ABC is trying something novel when its TV shows underperform: Rather than give an advertiser a refund or additional ad spots on the network, it’s offering them additional ad spots on the Web.
Background: In TV advertising, the seller takes all the risk: If ABC (DIS) guarantees a certain number of viewer impressions to Procter & Gamble and they don’t deliver, they have to pay “makegoods,” which is are typically additional ad spots or, in a worst-case scenario, a cash refund.
Now ABC sales president Mike Shaw tells MediaPost that he’s passing off spots on ABC.com as makegoods. The selling point: Rather than giving advertisers spots on ABC’s lesser TV shows, Shaw is offering spots on ABC’s top shows — “Lost,” “Desperate Housewives,” and “Grey’s Anatomy” — and the opportunity to be the sole sponsor for those shows.
If this becomes widely-accepted practice, it’s a sea change from just a just a year ago, when online ad spots were thrown into deals or considered ad-ons to bigger TV buys. The good news for the networks is that online ad spots sell for a higher cost-per-thousand than those on TV. The downside is that compared to TV they have very few viewers to offer, meaning this won’t help much for big shortfalls on network TV.
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