Punctured-Balloon Department

Just when the networks were starting to feel good about themselves again, with upfront ad sales finally rising after two straight years of decline, reality intrudes to ruin the party.

Upfront sales increased about 2.7 percent over last year, and PriceWaterhouseCooper reckons network TV ad revenue will rise by 2.5 percent for the entire year. That set networks ad execs crowing:

Broadcast television is "still the best way to reach people," Jon Nesvig, president of sales at News Corp.'s Fox, assured the Wall Street Journal.

"The point is, more commercials are being seen on the networks than any other video alternatives," ABC sales chief Mike Shaw told Advertising Age.

Huzzah! Trad media are coming back!

But wait, as the ad pitchman once said, there's more:

Three new ad-spending forecasts released this week suggest there is plenty of ad-revenue pain to come for networks and other traditional media.

Ad revenue at the networks is growing, but very slowly and from a low base. The prospects for faster growth in the future are dim because overall ad spending is sluggish. Including all media, it grew only 3.9 percent last year, even with the benefit of two ad-rich events: elections and the Winter Olympics.

Robert Coen, senior vice president for forecasting at Universal McCann, told Ad Age: "I can't deny it anymore. Things are pretty bad."

Much of the problem for the networks stems from the problems of their biggest customers. Domestic car companies, for instance, are flat on their backs, and cut spending on national TV networks by 11 percent in the first quarter.

There are some bright spots for nondigital media. Drug, food and automaker spending on magazine ads have all been increasing.

by Mark Stein