This Glenn Beck boycott is fascinating. I wrote a post for Andrew Sullivan on the substance of the matter last week, and I think it holds up okay. Let me just say that I continue to be amazed that some people think there is a free speech issue here. It seems to me that the right to free speech does not give you the right to massive corporate underwriting. Glenn Beck can defend "the white culture" and call Obama a "racist" in poverty and in private.
What I'm interested now is the economics of the boycott. Thirty-six companies have apparently signed on. And while it appears that some of them never advertised with Beck in the first place (oops), many if not most of them did. To which Fox responds:
While the advertising boycott has generated substantial media coverage, Fox News said it has not impacted the network's revenues or Beck's audience. "The advertisers referenced have all moved their spots from Beck to other programs on the network so there has been no revenue lost," a spokeswoman said.I have had enough tangential experience with the wacky world of marketing and advertising to believe that what this Fox News spokeswoman says is true. But I still wonder: Why is it true? It's not clear that there should be "no revenue lost" in this situation.
Let's assume that (1) the number total TV advertising spots is fixed and (2) the advertising budgets of the companies involved are fixed. (I believe both things are more-or-less true.) Let's further assume that (3) a boycott reduces the total number of available advertising spots.
So when the Beck Boycott hits, the same number of dollars is chasing a smaller number of advertising slots. This should ... raise the price of an advertising slot. And when that happens, I don't understand how the advertisers can simply move their spots "from Beck to other programs on the network" without increasing their advertising budgets. And if they don't increase their budgets, it would be more cost-effective for them to buy spots on (the now relatively cheaper) other networks.
But perhaps that assumes the market for advertising is efficient, and I've never met someone who believes that it is. Or am I missing something?
I wouldn't be surprised if Conor Clarke is missing something on the economic side of things, since in my limited experience with his thoughts he's not firing on all cylinders. For an example, see this Atlantic post from him: peekURL.com/zpobbac That goes to a comment I left with a question he left unanswered.
And, regarding his Sully post, perhaps he could explain what "white culture" means to him, bearing in mind things like this or this (particularly see the "spin" link after the summary) or this push from the BHO campaign: 24ahead.com/blog/archives/008286.html
I think what may account for potential truthfulness of the Fox spokeswoman's statement is that there are a lot of advertisers who were previously on non-Beck shows who don't mind being switched to Beck's show. So non-participants of the boycott are placed on Beck's show, and are no longer part of the pool that is "chasing after a smaller number of advertising slots." I'm not sure how to prove this quantitatively, but it seems that as long as the number of indifferent advertisers is large, this is what would happen.
I would assume the 'no revenue lost' means no revenue already booked is lost. The way I understand it, corporate marketing teams (via ad agencies) book a number of slots in particular program(s) for a particular price in a contract over a particular period (say, 3 months). A network will have many, but not all, of it's national advertising booked this way in advance. Some of the ad spaces are reserved for the local cable providers to sell ads targeted locally/regionally. Some more still are available to purchase for those needing to place an ad last minute or that don't want to lock into contracts.
The upshot is, that the booked revenue they have is revenue in existing contracts which is not being reduced. The 'boycotters' are telling whoever does the ad placement (likely a collaboration between their agent with sales and programmers at the network) to shuffle their ads out of Glenn Beck and into other slots. This changes the makeup of slots available for a more open-market sales, but it does not change the overall number of ads nor does it necessarily change the pricing of the ads customers have bought.
Now, the change in makeup of available ads may drive down the price some of these open-market ads actually sell for during Glenn Beck's show because there is both an increased supply and less desirability associated with those slots. However, it is not a reduction in revenue they already booked, it's a theoretical reduction of possible future revenues that likely fluctuated from day to day anyway so cannot be easily teased out, and certainly would not be handed out unless the company felt giving out an interpretation of the numbers to the media served it's interests. And I think Fox thinks it's in its interest to tell everyone the boycott is not impacting revenues.
Please Mr. Clark, don't embarass yourself by analyzing in public. It doesn't do you well.
Perhaps new sponsors arrive. Perhaps prices differ. Perhaps negotiations between existing sponsors take additional spots, .... perhaps any one of one thousand things.
Having said that, your "White culture" comment is beyond offensive. If it wasn't so stupid, it would be just pathetic. Mr. Clark .... Culture has no color.
I just came across this post on the net and found your logic, and presentation very typical of most small-minded people who feel that people should waste their time reading garbage such as yours.
Please struggle to imporve your thinking .... it might benefit all of us.
Ron, please struggle to improve your spelling and editing skills. It might benefit all of us.
"White culture" is a direct quote. That's why it's in quotation marks. They're used for quoting things. Please direct "offensive", "pathetic", etc. labels to Mr. Beck.
Step 1: Glenn Beck says X.
Step 2: PACGroup Y calls for Glenn Beck advertising boycott.
Step 3: Group A advertisers boycott Glenn Beck.
Step 4: Media makes news of advertisers boycott.
Step 5: Boycott causes Beck's ratings to shoot up.
Step 6: Group B advertisers see Beck's new ratings + lack of competition from boycotting advertisers-- Group B advertisers win!
