The race to TV creates pain and gain for buyers

Industry demanding cash upfront from fickle sponsors

by Chuck Ross

Dot-com mania has overtaken network TV.

Consider these amazing statistics: For all of last year, dot-coms spent about $219.6 million on all forms of TV, according to Competitive Media Reporting data Advertising Age reviewed for about 500 dot-coms and Web-related companies. But for just the first half of this year, dot-coms easily beat that figure with TV spending of $276.8 million. And that was merely a prelude to a dot-com-infested fourth quarter.

The biggest impact on network TV has been felt in prime-time, late-night and early morning programming.


In prime time, “Some of the inventory that has been bought in the day-to-day, or scatter, market is going for 60% to 70% increases over upfront pricing,” says a top media buyer, referring to last spring when buyers made long-term purchases of TV time during the so-called upfront marketplace. He estimates that without the dot-com business, increases would be in the 35% to 40% range.

In late-night programming, he notes, dot-coms are having an even greater impact: “Fifty percent to 75% of those increases are dot-com driven, and the premium over upfront pricing is 40% to 50%.”

Adds Rick Glosman, co-founding partner of Creative Media, New York, which buys media for a number of dot-coms: “Another factor that’s tightened up the marketplace is the fact that CBS and NBC have traded equity in some dot-coms for on-air ads.”

CBS Corp. has given away hundreds of millions of dollars of current and future ad inventory in return for an ownership stake in dot-coms such as SportsLine, CBS MarketWatch, Medscape and General Electric Co.’s NBC, meanwhile has heavily promoted an NBC-backed portal, Snap. NBC plans to house the portal, and some NBC Web assets under NBC Internet, which will be a publicly traded company.


In some local markets, dot-com mania has taken over.

In San Francisco, for instance, about 36 dot-coms were advertising on local TV stations at the beginning of October, according to Starcom Media. If each spends about $300,000 in the fourth quarter, that’s about $10 million–a significant chunk of new money to the market.

But all is not well in TV dot-comland.

“It’s maddening,” complains one media executive whose shop buys media for a number of dot-coms. “These people don’t understand what the word commitment means.

“They will give you signed authorizations. They will allow you to put orders on hold (with the network), or even go-to-order, and then arbitrarily cancel,” the executive says.

Given the uncertainty, TV properties increasingly are demanding cash payments from dot-coms.

Lynn Picard, exec VP-sales at Lifetime Television, says her network is asking a number of dot-coms to pay up front.


The executive at the media-buying shop also says his company more often asks dot-coms to pay for TV time in advance.

“Furthermore, we’re thinking about not going to hold (reserving a space with the network), which is usually what is done just after you negotiate a buy with a network,” he says. “What we’d do is just negotiate and go to a buy” and skip the intermediate steps. “The amount of work done negotiating and unnegotiating is time consuming and driving us crazy.”

Adds another disgruntled buyer: “Most of these dot-coms are run by really young individuals. Their attitude is, `Nobody is as smart as me,’ and they don’t understand our business. They are under a lot of pressure to make their sites successful, in some sort of business way, and make that happen quickly.

“They don’t want to think the rules of our business apply to them.”

Tim Spengler, senior VP-general manager for national TV buying at Western Initiative Media Worldwide, West Hollywood, Calif., defends the dot-coms.

“We must represent 15 to 18 of them. Anytime you have someone new to network TV, you have to educate them. That’s standard for a new client. We’ve had a pretty good experience with them.”

As for price increases, Mr. Spengler says, “For the most part they all need to get on the air by the end of the year, so the networks are taking advantage of that.”

Another phenomenon is the dot-com influx into Super Bowl XXXIV. There will be more than a dozen advertising in the Jan. 30, 2000, game on ABC.

Typical of the breed is Romac International’s, a job site that started advertising Oct. 14 on TV. It will have two pre-game Super Bowl spots, one before the kickoff, plus a :30 during the third quarter, says Christopher DiDomizio, Romac’s VP-marketing. He feels that with edgy creative from Grey Advertising, New York, spots will stand out.

But the company will face competition from at least two better-known job sites also advertising during the big game: via McCann-Erickson Worldwide, Troy, Mich., and TMP Worldwide’s via Mullen, Wenham, Mass.

Last year, traffic to HotJobs increased 500% after the game, but then its server crashed, according to a study by Starcom.

More interesting are numbers the study reported about Before this year’s Super Bowl, the site averaged 600 job searches per minute. Just after the game, that jumped to 2,900 job searches a minute. By the end of the week after the Super Bowl, searches on averaged 1,500 a minute.

Most viewers recall the Victoria’s Secret Super Bowl spot that drove so much traffic to its Web site that its server also crashed.


But, some observers warn, without breakout creative, there are just too many dot-coms in next year’s Super Bowl for any to achieve maximum impact.

“If I were a dot-com, I’d be going after passion groups,” says one top media agency executive. “I wouldn’t use the mass reach of the Super Bowl. I wonder how much of the Super Bowl spots are really aimed at the financial community to generate buzz for an IPO.”

Be that as it may, most media executives on both the buying and selling end say the current dot-com mania is likely to be relatively short-lived.

“I don’t see it lasting more than 12 to 18 months,” says one buyer, in a typical comment.

While it’s here, though, both buyers and sellers will play the dot-coms to the hilt.

“It’s great for business,” says one buyer. “They may be a pain in the rear end, but don’t get me wrong, I love ’em.”