COVID-19

Big brands are telling TV networks they might not be buying as many ads as planned

David Brancaccio, Candace Manriquez Wrenn, Rose Conlon, and Alex Schroeder May 13, 2020
Heard on:
HTML EMBED:
COPY
As much as $1.5 billion in TV advertising spending could be pulled back. Pixabay
COVID-19

Big brands are telling TV networks they might not be buying as many ads as planned

David Brancaccio, Candace Manriquez Wrenn, Rose Conlon, and Alex Schroeder May 13, 2020
Heard on:
As much as $1.5 billion in TV advertising spending could be pulled back. Pixabay
HTML EMBED:
COPY

It’s hard to buy TV advertising if you don’t know if the sporting events will happen or the shows can actually be made.

Some prominent brands are reportedly cutting back on some of the advertising they had promised to buy on TV networks. The Wall Street Journal is mentioning names like Pepsi and General Motors among the companies that are saying, essentially, “Yeah, not as much as we had first signed up for.”

It’s about the inability to predict the future in this COVID-19 economy. We’re stuck at home with more time to watch TV than planned, so it’s not an audience thing. Instead, it’s that advertisers are having their own troubles and want to cut costs.

“There’s very little visibility right now, of course, not only for their own businesses ⁠— they don’t know how they’re going to be operating in a couple of months, so they’re looking to cut costs,” said Jeanine Poggi, a senior editor at Ad Age who is also seeing signs of a pullback in ad spending. “But then also from the TV perspective: Yes, absolutely, people are at home. They’re watching more content than ever, but come the fall, it’s unclear right now what content will even be able to be produced.”

Poggi also points out there’s a huge gap in the TV ecosystem with no live sports.

Can advertisers just do this, though? Say, “Sorry, we were committed to this, but now we’re not going to pay you as much”?

Poggi says yes, there is some flexibility in these ad deals. “Companies have the option to cancel up to 50% of their third-quarter ad spending, and that sort of went into effect ⁠— May 1 was the first time that they could pull out of some of these commitments,” she said.

It could be as much as $1.5 billion in advertising that is pulled back, The Wall Street Journal reports.

Click the audio player above to hear the full interview.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.  

Need some Econ 101?

Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.