February 19, 2009 / 8:42 PM / 11 years ago

When it comes to Oscars, advertisers skip spotlight

NEW YORK (Reuters) - The Oscars have lost some of their luster this year — at least when it comes to advertising.

A section of red carpet is rolled out in the arrivals area in front of the Kodak Theatre as preparations continue for the 81st Academy Awards in Hollywood, California February 18, 2009. REUTERS/Danny Moloshok

ABC has dropped prices for 30-second advertisements and scrambled to replace two of the key sponsors for its Sunday broadcast of the Academy Awards, when Hollywood pays tribute to the best actors, directors, producers and movies of the year.

While always one of the biggest TV events, drawing over 30 million U.S. viewers, the Oscars broadcast this year is feeling the sting of the sharp pullback in ad spending by auto and retail companies.

Prices for advertising spots averaged $1.7 million last year, but this year, prices have come down to anywhere from $1.4 million to $1.7 million, according to media sources.

In addition, General Motors and L’Oreal, two of the biggest advertisers in the past, have decided against running spots. GM alone had spent $105 million over the past decade on Oscar ads, according to TNS Media Intelligence.

Hyundai Motor, which also bought time in this year’s Super Bowl, will step in as an advertiser. Other companies that have bought spots include J.C. Penney, PepsiCo’s Frito-Lay, and Coca-Cola.

But Walt Disney’s ABC also decided it should cast more widely for advertisers, and in a departure from tradition, will let movie studios buy commercials for the first time.

The Oscars broadcast is hardly alone in feeling the pinch of the advertising downturn. Spending has dried up across media, and experts say overall U.S. ad expenditures will drop by around 5 percent this year.

Even for the Super Bowl broadcast, the biggest TV event of the year, NBC dropped its asking price for 30-second spots as the financial crisis deepened last autumn.

But Brad Adgate, senior vice president of research at Horizon Media, says the Oscars face other obstacles, too.

One problem, he says, is that the broadcast does not resonate with younger viewers. Another is that catching sight of stars on the red carpet isn’t what it used to be, thanks to the glut of magazines, websites and TV shows that regularly feature them.

“I think ABC was pretty smart to drop their asking price,” he said. “For the most part, audience delivery for a lot of these awards shows has been tough.”

Last year’s three-hour-plus telecast pulled record-low TV ratings, averaging 32 million viewers, or about 1 million less than the previous record low in 2003.

Adding to concerns about audience size is this year’s crop of best picture contenders. None of the films, “Slumdog Millionaire,” “The Curious Case of Benjamin Button,” “Milk,” “Frost/Nixon,” and “The Reader,” were box office hits, adding to the challenge of drawing big audiences to the awards.

For their part, ABC and Oscar organizers are promising a lively, original award ceremony this year. It will be produced by Bill Condon and Laurence Mark — who backed the movie musical “Dreamgirls” — and hosted by Broadway and film star Hugh Jackman.

Horizon’s Adgate points out that even with recent audience declines — and concerns among advertisers — the Oscar broadcast still reaches a wide audience. “It still did 32 million viewers last year. Any show would take those numbers.”

Editing by Brian Moss

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