NBC finally copped to reimbursing advertisers for under-delivering on their ratings commitments. Adweek broke the story earlier this week, and NBC declined to comment. Now, in a statement via the WSJ:
“This represents an extremely small portion of NBC’s business and accommodates the changing needs of our clients’ marketing plans. NBC is working with its clients to come up with creative solutions in a sales environment faced with a new business metric and a writers’ strike.”
It’s unusual for networks to pay cash rebates to advertisers; usually they hold back enough remnant ad inventory or “scatter” to use as compensation when ratings tank. This time, though, program ratings are down 11% at NBC from last year. This year’s conversion to commercial ratings, in which each network gets judged on the ratings performance of the commercials, not the shows, is also resulting in diminished ratings. And, hinted in NBC’s statement, ratings could fall again in the first quarter due to the writers strike, further tightening supply.
Advertisers aren’t thrilled because losing access to network TV blows holes in their marketing plans, and short supply means higher “scatter” pricing. Zenith Optimedia’s Larry Novenstern put in succinctly: “We develop a plan for every client for the year… Now you’re telling me all this inventory won’t get on the air in the fourth quarter.”
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