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Why TV Advertising is Now a Buyer's Market

Dow Jones reports that broadcasters are expected to face a soft advertising market when they present their fall primetime line-ups to ad buyers next week, as they grapple with increased competition from the Internet, cable, telecom companies and other providers of on-demand programming.

As traditional media moves toward a more consumer-controlled landscape, the broadcast networks are faced with the difficult task of not only proving to advertisers that their traditional linear model still works (clearly a tough sell) -- but that they are simultaneously adapting to the rapid consumer shift to on-demand platforms.

The market for fall ads is expected to be weaker this year, as advertisers realize that they have a lot of territory to cover if they want to reach today's demanding audiences. "There are a number of reasons why people might be holding back their dollars, " said Greg Clausen, managing director of Starlink Worldwide. Some advertisers want to see what kind of new on-demand video opportunities emerge as the year goes on. "They might want to have some unallocated money available to take advantage of that," Clausen said.

This year's network upfront is estimated to generate about $8.7 billion to $9 billion, down from last year's total of $9.1 billion. The tried-and-true upfront formula, which was so simple when the practice began in the late 1960s and for many years thereafter, has become complicated by a number of factors. Cable networks have been eroding broadcast audiences for many years. Now, with broadband deployment increasing across the U.S., consumers have more reason to spend time online, enjoying rich media experiences. And handheld digital media players, most notably the Apple iPod, have made people accustomed to carrying extensive music and video collections around with them in a portable package. Cell phones are becoming more media-capable, as well.

Edd Johns, executive director of strategy at Resource Interactive, an online marketing firm based in Columbus, Ohio, estimates that online marketing will account for 30 percent of advertisers' budgets by 2010. He says that the precision possible with the Web appeals to many companies.

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