Viacom (VIA) CEO Philippe Dauman learned his lesson in Q2: he’s better off not making predictions in this ad market. On May 29, with one month left in Q2, Dauman warned that Viacom wouldn’t be delivering the 7% year-over-year Q1 advertising growth again in the second quarter. Rather, he said, ad sales growth would be in the 3% to 4% range.
Well, it was worse than he thought. Much worse. Apparently sales fell off a cliff in June, and Viacom turned in 1% ad sales growth in the U.S. and just 2% overall, including international.
What happened? Big advertising pullbacks happened in retail, automotive and some consumer goods. “In the short term, the economy is going to be difficult to predict,” Dauman said.
The big question is whether the dropoff in June will impact upfront ad commitments made by advertisers for the coming TV season. Viacom had a strong upfront, but those are commitments — not firm orders. The handshake deals turn into orders in the third quarter. Unless they don’t.
Asked whether he believes those orders will materialise, Dauman skirted the question, but said there’s more risk to the last-minute “scatter” ad market than to upfront commitments. “What we don’t know is where the economy is going to be headed and how that will impact the scatter market,” he said.
On a reassuring note, Dauman said the troubled categories of advertisers, generally speaking, weren’t big players in the upfront anyway. Categories like entertainment and wireless are big upfront spenders and they’re not pulling back. Want a prediction? Check back in September.