Lesson: The only thing a boycott does is increase ratings and revenue for Fox News. Smart thinking boycotters!
I work in media buying and some of my agency's clients are dealing with this Glenn Beck issue right now, in fact.
There are two issues at play:
1)Advertisers do not always buy spots in specific programs. We often buy what is called ROS which means "run of schedule." It is less expensive than "program-specific" purchases and for networks like FOX News, where one program isn't much different from another, we are happy to let the network sort out where to run us. When you buy ROS, you can block certain programs. This is usually done with things like Family Guy and South Park. Many advertisers already had Glenn Beck on their block lists. I know of several that blocked him back when he was on Headline News. Anyway, many advertisers didn't even know they were running in Glenn Beck's show until Color of Change called them.
2)FOX News has a lot of available inventory. FOX News is airing 24 hours a day. They have a lot of commercial breaks and they are nowhere near capacity. A good way to see how a network is doing selling ads is to see how many commercials they have from "direct response" advertisers and public service announcements. The DR advertisers do not buy in advance and they do not care where they run. They are often paid by how many calls they get to their 800 number within a given time after their ad airs. Things like the Snuggie and Cash4Gold run this way.
3) Keep in mind that the basic unit of TV advertising is not, in fact, the :30 ad spot. It's the people watching the spot that we are buying. The rate we use is the CPM (cost per thousand). Let's say FOX News is a $10 CPM and 2MM people watch Glenn Beck's show. That means a spot in his show costs $20k. The reality is we can find 2MM people by changing our Glenn Beck spot into 2 spots on FOX and Friends pretty easily.
On a side note, FOX News dropped its rates this year considerably, much more so than CNN or MSNBC. I expect that will impact revenue more than anything else.
thanks for the useful info! never knew how this worked before.
You are mislead by the Fox News spokesperson. The rate card for the Glenn Beck show has clearly dropped with demand. In addition, the non-Beck slots on Fox News which were already sold cannot be resold. It is technically impossible for them not to be losing net revenue.
AlienNation:
You are incorrect. Not all of the non-Beck spots have been sold. It is very easy for FOX News to move advertisers out of Glenn Beck and into other shows.
If FOX News has a problem, it's that the other shows also can be controversial. O'Reilly and Hannity are also on "do not buy" lists for advertisers who are looking to avoid controversy. Fox & Friends is Fox's morning show and that's where Beck's most controversial statement was made.
But the bottom line is FOX News has plenty of unsold inventory that they can move advertisers around in. If an advertiser says they want to move out of Glenn Beck's show, FOX News will move them without any loss of revenue. As noted above, they'll fill the gap in Beck with either advertisers that don't care - namely the DR ads (like Billy Mays products).
Well Walmart, CVS, and Bestbuy have the problem of not being able to tap in as well to prodominately liberal leaning communities. Why do you think Walmart is blasting radio air waves every commercial break about climate change and how you can help the enviroment?
...It couldn't be that they want to become more likeable company to liberal leaning people....or maybe it could.
Walmart has already sold themselves well with the conservatives, by drastically cutting costs compared to there competitors they did this. The most untapped market for them is the market(left leaning americans) which poses to become the most profitable, but they still want to advertise to there other customer base which is a lot of fox news. By not supporting Glen they are using the Press as free ad dollars towards left leaning Americans.
It is all a marketing ploy Mr. Clarke. As for the money what Fox is saying about no loss in revenue, I hate to say it but if you watch Fox any day of the week you would notice all the damn infomercials. They cut a few of those and they made there revenue back.
I support Glen Beck's right to say that he feels that Obama is racist, if a white person sat in kkk meetings for 20years- about the same message as Rev Wright's racists remarks, and then that same white politican wrote about himself and stated in the book about objections to white people (please read obama's book in his own words) then that white politican stated his grandmother was a typical black person, (like obama said about his grandmother that she was a typical white woman) then that same white politican made a statement about a black cop acting stupidly, etc,etc---guess what every black leader in the USA would not only call that politican a racist but would call for a demonstration and probably his impeachment. Guess what, many in the USA who voted for obama are really getting tired of all that is going on in D.C.
Very good observations Mary.
Mary's remarks are right on the money. Glenn Beck hits a nerve at times,but the dollars that should be put into question is the trillion dollar debt that Obama has created.
Poor Conor Clarke, just doesn't get it. Last time I checked, Beck's ratings were going up and up and up. I watched his show yesterday, and low and behold, there were advertisments just like before the "boycott."
Then poor Clarke says, "Glenn Beck can defend "the white culture" and call Obama a "racist" in poverty and in private." But, makes absolutely no mention of the fact that the "boycott" effort is being directed by Van Jones, who is 0bama's Green Jobs Czar, which clearly makes this a first amendment rights case since it is a government entity, the White House, which is trying to silence Beck. That is the way 0bama has always operated, he doesn't want to debate his opponenents, just eliminate them altogether through dirty tricks. Just ask anyone in IL who he ran against, he'd always find a way to knock opponents off the ballot, or he'd release sealed divorce records to cause a scandal.