The economy may still in the dumper, and ratings are down about 10 percent, but the demand for broadcast television advertising could be at an all time high.
Advertisers who did not buy enough ad inventory in last year’s upfront market are now paying as much as 30 percent more for the advertising they are buying in the scatter market -- despite continued ratings declines.
The upshot: The Big Five network sales executives are anticipating a windfall commitment of ad dollars for the approaching upfront selling season.
Also read: Big 4 Network Ratings Down 10% This Season
Indeed, they're looking at double-digit increases on the cost per thousand ad impressions (CPMs). The huge spike in demand and prices for the five major English-language networks could result in their total upfront take exceeding the $9.2 billion they took in pre-crash 2008.
Who said traditional media is dead?
What’s more, with advertisers needing to spread out their dollars across all networks in prime time, every network is going to reap the benefits -- including NBC, fourth among viewers, and the lowest rated but young audience friendly CW Network.
“The TV marketplace is going gangbusters,” one ad-agency buyer, who did not want to speak for attribution, told TheWrap. “The national TV market is growing faster than all other media sectors. National television’s share of the overall media ad dollar pie is growing while most others are declining. And television is strengthened by the digital marketplace, which advertisers can use to reinforce their TV campaigns. The combination of national television and digital is the most powerful combination that has ever existed for advertisers.”
Another media buyer who also requested anonymity said, “Even with ratings down, broadcast networks are still the best immediate mass reach vehicle for advertisers. Our clients are telling us, when they advertise on television, their products sell.”
And unlike in past years -- when media buyers were publicly posturing for low expectations -- this year they are being simply quiet in public, while privately conceding to TheWrap that the networks today can pretty much write their own checks.
“If they’ve done the math, they understand how strong the marketplace is and that this is the year there will be double-digit price increases,” said one network sales executive. “We may open our discussions looking for increases north of 15 percent -- and the agencies are going to have to adapt their plans and be flexible.”
So with a backdrop like that heading into the current upfront, the only real questions to be answered are, how quickly will buying be completed and how high will the ad rate increases be?
Last year the upfront negotiations for the five big networks took about three weeks to complete, the average rate increases were between 8-9 percent, and the total ad take was about $8.5 billion for prime time.
Both sides believe that negotiations could again be that quick -- and most likely the average price cumulative price hike could be about 12 percent.
