Veteran ad players take the field for Super Bowl
By Tim Jones Chicago Tribune
Don’t look for the Sock Puppet at the Super Bowl next month.
The commercial mascot for Pets.com won’t make the game, at least not as a representative for the now-defunct online pet-supply company, one of 17 dot-coms that each spent an average $2.2 million last January for a 30-second moment of commercial glory in the televised pigskin extravaganza.
It’ll be back to advertising basics as the biggest television event of the year is brought to you by proven companies that generate not only revenues, but profits as well.
As reassuring as this may be for economic traditionalists, the back-to-basics approach represents a bland financial diet for media companies that had fattened themselves on the stock market-driven riches of dot-com mania. CBS can smile broadly because it will charge about $2.4 million for a 30-second Super Bowl ad and also will attract a premium price for the second round of its reality series “Survivor.”
But those examples of advertising largesse are the exception to the probable rule for the rest of the media, which must try to convince investors there is life after a robustly aberrant economy, however undistinguished and puny it may look by comparison.
In the New Year, the media will have to deal just as much with managing expectations as managing business.
Talk about a letdown. The New Year offers no Olympics, no political advertising. Retail advertising and car sales are softening as the broader economy slows. Newsprint prices, the largest cost for newspapers after labor, continue to rise. Technology stocks have been hammered since the spring, and their fall has dragged down the stocks of traditional media players – broadcasters, newspapers and cable companies – in part because the dot-coms represented a generous source of ad revenue.
Despite having some of the fattest profit margins in the business world – several times the average of the Standard & Poor’s 500 companies – so-called Old Media companies are cyclical performers and have trouble generating investor excitement. When the economic conditions turn even partly cloudy, newspapers, television and radio stocks often suffer because on Wall Street they have all of the sex appeal of an Oldsmobile.
“We’ve lived through slow times before,” observed Jeff Smulyan, former Seattle Mariner owner and the chairman of Emmis Broadcasting, the Indianapolis-based broadcasting and publishing company whose stock was trading in the $60 range a year ago. It is almost certain to close the year at less than half that, finishing earlier this week in the $26 range. “Right now, things are just slower. It’s not a disaster,” Smulyan said.
Just as few media economists are predicting a recession, media executives are putting a positive spin on the soft market.
“Yes, it is true that many of the free-spending dot-com advertisers that contributed to this year’s strong market will not be with us next year. However, the impact of the absence of these advertisers in the network television market has been greatly exaggerated,” said David Poltrack, executive vice president for planning and research at CBS.
He and others point out that as the network television audience has shrunk, prime-time advertising spending has more than doubled in the past seven years.
These indicators do not outweigh the expectation that next year will not be as strong. And bullish talk in the face of dour economic forecasts has done little to boost media stock prices, which is why Smulyan said the industry has to mind its spending and ride out the downturn.