Writers Strike Impacts TV Ad Placement

Members of the Writers Guild of America, East and the Writers Guild of America, West have been on strike since November 5, 2007. While this work stoppage has had many consequences, ranging from television shows being indefinitely postponed to writers and crewmembers accumulating nearly $342.8 million in lost wages, one unexpected effect has directly impacted advertisers. Given that few new shows are on the air, advertisers everywhere are scrambling to find new ways to reach consumers.

The Guilds, two unions that represent film, television, and radio writers who work in the United States, failed to negotiate a new agreement with the Alliance of Motion Picture and Television Producers (AMPTP) before the previous contract expired in the fall. Subsequent negotiations that would have prevented a walkout failed, and the WGA voted to strike. Disagreement between the two parties was and continues to be tied to "DVD residuals; union jurisdiction over animation and reality program writers; and compensation for 'new media' — content written for (or distributed through) emerging digital technology such as the Internet."

As noted above, while consequences that directly impacted members of the entertainment industry were somewhat foreseen, those that affected other industries have been rather unexpected. For instance, because there are so few new shows on television, viewers are not watching as much television as they normally would at this time of year. Consequently, advertisers are finding it necessary to seek out new programs through which to connect with viewers and get their ads seen.



Interestingly, the unintended beneficiaries of this search appear to be sports programs. Besides some reality television shows or the few programs that were taped and stockpiled before the strike, televised sports events are the only programming that is fresh and new. More importantly, most sports programs are watched live and thus are not affected by ad-skipping devices such as TIVO. (Who wants to watch a game a week after it has already happened?) As such, advertisements are much more likely to reach their targets.

The Super Bowl, for instance, which has historically been a ratings juggernaut and demanded advertising dollars to match, has commanded even higher prices for the 2008 edition. And, spots sold even quicker than usual. To illustrate, advertising spots typically become available for sale starting in March of the preceding year, leaving nearly 11 months of buying time. Usually, dozens of spots are still available in November; however, only eight spots were still available for the February 3rd game this past fall. Also, it is estimated that some companies paid $3 million for one 30-second spot, a 4% from the previous year.

Other football games have also been raking in hefty ad dollars. Advertisements for the NFL's divisional playoff games were going for between $750,000 and $1 million per 30-second spot. Even college games saw increases. BCS championship games saw advertising spending increase by 15%. This trend has also spread to sports such as baseball and NASCAR, both of which have seen demand for their ad time spike.

In addition to the lack of programming options available, at the beginning of the new television season programs overall failed to connect with audiences. Dismal ratings also made sports programs a lucrative alternative to struggling prime-time shows.

Interestingly, these recent developments may only be part of a larger trend. In 2006 and 2007, cable sports network ESPN earned more gross advertising revenue than cable mainstays Nickelodeon and MTV. As a result, more stations, ranging from Spike TV to NBC, have started covering more (and sometimes even obscure) sporting events.

Overall, all of these factors have worked in concert and forced advertisers to realize that sports programs are a great and effective way to reach consumers and convey their messages.