| Madison Avenue Takes a Back Road | |
|
The terrorist attacks on Tuesday, September 11, in New York, Washington and Pennsylvania caused widespread devastation across the world. As we progress, people are trying to get their lives back to normal as much as possible. But it's certainly not business as usual.
The advertising world is also bracing for a huge financial loss. Experts predict the ad industry could lose up to half a billion dollars as a result of this tragedy.
Countless advertisers pulled everything from newspaper ads to television commercials immediately after the first reports of terrorism. Normally, these companies would face steep penalties from pulling out of a contract. In light of the horrific events, they were released out of the contracts with no penalty whatsoever.
Some companies suspended their advertising campaign for ten days. Others pulled their ads indefinitely. Nationwide, numerous companies were forced to pull their ads because they were featuring "blowout sales" before the terrorists struck.
Network execs expect ad revenue to pick back up once everyone has had time to regroup. Even so, advertisers will have to proceed cautiously.
Now's not the time to show Geico's commercial featuring a piggy bank crashing through the streets, tearing down buildings. Even some of Target's commercials may be questionable for the time-being. For instance, select ads contain a jingle with the lines, "It's a wonderful world we live in. It's good to be alive." Consumers are simply not ready for such a commercial right now.
The major networks and their affiliate stations are also losing massive amounts of money as well. Network coverage has been running commercial-free, resulting in an estimated $100 million loss per day. Within the first 24 hours, even some of the smaller market network affiliates were reporting an advertising loss close to $100,000.
During a time such as this, networks are competing for viewers but there's no immediate financial gain. Coverage of these events turns into more of a public service effort rather than a money-making newscast.
There's also the struggle of digital conversion to consider. The Federal Communications Commission (FCC) has mandated a changeover to digital format date of 2006 for all television stations.
Many stations were already scrambling to save money for the conversion process. Each one could have to spend several million dollars for new equipment such as studio cameras, a digital transmitter, control room, master control facilities and even a new tower for the transmitter if their current space is limited.
Smaller stations without the financial backing of huge media corporations were already facing the possibility of going out of business. The effects of Tuesday's attacks might have sealed their fate.
Next page > The Travel Industry's Future > Page 1, 2