The ratings drops resulted in a higher number of
makegoods, which ate into inventory and led to the unthinkable: a year-over-year decline in TV NFL ad revenue for NBC, CBS, Fox and ESPN, from $2.45 billion during the 2016-17 regular season to $2.42 billion last year, according to Standard Media Index.
While paid unit costs dipped, that was offset by a 16% reduction in the number of unpaid spots -- also known as
makegoods, or ADUs.
This represents a lot of money for advertisers and their agencies, but also for publishers given non viewable impressions are a source of negotiations and
makegoods with agencies.
Cut costs, track production time, reduce
makegoods with this powerful tool.
"
Makegoods," advertising parlance for credits given to advertisers as a form of compensation when something goes wrong with their ad buy, have long been a function of the advertiser-buyer relationship.
NTI is also the basis for the networks providing the advertisers with "
makegoods," that is, reimbursements to advertisers when programs do not meet minimum media exposure targets.
* Allowances for
makegoods have been cut by $250,000 to $500,000 per year.
In contrast to the network's Olympics under-delivery, many of CBS' owned-and-operated stations exceeded their advertising budgets for the Games and did not have to cough up many
makegoods.
Additionally,the amount of ADUs (or
makegoods) increased by 6% for in-game coverage.
That's because a year ago, Ross and her team couldn't take advantage of the white-hot scatter market, as they were forced to give out
makegoods to compensate for Colbert's soft debut in fall 2015.
Makegoods associated with these negotiations had to be in the same currency.
Both Kardell and Wright say another cost-saving offshoot of the new system is that it is helping to cut back on the amount of revenue lost because of mistakes (aka
makegoods).