Advertising shows signs of renewed vigor

“In challenging times, people go back to what they know, and what they know best is television,” said David Levy, president of sales for Turner Entertainment, which includes TNT and TBS. “It is a little too early to declare victory, but the market is definitely improving.”

The welcome news is the result of stronger-than-expected demand for TV advertising in the “scatter” market, in which advertisers frequently have to pay premiums for scarce available commercial time. It also represents something of a win for the networks, which gambled over the summer that demand would pick up later in the year and held back a larger percentage of their inventory than in previous years, hoping to capitalize on the improved economy.

Fourth-quarter commercial sales have been propelled by retail chains hoping to ignite their holiday sales; technology giants Microsoft Corp. and Apple Inc., which have new products to promote; cell phone carriers such as Verizon, AT&T and Sprint, which are battling for customers; and even such financial interests as American Express, according to television executives and advertising buyers surveyed this week.

Such strong demand has made up for the weaker orders from other mainstay advertisers, including automakers, still reeling from weak sales, and Hollywood movie studios, which have fewer new movies to hype.

The fourth quarter, described by one top network sales executive as “gangbusters,” amazed even veterans who have lived through several economic cycles. Only five months ago, the industry was bracing for another dismal year as TV network sales teams were engaged in protracted negotiations with advertisers that were demanding that the networks roll back prices as much as 20 percent. Networks eventually agreed to trim rates about 5 percent to 8 percent to mollify advertisers and begin unloading their time.

But now, in some cases, advertisers have agreed to pay rates 10 percent to 35 percent higher than those established in June and July, when the networks sold the bulk of their time for the new TV season. In addition, advertisers that placed their orders in the summer are honoring their commitments. Network executives said that few advertisers have canceled their orders for commercial spots, in contrast with a year ago.

“We have all been surprised that the ad market has come back this soon,” said Gary Carr, executive director of national broadcast for the advertising outfit TargetCast. The networks, he said, also face easier comparisons because last autumn, with banks failing and the economy on the skids, companies were afraid to spend on advertising.

“A year ago, people thought the world was coming to an end, and the U.S. economy was falling apart,” Carr said. “But the world did not come to an end. Cars still have to be sold, and studios still need people to go see their movies. Advertisers have begun releasing the money that they have been holding onto all year.”

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