While networks have already taken a hit, they've also been relatively insulated by upfront commitments — but with the option to pull some of that spend, H2 looks much bleaker. The loss of live sports, a decline in political ad spend, and broader fears about the state of consumer spending have all contributed to a difficult H1.
Even still, networks have been sheltered from the worst declines, as the majority of TV ad inventory is sold in contracts that lock companies into a yearlong commitment. The pandemic hit too close to the beginning of Q2 for advertisers to cancel their commitments, but they now have the option to slash up to 50% of their spend for Q3 — and with the uncertainty of live sports and production delays in Hollywood, many advertisers are likely to take advantage. Cancellation has always been an option, but it's been rarely used until now: Historical pullbacks have ranged from 2% to 5% — but now that number could jump to 25%, per MediaPost .
The flip side of that trend is an even greater appetite for advertising on digital platforms, which allow for more real-time stopping and starting of spend: For example, a General Mills spokesperson told the Wall Street Journal that the company was shifting TV ad dollars into digital video and ecommerce.
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