour is “headwinds,” that may be too easy-breezy an assessment for what lies ahead in terms of sheer discomfort, the next few quarters would seem to offer little more than a steady diet of mouth-shredding Cap’n Crunch. The prize at the bottom of a box of cereal was usually a phial of laudanum, and if a dandy from that era were to lay eyes on the likes of Toucan Sam, he’d topple from his velocipede in a great, foppish heap.Īlthough none of the top media execs has said as much in so many words, this earnings season has made it clear that the ad market is heading for a world of hurt. Back then, radio was still in its infancy, and the only venues for advertising were outfield fences and the pamphlets that were distributed whenever the medicine show trundled into town. While there’s something to be said for the way Snap, Crackle and their buddy in the drum major’s shako helped steer Kellogg’s through a decade of catastrophe-today, the company has a $25.4 billion market cap and is about five times more valuable than the purveyor of Grape-Nuts-it’s also more than a little weird that the analogy everyone reaches for is nearly 100 years old. In support of this thesis, they’ll dust off the old chestnut about how Kellogg’s doubled its ad budget in the run-up to the Great Depression, and when the dust cleared, the Rice Krispies manufacturer had all but buried its far more risk-averse rival, Post. When the economy starts getting hairy, one of the first things marketing types will tell you is that the only way for brands to power their way through a downturn is to crank up the advertising spend.
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