The X Factor - Ad Rates Drop and Advertisers Compensated

After failing to attract American Idol ratings numbers, FOX has adjusted the ad rates for The X Factor from an average $400K for a 30-second spot to between $280K-$300K according to the WSJ.

FOX is also compensating advertisers like PepsiCo with additional ad time on the show.

So it's the right thing to do -- but it doesn't change the fact that The X Factor is a hit show and is not going anywhere. Hopefully it will retain it's audience in come back next fall.

From THR:

Fox's X Factor is so far drawing smaller audiences than projected, pushing down advertising rates and leading Fox to compensate marketers with additional ad time on the show, the Wall Street Journal reported.

Fox guaranteed advertisers a rating of around 6, or approximately 7.6 million viewers, in the 18-49 demographic, according to the Journal. About 5.4 million viewers in that demo have watched on average so far, it said, citing Nielsen data.

The show has nonetheless boosted Fox's Thursday viewership by 59 percent, giving the network the ratings lead among viewers aged 18 to 49 on that night for the first time in network history, according to the Journal.

The paper said network sources say Fox is selling ads at or above upfront market prices, which averaged $400,000 for a 30-second spot. But some media buyers told the Journal that they have been getting spots for as low as $280,000-$300,000.

Mike Darnell, Fox's president of alternative entertainment, said he is "thrilled" with the early ratings for X Factor. "My competitors would give one eye and two legs to have this show," he told the Journal. If the show maintains its current audience, "I would be perfectly happy, and the show would become a staple of the network."

Among the marketers that Fox is compensating for the X Factor ratings shortfall is PepsiCo, the show's biggest sponsor. A spokeswoman told the Journal: "We're pleased with the total value we're extracting from our partnership."