It’s no surprise that Procter & Gamble, which has been vocal in its displeasure with digital advertising, is planning to shift more of its marketing dollars back into TV during this year’s upfront ad talks.
Less expected, perhaps, is the double edge that carries for TV. While it would seem like a win for the TV networks, which have been losing share to digital behemoths like Facebook and Google, they might not actually want P&G’s money. At least not as much as they’d like it from someone new.
P&G is looking to meaningfully increase the volume of its ad commitments during the annual negotiation, where networks look to sell a bulk of their commercial inventory for the next season, according to both buyers and sellers who are familiar with the budding conversations.
But the maker of Crest toothpaste and Downy detergent could find it hard to place all the additional money it would like. That’s because P&G is one of several major marketers that have been grandfathered into legacy ad deals that reward marketers for decades of consistent business by guaranteeing relatively small price hikes on relatively low bases. TV networks are tired of those old deals and ultimately want to strike agreements with advertisers whom they can charge higher rates.
Representatives of Procter & Gamble and TV networks declined to comment on their plans for upfront negotiations.
When the market is weak, like in the 2009 recession, TV networks are happy to have these agreements in place, encouraging long-time big spenders to keep it up.
But when business is robust, like last year, the deals leave little wiggle room for the networks to increase rates. Several major network groups actually turned away money from advertisers at the lower rates in 2016.
“It will be tough for them to get that money down, though this year’s marketplace should be a bit easier if the indications of down to flat budgets overall are accurate,” one media buyer said.